Multidisciplinary openpit mining company Afrimat intends to further develop its strategy of growth through diversification by exploiting new opportunities in Africa by remaining “agile and entrepreneurial”.
“Afrimat has always been strategically focused to expand its offering to not be subject to only the construction cycles in South Africa, which saw us diversify into industrial minerals, contracting services, new or unexplored areas and packaged deals,” Afrimat MD Gerhard Odendaal tells Mining Weekly.
He further notes that the South African company is “constantly scanning” for more opportunities that are suited to its core competencies of industrial minerals and construction materials.
In line with its strategy, the South African company, which also owns operations in Mozambique, has started producing direct shipping ore at its Diro iron-ore operation, in the Northern Cape, and commissioning of the project’s dense-media separation plant. Afrimat aims to reach a production rate of one-million tons a year of saleable product at the mine by financial year-end.
“The long-term strategy is to grow this production rate to north of two-million tons a year, but we are not yet ready to commit to a schedule for this ramp-up,” notes Odendaal.
He explains that Afrimat embarked on its growth through diversification strategy in 2010, evidenced by its previous acquisitions of the Glen Douglas dolomite mine and resources group Infrasors, as well as versatile chemicals company Cape Lime and, most recently, the Diro iron-ore mine last year.
Subsequently, the company developed from solely operating within the aggregates and industrial minerals sectors to being a future player within the iron-ore industry.
The iron-ore business plan entails gathering detailed geological and exploration information, mine planning, refurbishment of available plant and equipment, as well as upgrading process equipment to ensure reliable and economical production capacity at the company’s existing operations, Odendaal elaborates.
“We are slightly ahead of schedule with this strategy,” he adds, noting that the refurbishment of the Diro operation mostly forms part of the initial project cost estimate of R276-million.
Further, Odendaal points out that, during the 2017 financial year, with Afrimat’s traditional aggregates and concrete products business contributing 44% of the company’s revenue, and its industrial minerals and clinker businesses 56%, aggregates had been replaced as the company’s main source of income, even before the Diro mine acquisition in 2016.
Meanwhile, he notes that Afrimat does not have to export its entire production and it is evaluating the merits of selling a portion of its output domestically.
“Iron-ore, in the quantities that we intend to produce, can easily be sold, either in the export market or domestically, depending on the best value at the time. Iron-ore also adds a totally new product line, with massive expansion potential in addition to earning revenue in hard currency and hedging a purely rand income,” Odendaal enthuses.
However, he concludes that trading conditions are difficult for steel manufacturers in South Africa.
“We foresee the market remaining tough for steel manufacturers in the near future. They continue to use large amounts of raw materials; [however], we foresee that this demand will diminish.”