ARM: Machadodorp Works developing energy-efficient smelting technology
In its Interim Results for the six months ended 31 December 2023 African Rainbow Minerals reports that iron ore sales volumes were higher in 1H F2024 compared to 1H F2023, as the comparative period was impacted by industrial action at Transnet.
Unit production costs remained under pressure due to lower production volumes and above-inflation increases in electricity and maintenance costs at the manganese and PGM operations.
The decline in the average US dollar 6E PGM basket price and the lower thermal coal prices were partially offset by a weaker average rand/US dollar exchange rate and higher average realised export iron ore prices.
Growth
ARM continues to be confident about the long-term profitability of Bokoni. The definitive feasibility study (DFS) for the phased development of Bokoni was further advanced to a bankable feasibility study (BFS) level. Due to depressed commodity prices and uncertain immediate outlook, the BFS project approval request has been deferred. The immediate priority will be to conserve cash while ramping up production on a phased basis, from the installed capacity of 60 000 tonnes per month by leveraging and enhancing existing infrastructure.
Lower headline earnings in the manganese division were driven primarily by lower average realised US dollar manganese ore and alloy prices, partially offset by the weaker rand/US dollar exchange rate and higher sales volumes.
ARM Platinum headline earnings were 121% lower at a R282 million loss (1H F2023: R1 330 million earnings) due to depressed commodity prices and above inflation unit cost increases.
Two Rivers Mine headline earnings were 82% lower at R164 million (1H F2023: R920 million), mainly due to depressed commodity prices.
Modikwa Mine headline earnings were 105% lower at a R31 million loss (1H F2023: R615 million earnings), mainly due to depressed commodity prices.
Bokoni Mine reported a headline loss of R341 million (1H F2023: R150 million loss), driven mainly by the mine ramping up to its first PGM ounce production and 1H F2023 only being included for four months. First PGM ounce production was successfully achieved in November 2023.
Nkomati Mine reported a headline loss of R74 million (1H F2023: R55 million loss), driven mainly by the increase in decommissioning unwinding costs. The mine has been on care and maintenance since 15 March 2021. During 1H F2024, the period under review, ARM and
Norilsk Nickel Africa Proprietary Limited (NNAf) concluded a Purchase and Sale Agreement which provides for the acquisition by ARM of NNAf’s 50% participation interest for a cash consideration of R1 million. ARM will take over NNAf’s proportionate share of the obligations and liabilities relating to the Nkomati Mine’s assets.
ARM Coal headline earnings were 85% lower at R204 million (1H F2023: R1 404 million) driven mainly by lower export thermal coal prices.
ARM Corporate and other (including Gold) reported headline earnings of R324 million (1H F2023: R71 million), driven mainly by an increase in management fees received.
Machadodorp Works reported a headline loss of R112 million (1H F2023: R153 million loss) related to research into developing energy-efficient smelting technology.
