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oftening copper and magnetite prices in 2012 pushed Palabora Mining into a loss-making position of R97-million.

This compared with a profit of R1.46-billion in the 2011 financial year.

The company, which is a subsidiary of Rio Tinto, reported last week that the loss was further exacerbated by a guide rope failure in July, a weaker rand, foreign currency denominated costs and an increase in cash production costs owing to inflationary pressures, which grew 3% to R2.5-billion in 2012, compared with R2.4-billion the year before.

Cash generated from operating activ-ities decreased by 78% to R514-million from R2.3-billion in 2011, chiefly as a result of increased spend on exploration and early development works and lower realised prices.

Selling and distribution costs increased by 61% to R3-billion from R1.9-billion in the previous year on the back of increased magnetite sales and above-inflation increases in freight and port charges.

“Port charges doubled to R441-million for the year owing to increased use of the more expensive terminal in Maputo to accommodate road trucking,” the company noted.

Notwithstanding the challenges, the JSE-listed miner managed to maintain a cash position of R1.98-billion, compared with R2.2-billion in 2011. It paid out dividends of R100-million.

The company said it planned further expansions in 2013.

“There are good growth opportunities in iron-ore and we continue to expand magnetite production. “Other projects lined up for 2013 include increasing the magnetite booster and separation plants to reduce bottlenecks in the production stream,” the company said in a preliminary results statement.

Further, refined copper production decreased by 31% to 40 900 t compared with 59 000 t in 2011 as a result of the guide rope failure, declining ore grades and reduced concentrator recoveries during the first quarter.

Total magnetite production increased to 5.3-million tons from 3.4-million tons in 2011, in line with increased logistical capacity from the road trucking of iron-oxide to the Maputo port.

As a result of the improved logistics, magnetite exports increased by 58% to 4.6-million tons compared with 2.9-million tons in 2011.

The production of iron-oxide increased by 50% to 2.6-million tons to take advan-tage of improved logistical options.

Meanwhile, the company said efforts to transform the vermiculite business to increase its contribution to the bottom line were hampered by increased competition in the American market and reduced demand in Europe.

Consequently, production decreased by 19% to 133 000 t compared with the 164 000 t produced the year before, in line with reduced demand.