ARM, Vale in copper venture

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 Aug 2010

Diversified mining group African Rainbow Minerals (ARM) had teamed up with Brazil's Vale to form a joint venture in a copper mine in Zambia, the company said yesterday as it released its year-end results The executive chairman of ARM, Patrice Motsepe, said the project capital expenditure was $380 million (R2.7 billion) and another $500m would be added in the long term.
ARM said the newly developed mine would be housed in a new division, ARM Copper.
This adds a new commodity to ARM's portfolio.
ARM said that it and Vale had approved the release on the Konkola North copper project in Zambia's wealthy copper belt.
Motsepe said ARM was also eyeing Zimbabwe for opportunities. "Zimbabwe continues to have the best ore bodies in the world," he said.
"Things in Zimbabwe will continue to improve significantly. We have to keep on talking to them because we need Zimbabwe to do well."
ARM said the Kalumines exploration project, a joint venture with the government of the Democratic Republic of Congo, had defined copper and cobalt resources through an extensive drilling campaign.
Motsepe said ARM wanted to be a low-cost producer and was looking at Africa seriously.
"Africa is a mixed bag, although some countries stand out," Motsepe said.
The company's full-year headline earnings declined 26 percent to R1.7bn mainly due to a 16 percent stronger rand and lower commodity prices. This equated to headline earnings a share of R8.07 compared with R10.94 in the previous year.
Second-half headline earnings were up by a substantial 178 percent to R1.26bn from the first-half figure of R454m.
ARM declared a dividend of R2 a share compared with R1.75 the previous year.
The company said the past financial year and especially the second half had seen a remarkable recovery in commodity prices, tempered to some extent by sovereign debt issues in Europe and elsewhere.
ARM said it believed that demand for ferrous metals would be driven by the development of steel manufacturing capacity in China, India and Brazil.
Abdul Davids, the head of research at Kagiso Asset Management, said the results were a mixed bag. The second half was phenomenally better due to increases in iron ore and manganese volumes.
"Iron ore increased from 4.4 million tons in the first half to 5.3 million tons in the second half. Manganese increased from 2.2 million tons to 2.4 million tons," Davids said.
He said ARM had been active in Zambia for a while.
Davids added that ARM's partner in the Zambian mine, Vale, was highly respected and ARM would benefit from the joint venture substantially.
Shoaib Vayej, the head of resources at Sanlam Investment Managers, said: "I think the initial trading statement issued by ARM was a bit disappointing. Its coal division did not do very well and this is also disappointing. The profits were driven by volumes."
ARM's share price rose 2.2 percent to close at R151.14 on the JSE yesterday.

Source: Business Report