Diversified mining and construction materials group Afrimat says its performance for the six months to June 30 will reflect the pressure it has been under as a combination of weaker commodity prices, a stronger rand, higher shipping and fuel costs and subdued domestic demand weighed heavily on the business.

Afrimat describes the period as among the hardest in its 20-year history, although it expects conditions to improve during the second half of the year.

“Despite these headwinds, Afrimat’s diversified portfolio and resources delivered gains across the business. These are some of the hardest times Afrimat has faced, yet its people and culture continue to show resilience, positivity, operational discipline and leadership in adversity,” the company says.

The company notes that domestic iron-ore sales weakened in the first quarter of the year, although volumes normalised in the second quarter.

Afrimat adds that an improvement in rail performance has supported its international iron-ore business, although a ten-day maintenance shutdown reduced volumes. Another shutdown is planned for October, with the company expecting yearly volumes to remain about 10% below its 870 000 t allocation.

The imminent end of life of the Demaneng iron-ore operation, in the Northern Cape, is being addressed through the recently acquired Doornfontein deposit, located close to Demaneng, which is expected to provide a lower-cost replacement and extend the group’s operational life.

Meanwhile, the company’s anthracite business is also showing signs of recovery; however, domestic demand was hit after ferrochrome smelters remained shut during the first quarter of the year, with several operations now reopening following the approval of a reduced electricity tariff for smelters by the National Energy Regulator of South Africa. Consequently, Afrimat also notes that the Nkomati anthracite mine is ramping up to supply the local market.

Internationally, the group expects to export about 240 000 t of anthracite during the financial year, with three vessels already executed and another four confirmed.

Afrimat has also secured a 240 000 t/y manganese export allocation through Saldanha Bay, in the Western Cape, under the Transnet Manganese Export Capacity Allocation, or MECA III, for seven years. The first vessel departed on August 4, with the company targeting one vessel a quarter for the remainder of the financial year.

Notably, the group’s Construction Materials business is expected to be the largest contributor to revenue and profitability in the first half.

Afrimat also notes that aggregates, in particular, continues to demonstrate the strategic rationale behind the acquisition of cement and building material company Lafarge South Africa, with operating profits having achieved a compound yearly growth rate of 36.29% between the 2022 and 2026 financial years.

Demand is being supported by infrastructure and construction activity, including rail maintenance, provincial roads, water infrastructure, residential and private-sector projects and renewable-energy developments.

Cash preservation and balance-sheet strengthening remain key priorities for Afrimat. Proceeds from the disposal of noncore marginal businesses and Competition Commission-mandated divestitures have been used to strengthen the company’s balance sheet.

Afrimat will update the market in September once management has greater certainty about the company’s financial position.