Patrice Motsepe’s African Rainbow Minerals reports lowest profit in seven years

ARM, led by Africa’s first Black billionaire Patrice Motsepe, reports its lowest profit in seven years due to rising costs and a tough operating environment.

, and Omokolade Ajayi

September 6, 2024 . 7:30 PM

2 min read

Patrice Motsepe, founder and chairman of African Rainbow Minerals.

Key Points

ARM’s 2024 profit plunged 75% to R2.29 billion ($128.5 million), its lowest in seven years, due to higher costs and lower revenue.
Revenue fell to R12.92 billion ($722.9 million) from R16.1 billion ($900.8 million) as commodity prices dropped and operational costs increased.
Despite profit decline, ARM raised total assets to R70.7 billion ($3.95 billion) and equity to R58.1 billion ($3.24 billion), reflecting financial resilience.

African Rainbow Minerals (ARM), the diversified South African mining group led by Patrice Motsepe, Africa’s first Black billionaire, reported its lowest profit in seven years. The company’s 2024 fiscal year results showed a 75-percent drop in profit, driven by higher costs and a tough operating environment.

ARM reported a profit of R2.29 billion ($128.5 million) for the year ended June 30, 2024, a stark contrast to the R9.32 billion ($521.5 million) achieved in 2023. This decline represents the lowest profit since 2017 when the group posted earnings of R1.43 billion ($80 million). The drop in profits was attributed to several factors, including lower revenue and rising operational costs.

ARM cuts dividend amid earnings dip

Revenue fell to R12.92 billion ($722.9 million) from R16.1 billion ($900.8 million) in the prior year. This decline was largely driven by a drop in the average US dollar price for 6E platinum group metals (PGMs) and a decrease in thermal coal prices. Additionally, higher unit costs due to reduced production volumes, above-inflation increases in electricity expenses, and higher waste-stripping costs at ARM’s iron ore operations further squeezed earnings.

Despite these headwinds, ARM continued its tradition of rewarding shareholders. The board approved a final dividend of R9 ($0.50) per share, down from the R12 ($0.67) per share paid in the prior year. Including an interim dividend of R6 ($0.34) per share, the total dividend for the 2024 fiscal year stands at R15 ($0.84) per share, compared to R26 ($1.45) per share in 2023.

Patrice Motsepe’s wealth grows with ARM

ARM, a significant player in South Africa’s mining industry, has interests across a broad spectrum of commodities, including iron ore, coal, copper, gold, platinum, and other precious metals. Motsepe, who owns 45.9 percent of ARM, remains one of Africa’s richest individuals, with a significant portion of his wealth tied to the company.

While the profit decline marks a challenging period for ARM, the company saw an increase in its total assets, which rose to R70.7 billion ($3.95 billion) from R64.02 billion ($3.6 billion) in 2023. The group’s equity also grew, reaching R58.1 billion ($3.24 billion), up from R54.15 billion ($3.03 billion) a year earlier. This asset growth underscores the resilience of ARM’s financial position despite the tough market conditions.

ARM’s latest results highlight the pressures faced by the mining sector amid fluctuating commodity prices and rising costs. However, with its diversified portfolio and strong asset base, the group remains well-positioned to navigate future challenges.