JOHANNESBURG (miningweekly.com) – South Africa would benefit greatly if it succeeded in instilling new confidence in the global investment community, African Rainbow Minerals (ARM) executive chairperson Patrice Motsepe said on Tuesday.
Answering questions after the JSE-listed ARM presented a 30% fall in headline earnings to R1.41-billion in the six months to December 31, Motsepe said the countries that had created the most jobs, lifted living standards highest, improved literacy most and provided the best health facilities were those that offered global investors the highest degree of confidence.
Elucidating in reply to Mining Weekly Online, Motsepe emphasised – also see accompanying video – the importance of corporates like ARM engaging in ongoing communication with the government.
In such discussions it was important for CEOs to be forthright in also raising the negative aspects of doing business in South Africa.
Government, he said, had no choice but to partner with the private sector in order to benefit the people of South Africa.
Governments of developing countries needed jobs for their people and could only provide employment in partnership with the private sector.
He said the attention that other developing countries were affording potential investors was impressive.
He had recently gained first-hand experience of the the impressive attention that the governments of Papua New Guinea (PNG) and Chile gave to investors.
As a potential investor in PNG, he was impressed with the interface that had been laid on at top level and believed that the South African government would do well to give similar encouragement to prospective investors in this country.
He had also been impressed in an interface with the Finance Minister of Chile.
He said it would give great insight to top-level South African politicians to accompany ARM on its international road shows.
By doing so, they would see the exciting opportunity for South Africa and South African business to be able to fare well in an economic environment that instilled confidence.
Simultaneously, they would also see how investors turned off their support in the face of economic uncertainty and a fall off in confidence.
He related how an extremely supportive American investor had confided in him about the losses he had suffered and the negative message such losses send out about South Africa as an investment destination.
Motsepe expressed absolute confidence, however, that South Africa would do better in the medium-to-long term.
ARM’s latest 30% earnings fall was partially offset by improved performances at Nkomati Nickel and ARM Coal.
Headline earnings a share were down at 654 c a share, compared with 937 c a share in 2012’s first half.
Sales revenue remained virtually flat at R8.8-billion compared with R8.7-billion, despite increased sales volumes for iron-ore, platinum group metals, nickel, Dwarsrivier chrome and thermal coal.
Cash generated from operations decreased by 38% to R1.67-billion (R2.67-billion), with net cash excluding partner loans of R630-million remaining positive after capital expenditure of R2.02-billion and an increase in working capital of R1.5 billion.
Nkomati Nickel improved its mining and metallurgical recoveries, which 87%-increased production and 50%-reduced unit costs to $5.13/lb.
The nickel operation contributed R147-million to headline earnings, turning around the R75-million first-half loss.
ARM’s concentrator plant at the Lubambe copper project at Konkola North in Zambia was commissioned in October 2012, two months ahead of schedule, and Assore’s Khumani iron-ore mine is also ramping up ahead of schedule.
ARM said that reconfirmation of the government's commitment to investment in infrastructure boded “very well” for the development of its South African projects.
ARM partners Assore in iron-ore and manganese, Anglo American Platinum and Impala Platinum in platinum, Russia’s Norilsk in nickel, Xstrata in coal and the Brazilian Vale and Zambian Consolidated in copper.
ARM’s growth will be through the ramping up of production in iron-ore, nickel, coal and copper, with the Lubambe project producing 3 214 t of copper concentrate in the period.
Lubambe is on schedule to produce 45 000 t of copper a year from 2015.
Lubambe’s second phase is also progressing with six exploration drill rigs deployed and a total of 10 535 m drilled.
Khumani iron-ore production is up 14% to 7.7-million tons and the plant has reached steady state.
Tons milled at Nkomati improved 19% to 3.74-million tons and the Goedgevonden coal mine produced 4.41-million tons saleable product in the second half of 2012, which is 58% up on the first half and higher than the average steady-state capacity of 6.7-million tons a year.
The board has given the go-ahead for the start of early works in the R5.8-billion expansion of the Black Rock mine from 3-million tons of manganese a year to 4-million tons a year over the next four years.
Feasibility studies are well advanced for the expansion of the Modikwa platinum mine, the iron-ore operations and for an increase in the production of manganese ore.
ARM is confident that the additional rail, port, water and electricity capacity required for its expansions will be forthcoming from South Africa’s parastatals.