https://www.miningweekly.com

Assore earnings nose-dive amid weak iron, steel environment

26th August 2015

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

  

Font size: - +

JOHANNESBURG (miningweekly.com) – “Substantially” lower iron-ore and manganese prices and challenging operating conditions have contributed to JSE-listed Assore posting lower headline earnings and profit for the 2015 financial year.

Headline earnings were down 53.3% to R2-billion, compared with R4.2-billion in the 2014 financial year, while profit fell 68% to R1.3-billion, compared with R4-billion in the prior comparative period.

Assore chairperson Desmond Sacco pointed out that the iron-ore price had decreased by 41.6% year-on-year to $72/t in the year under review, while the manganese ore price was 21.6% lower year-on-year at $3.88 per manganese unit.

The lower prices were the result of lower-than-expected demand from China and increased global supply. Manganese alloy prices also reduced during the year, although the decline for refined alloys was less than for high-carbon ferromanganese.

However, Assore achieved record iron-ore and chrome ore sales volumes in the year under review, while maintaining a strong cash position.

Meanwhile, the group had taken the decision to suspend indefinitely further underground development at its Rustenburg Minerals chrome mines, resulting in an impairment charge of R365-million.

Further, its Assmang subsidiary – a joint venture with African Rainbow Minerals – recorded a 56.8% year-on-year drop in headline earnings to R3.3-billion for the year ended June 30, as well as incurring an impairment charge of R812-million.

Assmang had closed its last operational furnace at Machadodorp Works, as well as a further ferromanganese furnace at Cato Ridge Works, owing to the weak alloy market and increased electricity and labour costs, necessitating impairment charges of R812-million, of which 50% was included in Assore’s results.

An additional impairment charge of R114-million was recorded against Assore’s share portfolio, owing to declines in the share prices of the shares in which the group is invested.

The group exected growth in crude steel production to remain subdued in the short-to-medium term with the Chinese economy, in particular, showing continued signs of weakness and reduced demand.

Economic growth in the rest of the world was also expected to remain muted and, combined with the increased supply of low cost iron-ore and central and local government support for Chinese iron-ore mines, prices were not anticipated to recover over this period and could deteriorate further from current levels.

“The cost of mining and production in South Africa is becoming increasingly expensive, due largely to price increases in electricity and labour, which far exceed inflation, resulting in the group embarking on various right-sizing and restructuring projects in an attempt to improve and maintain the competitiveness of its operations. 

“In addition to the impacts of the above market dynamics, the results of the group remain significantly exposed to fluctuations in exchange rates,” the group noted.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

Magni SA
Magni SA

Magni SA is committed to developing the safest Telehandlers available to our customers for underground and surface mining, construction, forestry,...

VISIT SHOWROOM 
Werner South Africa Pumps & Equipment (PTY) LTD
Werner South Africa Pumps & Equipment (PTY) LTD

For over 30 years, Werner South Africa Pumps & Equipment (PTY) LTD has been designing, manufacturing, supplying and maintaining specialist...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.134 0.166s - 88pq - 2rq
Subscribe Now