JOHANNESBURG (miningweekly.com) - The executive chairperson of diversified black-controlled mining company African Rainbow Minerals (ARM), Patrice Motsepe, on Friday expressed the firm conviction that South Africa was in the process of reinforcing its position as a competitive mining destination through a positive Mining Charter outcome and widespread consensus on the manner in which the crucial issue of land expropriation is tackled.
After ARM declared a maiden R549-million dividend on a 15% increase in half-year headline earnings to R1 945-million in the six months to December 31, Motsepe said he was absolutely confident that current Mining Charter discussions under way would ensure South Africa's position as a competitive global mining destination for investment. (Also watch attached Creamer media video).
"If you look at the most successful countries in the world that have taken their people out of poverty and created jobs and a huge middle class, it's those economies that have consistently, over an extended period of time, created investor confidence," said Motsepe, whose ARM slashed net debt in the half-year to R1 102-million from R3 508-million in the same period of 2016.
ARM Ferrous headline earnings were 26% higher at R1 765-million in the six months on strong premium-priced iron-ore and manganese sales to an environment-conscious world that is prepared to pay a higher price for the high-quality metal that is a hallmark of the company's offering.
He urged the private sector to enter mainstream South Africa's political discussions on the expropriation of land without compensation.
"The private sector must be a credible committed partner," he said, recalling the important role that former Anglo American executive Gavin Relly played in the 1980s, ahead of the release from prison of Nelson Mandela and the introduction of democracy in South Africa.
"Our shareholders expect us to create value and that is crucial. But business also has to influence and engage with government…the issues we share in common are so fundamental, which is why I'm absolutely confident," he said at the results presentation covered by Mining Weekly Online.
He expressed the conviction that black landlessness and exclusion would be dealt with in a manner that was legally compliant and constitutional and that its outcome would not be negative for investor confidence.
A commitment to meaningful, significant black ownership and black farming was necessary, as was dedication to economic growth to expand employment of urban blacks.
Great sensitivity needed to be shown to the insecurity of white farmers and the country's duty to all South Africans had to be acknowledged.
"We have an absolute duty to all South Africans, and we're going to succeed in building a future for all South Africans, black South Africans and white South Africans," he added.
Motsepe committed ARM to the payment of dividends to shareholders and pledged to reposition ARM as a globally competitive and growing company that would also be in copper, despite its exit from Lubambe copper mine in Zambia.
He said that he regarded dividends and a rising share price as being a critical component of global competitiveness.
On criticism that the maiden interim dividend payout was conservative, he said: "We're a growth company in a growth phase. As a starting interim dividend, I think it's appropriate," he countered.
ARM CEO Mike Schmidt said all marginal assets had been returned to profitability across the full spectrum of platinum, nickel, iron-ore, manganese, chrome and coal mines.
In each commodity earnings before interest tax depreciation and amortisation had been enhanced.
Schmidt said that ARM was looking at a number of value accretive growth opportunities, with really good prospects around its own orebodies, which could still be sweated.
The guided that the improved contributions from manganese and coal would continue.
"We'll continue to see those two in particular playing a more meaningful role into our business going forward," he said.
Although nickel failed to do well, the coming through of substantial copper and platinum group metals by-product credits reduced nickel unit costs materially.
The iron-ore division once again delivered exceptionally good results, with price premiums received for high grade and lumpy ore.
"The demand is out there and it's all around quality. In manganese and iron-ore, it's a quality game, and we're well positioned going forward," Schmidt said.
Additional logistics capacity has been secured for manganese ore, which was produced in greater volumes and sold at higher prices, with the benefits of upgrades, modernisation and expansion flexibility boding well for the future.