African Rainbow Minerals (ARM), a South African diversified mining corporation run by billionaire businessman Patrice Motsepe, has announced that it anticipates headline earnings to fall short of its projections for the first six months of its 2022 fiscal year, which ends on Dec. 31, 2021.
The South Africa-based miner’s profits projection can be attributed to a recent fall in precious metals and iron prices on the global commodities market, compared to last year when it reported a 136-percent increase in headline earnings to a record R13 billion ($913.7 million).
According to the trading update, headline earnings, South Africa’s primary profit measure, are expected to fall by between 24 and 33 percent in the half-year period, to between R3.38 billion ($223.2 million) and R3.83 billion ($252.9 million), compared to the corresponding six-month period that ended Dec. 31 2020.
Meanwhile, its basic earnings for the period are predicted to fall by between 17 and 26 percent to R3.6 billion ($237.7 million) and R4.04 billion ($266.7 million), compared to R4.87 billion ($321.5 million) in the same period in 2021.
The management indicated that the drop in headline earnings may be attributed to lower average iron ore and palladium prices, as well as the rand’s strengthening versus the U.S. dollar.
ARM stated that a portion of its subsidiary ARM Platinum’s receivables as of June 30 were realized at lower prices due to a decline in rhodium and palladium prices in the first three months of the period under review, resulting in negative mark-to-market adjustments and a decline in earnings.
ARM is a significant South African mining and minerals firm with holdings in a variety of mines, including iron, coal, copper, gold, platinum, and other precious metals.
Motsepe established the mining firm as South Africa’s first Black-owned mining corporation in 1997. Since then, ARM has evolved to become a major participant in the worldwide mining sector.
Figures in the trading update are anticipated to have an impact on investors’ confidence, as market participants are expected to reduce their stakes in expectation of a drop in the group’s earnings at the conclusion of its fiscal year in 2021.
As of press time on Feb. 21, shares in the world’s largest mining company were trading at R248.4 ($18.8), 14 basis points lower than their opening price on the Johannesburg Stock Exchange.
ARM shares are up 8.94-percent year to date. Its market capitalization is presently R55.7 billion ($3.68 billion), with Motsepe owning 40 percent of the company for R22.13 billion ($1.46 billion).
Nearly three weeks ago, the South Africa-based miner completed the acquisition of Bokoni Platinum Mine, a joint venture held by Johannesburg-based Anglo-American Platinum (Amplats) and Toronto-based Atlatsa Resources Corporation.
The acquisition was completed at a cost of R3.5 billion ($334 million), as the Motsepe-led mining group seeks to expand its mining operations by acquiring mines with low operating costs.
