African Rainbow Minerals (ARM), founded and helmed by one of South Africa’s wealthiest men, Patrice Motsepe, has reported a staggering 49% decline in headline earnings for the six months ending December 2024. This development marks a challenging period for the mining giant, which operates in several mineral sectors including iron ore, platinum group metals (PGMs), and manganese ore.Motsepe, who holds an estimated net worth of $3 billion, making him the fourth richest individual in South Africa, possesses approximately a 40% stake in ARM, valued at around R13.2 billion.
His multifaceted business interests extend beyond ARM, encompassing African Rainbow Capital, Mamelodi Sundowns, and Ubuntu-Botho Investments, among others. Motsepe founded ARM in 2004 through a merger of companies including ARMgold and Harmony Gold, and has taken the company on a diversified growth trajectory since its inception.
The latest financial results reveal headline earnings plummeting to R1.5 million, translating to R7.75 per share, with ARM Ferrous witnessing a notable drop of 33% in headline earnings to R1,881 million. This downturn was largely driven by a decrease in the iron ore division, attributed to lower average realised US dollar export prices, a fortifying rand, and reduced sales volumes.Iron ore operations experienced a marked drop due to the same external pressures, signalling worry among investors about the broader commodity market. Meanwhile, the manganese sector showed resilience, with headline earnings buoyed by a higher average realised price, though this was slightly restrained by lower export volumes and the strong rand.ARM Platinum was not spared from the challenging landscape, declaring a headline loss of R689 million, compared to a R282 million loss the previous half year.
The bulk of this loss stemmed from increased operational costs at the Bokoni Mine, prompting further scrutiny of operational efficiencies within the sector.As a consequence of the financial strain, ARM has made the decision to reduce its interim dividend by 25%, now paying out R4.50 per share, down from R6.00. The group’s net cash also fell to R6,073 million from R7,197 million just six months earlier, highlighting a tightening financial situation.On a more positive note, basic earnings per share reported a 15% increase, reaching R1,394 million or R7.11 per share, despite the attributable impairments during this period. Impairments include R96 million related to property and equipment at Beeshoek, R36 million from Assmang’s investment in Sakura Ferroalloys, and R4 million at Cato Ridge Works.