Billionaire Patrice Motsepe’s mining empire under pressure

African Rainbow Minerals (ARM) is under significant pressure as commodity prices weighed on the mining giant’s operations in the first half of its 2025 financial year.

ARM was founded by billionaire businessman Patrice Motsepe and is a leading diversified mining and minerals company with operations in South Africa and Malaysia.

The company mines and beneficiates iron ore, manganese ore, chrome ore, platinum group metals (PGMs), nickel and coal and also has a strategic investment in gold through Harmony Gold.

ARM released its interim results for the six months through December 2024 on Friday, 7 March 2025, which revealed a weak performance for the mining giant.

Its revenue dropped by 3.38% to R6.38 billion, while sales declined by 1.87% to R5.71 billion.

Concerningly, the company’s cost of sales rose by 11.87% to R5.82 billion.

This saw the company swing from a gross profit to a loss of R118 million for the six-month period.

However, the miner’s net profit and basic earnings per share rose by 299.72% and 14.68%, respectively.

This is largely due to the significantly lower impairments ARM recorded in this six-month period (R136 million) compared to the previous corresponding period (R1.74 billion).

Some of these impairments include –

• 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

One of ARM’s biggest challenges in this period was commodity prices, which were compounded by lower production and higher costs.

ARM’s iron ore production volumes were lower in this six-month period compared to the previous year, mainly due to reduced offtake from ArcelorMittal South Africa, which is set to wind down its long steel business in the country sometime this year.

Positively, the miner said the lower average realised export iron ore prices and stronger rand/US dollar exchange rate were partially offset by higher manganese ore and alloy prices. 

In addition, the miner’s PGM production volumes rose marginally due to an increase in ounces at its Bokoni Platinum Mine.

However, ARM said mining development costs were higher because the mine was in the ramp-up phase, leading to higher operational losses. The platinum segment reported a headline loss of R689 million.

The miner added that its unit costs remained under pressure due to lower production volumes and above-inflation increases in costs at the iron ore and coal operations.

Looking forward, ARM said does not expect commodity prices to improve.

With iron ore, prices are expected to decline due to increased supply and slower demand from China.

For PGMs, prices are expected to remain weak due to higher-than-expected South African exports and low Chinese demand.

However, the miner said long-term demand should rise from hybrid vehicles and hydrogen technology.

Global coal demand is also expected to fall in 2025/26, especially in Europe, due to renewable energy growth. ARM said is not investing in new coal projects.

For manganese, AMR explained that prices spiked due to supply disruptions at GEMCO, but a rebound is expected as operations normalise in 2025.

Therefore, ARM said it is prioritising productivity, cost savings, and capital allocation due to the expected weak PGM and iron ore prices in its 2025 financial year.

The miner said it may defer non-essential projects while ensuring key initiatives are completed responsibly.

Overall, the company said it remains confident that its high-quality, long-life assets will create sustainable value, despite short-term challenges.

ARM declared an interim dividend of R4.50 per share, far lower than the R6 it declared the previous year.