Billionaire Patrice Motsepe’s mining giant in trouble

African Rainbow Minerals (ARM) is expecting a significant drop in headline earnings for the first half of its 2025 financial year, as commodity prices did not favour the mining giant over the past year.

ARM – which was founded by billionaire businessman Patrice Motsepe – released a trading update on Tuesday, 26 February 2025, to inform shareholders that it expects a significant decrease in its earnings for the six months through December 2024.

The miner’s headline earnings for the first half of its 2025 financial year are expected to decrease by between 45% and 55% to between R1.33 billion and R1.63 billion.

Its headline earnings per share are, therefore, expected to be between 678 cents and 829 cents.

ARM explained that this decrease was primarily due to a 22% reduction in average realised US dollar iron ore prices, lower iron ore and manganese ore sales volumes, higher cash costs and a stronger rand/US dollar exchange rate. 

However, it said the impact of these factors was partially offset by higher platinum group metals ounce production.

Notably, unlike headline earnings, the company’s basic earnings for the half-year are expected to increase by between 8% and 18% to between R1.31 billion and R1.44 billion.

Basic earnings per share are expected to be between 670 cents and 732 cents, up significantly from 620 cents per share the prior year.

The company explained that the stark difference between its basic and headline earnings comes down to impairment charges.

In the first half of its 2024 financial year, ARM reported impairments totalling R1.74 billion. In the first half of 2025, the company expects to report impairment charges of around R136 million.

ARM’s basic earnings for H1 2025 include the following impairments –

• An impairment of property, plant and equipment at Beeshoek of R96 million after tax
• An impairment of Assmang’s investment in Sakura Ferroalloys of R36 million with no tax effect
• An impairment of property, plant and equipment at Cato Ridge Works of R4 million after tax

These poor half-year outcomes are a continuation of ARM’s financial decline over the past year.

The miner reported weak results for its 2024 financial year as lower platinum prices and declining coal earnings significantly impacted its performance.

The company saw revenue drop nearly 20%, with sales down 22% and costs rising 19.3%. 

As a result, its annual profit plunged 75% to R2.30 billion from R9.32 billion in 2023. 

ARM’s earnings per share fell 61% to 1,604 cents, while headline earnings per share dropped 43% to 2,591 cents.

The company attributed the decline to lower platinum group metals (PGM) and coal prices, partially offset by a weaker rand and stronger iron ore prices.

ARM is set to release its full 2025 half-year results on Friday, 7 March 2025.