ARM Ferrous headline earnings were 77% higher at R7 927 million (F2020: R4 479 million) as a 104% increase in the iron ore division’s headline earnings more than offset a 46% decrease in the manganese division’s headline earnings.
The iron ore division benefited from a 5% increase in sales volumes and a 79% rise in the average realised US dollar price for iron ore. These benefits were partially offset by a stronger average realised rand versus the US dollar coupled with a 16% increase in unit cost of sales.
The iron ore division’s headline earnings included an attributable R881 million positive fair value adjustment to revenue related to open iron ore sales which are expected to be realised at higher prices compared to initial prices recorded.
Despite a 22% increase in manganese ore sales volumes, the manganese ore operations reported lower headline earnings mainly due to the reduction in average realised US dollar prices for manganese ore as increased global supply put pressure on prices.
The manganese alloy operations (including Sakura) reported improved attributable headline earnings of R37 million compared to an attributable headline loss of R114 million in F2020 as manganese alloy prices improved, particularly in the second half of the financial year.
Corporate and other (including Gold) headline earnings were R828 million compared to R78 million in F2020. This was mainly due to higher management fees received of R1 800 million (F2020: R733 million) following revised fee arrangements at Assmang which align ARM’s management fees to the performance of Assmang.
The Machadodorp Works headline loss was R107 million (F2020: R163 million) as research into developing energy-efficient smelting technology progressed.