African Rainbow Minerals (ARM), a diverse South African mining company managed by Patrice Motsepe, Africa’s first Black billionaire, posted its lowest profit in seven years. The company’s fiscal year 2024 results indicated a 75% decline in earnings, owing to increasing costs and a challenging operating climate.
ARM recorded a profit of R2.29 billion ($128.5 million) for the year ending June 30, 2024, compared to R9.32 billion ($521.5 million) in 2023. This reduction is the group’s lowest profit since 2017, when it earned R1.43 billion ($80 million). Profits were down due to a variety of causes, including decreasing sales and higher operating costs.
Revenue decreased to R12.92 billion ($722.9 million) from R16.1 billion ($900.8 million) the previous year. This loss was primarily caused by a dip in the average US dollar price for 6E platinum group metals (PGMs) and a decrease in thermal coal pricing. Furthermore, increased unit costs due to lower production volumes, above-inflation increases in electricity bills, and greater waste-stripping costs at ARM’s iron ore operations all weighed on profitability.
Despite these difficulties, ARM maintained its habit of compensating shareholders. The board approved a final dividend of R9 ($0.50) per share, a decrease from the R12 ($0.67) per share paid the previous year. Including an interim dividend of R6 ($0.34) per share, the total payout for the fiscal year 2024 is R15 ($0.84) per share, compared to R26 ($1.45) per share in 2023.
ARM, a major player in South Africa’s mining industry, holds holdings in a wide range of commodities, including iron ore, coal, copper, gold, platinum, and other precious metals. Motsepe, who owns 45.9 percent of ARM, remains one of Africa’s wealthiest people, with a large chunk of his fortune linked to the company.
While the profit decline represents a difficult moment for ARM, the company’s total assets increased to R70.7 billion ($3.95 billion), up from R64.02 billion ($3.6 billion) in 2023. The group’s equity increased to R58.1 billion ($3.24 billion), up from R54.15 billion ($3.03 billion) the year before. This asset increase demonstrates ARM’s financial resiliency in the face of challenging market conditions.
The latest results from ARM underscore the difficulties on the mining sector as commodity prices fluctuate and costs rise. However, with its diverse portfolio and robust asset base, the business is well-positioned to face future challenges.
