Oversupply, low prices dent Assore’s H1 earnings
JOHANNESBURG (miningweekly.com) – Oversupply and low prices in the commodities in which it trades have contributed to a 25.4% decline in JSE-listed Assore’s headline earnings a share to 715c for the six months ended December 31, compared with 959c in the six months to December 2014.
This translated into a decrease in headline earnings to R738-million, mainly as a result of the 28.2% year-on-year decrease in its Assmang’s subsidiary’s headline earnings to R1.2-billion.
Chairperson Des Sacco said that, while the market weakness was expected to continue in the immediate future, prevailing conditions had driven some higher-cost capacity to exit the market, while exchange rates and freight rates were at all-time lows, which provided some relief.
Meanwhile, Assmang’s manganese ore sales had increased 3% to 1.4-billion tons in the period under review, as a result of the group’s efforts to secure sales in new markets and increase production at Dwarsrivier, which had resulted in a 14% year-on-year rise in chrome ore sales to 545-million tons.
Manganese alloy volumes fell 29%, from 112-million tons to 80-million tons, following the closure of a furnace at Assmang’s Cato Ridge Works.
Cost reduction initiatives were being undertaken at all operations, with significant savings having already been achieved.
Further, iron-ore prices had stabilised at about $40/t, marginally above the lowest prices at which it traded in December 2015, while the premium for lumpy grade material had also improved slightly.
The manganese ore market also appeared to have stabilised, owing to a reduction in production by other South African producers. However, prices for this commodity were expected to remain under pressure in the short to medium term.
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