African Rainbow Minerals (ARM) is a leading South African diversified mining and minerals company with long-life, low unit cost operations. ARM mines and beneficiates iron ore, manganese ore, chrome ore, platinum group metals (PGMs), copper, nickel and coal. ARM also produces manganese and chrome alloys, and has an investment in gold through its shareholding in Harmony.
I am pleased to report a 9% increase in headline earnings for the 2019 financial year (“F2019”). On an adjusted basis1, headline earnings were up 35% driven mainly by an excellent performance from the iron ore operations.
We benefitted from the diversity of our portfolio as higher US dollar prices for iron ore, palladium and rhodium more than offset lower US dollar prices realised for manganese ore, manganese alloy, platinum, nickel and thermal coal.
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The benefit of initiatives to address loss-making operations in recent years is reflected in most of our operations delivering positive headline earnings. Only Nkomati Mine and Sakura Ferroalloy reported a headline earnings loss. As discussed in the Executive chairman’s report, a decision has been made to scale down Nkomati Mine while Sakura Ferroalloy has been impacted by high manganese ore and reductant prices.
Our diverse portfolio has proven its worth in a protracted period of commodity volatility.
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Group headline earnings increased by 9% to R5 226 million or R27.18 per share in F2019 (F2018: R4 814 million or R25.26 per share) driven mainly by higher headline earnings delivered by the iron ore and Two Rivers operations. The F2018 headline earnings included a net fair value gain of R977 million. Excluding this net fair value gain in F2018 the F2019 adjusted headline earnings are 35% higher.
READ MOREIron ore
Open-pit mechanised
14.5Mt iron ore
21 years
3 827
0.08
60th percentile
Iron ore
Open-pit mechanised mine
3.5Mt iron ore
7 years
1 445
0.06
60th percentile
Manganese ore
Underground mechanised
mine
3.4Mt manganese ore
>30 years
5 528
0.33
40th percentile
Ferromanganese
Smelter
206 000t ferromanganese
552
0
70th percentile
6E PGM metals
Underground mechanised
mine
313 000 6E PGM oz
>30 years
3 261
0.47
40th percentile
6E PGM metals
Underground mine
307 000 6E PGM oz
>30 years
4 439
0.90
55th percentile
Nickel (by-products including PGM, chrome, copper and cobalt)
Open-pit mechanised mine
14 200t nickel, 110 000 oz
PGM, 443 000t chrome,
7 000t copper, 820t cobalt
1 year
1 994
0.07
75th percentile
Thermal coal
Open-pit mechanised mine
7.0Mt saleable thermal coal
21 years
Not reported by ARM
Not reported by ARM
35th percentile
Thermal coal
15.3Mt saleable thermal coal
7.0Mt saleable thermal coal
20 years
Not reported by ARM
Not reported by ARM
30th percentile
Million tonnes
Platinum group metals
Mine/operation type
F2019 approximate production volumes on a 100%
Approximate life-of-mine
Number of employees at 30 June 2019 (full‑time employees and contractors)
F2019 lost‑time injury‑frequency rate (LTIFR) per 200 000 man-hours
Position on the global commodity unit cost curve (F2019)
Ferromanganese
Smelter
249 000t ferromanganese
>30 years
Not reported by ARM
Not reported by ARM
45th percentile
Million tonnes
Platinum group metals
Mine/operation type
F2019 approximate production volumes on a 100%
Approximate life-of-mine
Number of employees at 30 June 2019 (full‑time employees and contractors)
F2019 lost‑time injury‑frequency rate (LTIFR) per 200 000 man-hours
Position on the global commodity unit cost curve (F2019)
ARM’s material matters are determined at board, executive and operational levels by considering the financial and non-financial risks, opportunities and other factors that affect our strategy, performance, prospects, governance and value creation. These are matters with the greatest potential impact on stakeholders and our ability to create long‑term sustainable value.
Our management style is supported by our values, which in turn guide the way we conduct our business.
Aim for operational excellence
Provide a safe and healthy work environment for all our employees
Maintain a non-discriminatory workplace
Improve the lives of those in the communities where we operate
Work responsibly to achieve balance between the economic, social and environmental aspects of our business
Maintain the highest standards of corporate governance
Value we created and distributed to our various stakeholders.
The metals and minerals ARM produces are essential to support many aspects of modern society
Iron ore, manganese and nickel are used in the production of steel. Crude steel is a key component in the infrastructure needed to sustain and support development of cities and communities. This includes hospitals and schools to improve health and education. Steel is not only essential in infrastructure development, but also in the production of machinery and equipment which is used in industries, which drive job creation and economic growth. Steel is also a critical part of water and energy distribution systems, agricultural irrigation, transport infrastructure, alternative energy systems and information and communication technology. Stainless steel too has many industrial and medical applications.
ARM’s activities create value for our stakeholders in a variety of ways
ARM operations are located in some of the poorest and most remote parts of the country and provide employment opportunities, skills development and educational support in these areas. Infrastructure investments and support for social projects in local communities support socio-economic development and improve community sustainability.
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