Motsepe’s ARM To Cut Jobs Amid Major Profit Losses

Patrice Motsepe’s mining group African Rainbow Minerals (ARM) has confirmed that jobs will be cut at some of its mines as the group’s half-year profits are halved

Delivering the company’s first-half results on Friday, ARM CEO Mike Schmidt said the group was in the process of “critically reviewing” its operations following the substantial decline in commodity prices and a slowdown in economic growth in China, which has resulted in headline earnings falling by 51% to R507 million for the six months ending December.

“Almost 95% of commodities that we mine have been experiencing challenges. As a group we have to review our operations so that we create returns for shareholders,” Schmidt was quoted saying in a Business Day report.

“But I must stress that we are in a robust financial position, and cost containment and our balance sheet help us stay profitable and to serve shareholders.”

Despite a drop in headline earnings per share from R4,73 to R2,33 the previous year, Motesepe confirmed that dividends would still be paid out.

Schmidt said the group’s profits could have plunged further had it not been supplemented with a R599 million profit from its iron-based metal units, including manganese, iron ore and chrome.

The group operates joint ventures with Anglo American Platinum, Assore, Impala Platinum, Glencore and Vale.

In a bid to reduce its operational costs, Motsepe said jobs would inevitably be shed at its platinum mines Modikwa and Nkomati, Beeshoek iron ore mine and Khumani chrome mine.

While the exact number of jobs on the line has not been confirmed, Motsepe added that the group would start by cutting expat labour first.

“Every company has a duty to its shareholders and we need to ensure that we provide them with value. Currently, market conditions are very tough and we will have to cut some labour. We will try to cut expat labour first as it is more expensive and we must focus on maintaining our permanent local staff,” he said.

In spite of the impending job cuts, the company has managed to cut planned spending by 15% to R1,4 billion, thanks largely to reductions in the ferrous metals Black Rock Project, which is the group’s most capital-intensive venture.

It also reduced capital expenditure by 27% from R810 million for the previous year’s comparative six months to R589 million for the 2016 financial year.

Motsepe has personally been hit hard by the falling global commodity prices, slowing demand and the weak rand, with Forbes recently reporting that his net worth halved in 2015 from $2,2 billion (R33,7 billion) to $1,1 billion (R16,8 billion).

source: Destinyman


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