Afrimat business update and pre-close briefing session

Afrimat reports that the build-up to the first half of the 2025 financial year (“HY2025”) is best characterised by two distinct quarters. In the first quarter (March, April, May) (“Q1”) the bulk commodity market was lacklustre. The continued underperformance of the iron ore export corridor, together with ArcelorMittal South Africa Limited’s (“ArcelorMittal”) well-documented issues (specifically the force majeure being declared at the Vanderbijlpark facilities due to the freeze of two furnaces), impacted Afrimat volumes in Q1.

By the second quarter (June, July and the first week of August) (“Q2”), volume increases were evident, as domestic customers with furnaces started up again, and tender activity increased in road, rail and small infrastructure projects. However, the increase in volumes in Q2 is not sufficient to make up for the volume decline in Q1.

Construction Materials

Volume levels across the segment were maintained in Q1. By Q2, the integrated Lafarge

quarries increased volumes.

The loss-making cement component in the Lafarge business has been reduced but remains

loss-making at this point in time. At the time of the acquisition, the cement kilns were extremely unreliable, and a highly experienced team is working on the turnaround. Although an improvement is already visible, this business component is expected to remain loss-making by the end of Q2. Innovative strategic initiatives are expected to turn this business unit into a good contributor in future.

Industrial Minerals

The suspension of loadshedding is positive for both the segment and its customers. Starting from a low baseline, the volume increase is encouraging and was further supplemented through strategic marketing initiatives into new markets.

Local iron ore volumes suffered a 70% retraction in Q1. This was due to significantly reduced volumes taken by ArcelorMittal. Pleasingly, volumes for Q2 began increasing and are tracking at normal levels, correlating with ArcelorMittal’s business update and trading statement released on 2 July 2024. Afrimat expects volumes to ArcelorMittal to return to normal ranges for the remainder of the financial year.

At the Nkomati Anthracite Mine, the production rate at the open pits have been ramped up.

An Eskom powerline is being moved after a frustratingly long approval time, further enhancing the ease of the open cast mining operations. Afrimat continues to find underground operations difficult due to geological limitations.