JOHANNESBURG (miningweekly.com) – Diversified mining company African Rainbow Minerals (ARM) has reiterated its commitment to transitioning from coal to renewable energy, with its executive chairperson Patrice Motsepe describing the global commitment to the green economy as being not only important but crucial.

Motsepe was speaking against the background of coal contributing an increased R351-million to ARM headline earnings of R3.7-billion in the six months ended December 31, well up on the R222-million headline loss in the corresponding period of 2021 and representing 8% of earnings before interest, taxation, depreciation and amortisation (Ebitda). Significant combined contributions from platinum-group metals (PGMs) and iron-ore made up 88% of ARM’s Ebitda in the half-year.

“Coal has done reasonably well, but we are also committed to the transition from coal to renewables,” Motsepe said during ARM's presentation of half-year financial results covered by Mining Weekly.

“What we’ve said globally, and I have been part of discussions at the highest levels in the world, is that the commitment to the green economy is not only important, it’s crucial.

“What is indeed important is that the transition must be a responsible and carefully planned transition that creates new jobs in the new economy, the economies of the countries and in the companies that are part of the minerals that are under purview in relation to their negative impact on global warming and climate change.

“Coal will continue to be an important part of the South African economy as part of the transition. There are no easy discussions as to how long the transition will take, and we will play our role in terms of making sure that African Rainbow Minerals is in line with the commitments of all of us globally, to climate change and to protection of the environment, society, and the globe overall,” said Motsepe, who expressed pleasure at signing the agreement to acquire Bokoni Platinum Mine for R3.5-billion in cash. ARM’s group net cash rose 35% to R11-1-billion in the period.

ARM has invested a lot in manganese and expressed confidence that in the medium term, manganese would continue to be a significant contributor to Ebitda, headline earnings and profitability.

ARM displayed a slide to emphasise the importance of the Bokoni PGMs transaction, and described it as being part of his JSE-listed company's growth in the short-, medium- and long term.

“The developing of the mine will allow us to scale our PGMs portfolio and create value for shareholders and other stakeholders,” Motsepe said in declaring a 20%-higher interim dividend of 12c a share.

The mine, which has not been operational, is viewed as an exciting opportunity for ARM.

“We’re excited and committed to growing Bokoni in the medium term,” said Motsepe, with ARM ultimately poised to own 85% of Bokoni mine, with communities, employees, and industrialists each owning 5% acquired at a nominal price.

“You cannot be a globally competitive company unless you pay consistent, competitive dividends, as well as indicate a track record of growth.

“We remain committed to paying competitive dividends while pursuing value-creating growth,” he added. ARM’s PGM assets contributed R1.2-billion to overall headline earnings in the period.

ARM’s PGM assets continue to display growth, and iron-ore and manganese continue to play a strategic role. PGMs contributed 46% to Ebitda in the period, iron-ore 42%, and manganese 10%.

“What we’ve said over the last 20 years is that we will grow the PGMs, but side-by-side with that, we will also grow the iron-ore and manganese. Over time, the plan is that the iron-ore and manganese should continue to be a strategic part of our long-term future, but the PGMs will grow significantly in terms of our plans and specifically the Bokoni transaction, and other opportunities that we’re looking at, so that we can get the full benefits of being a diversified mining company,” Motsepe said.

In addition to the acquisitive Bokoni growth project, organic growth projects include the ramp-up of Black Rock and Gloria manganese projects to 4.4-million tonnes a year, Two Rivers Plant Expansion for an additional 182 000 six element (6E) PGM ounces, Two Rivers Merensky Project for an additional 182 000 6E PGM ounces, 1 600 t of nickel and 1 300 t of copper a year, with Bokoni targeted to provide steady-state production of 300 000 6E PGMs ounces a year in 2028.

Plans are in place to derive income from Bokoni in the short- to medium-term, with ARM continuing to pursue value-enhancing internal and acquisitive growth opportunities.

A 23-year sale of concentrate agreement between Bokoni mine and Rustenburg Platinum Mines on commercially agreed terms has been finalised.

Located on the eastern limb of the Bushveld Complex, Bokoni is close to existing ARM operations at Modikwa and Two Rivers.

Bokoni has measured, indicated and inferred mineral resources of 153-million ounces of 4E PGMs at a grade of 5.87 g/t. Its mineral resource is made up of 65% upper group two (G2) reef and 36% Merensky reef. The 6.56 g/t 4E ounce UG2 reef is of considerably higher grade than the 4.94 g/t 6E Merensky reef and has a favourable 49% prill split for palladium and an 8% rhodium prill split.

ARM CEO Mike Schmidt said key focus areas from the operations remain safe, responsible mining, an absolute drive on cost focus, a drive on productivity and efficiencies, appropriate use of technology and pursuit of value accretive growth.

Schmidt referred to the recent increases in PGMs and iron-ore boding well going forward, outlined the robust and healthy margins in all the commodities that ARM mines and produces, and welcomed the commitment of government to address infrastructure, logistics and water challenges.

Regarding Bokoni, he said ARM would initially focus exclusively on the high-grade UG2, with the combined 57% palladium and rhodium prill split providing for a favourable basket price.