Africa’s first Black billionaire Patrice Motsepe’s mining empire battles falling earnings

Key Points

• African Rainbow Minerals forecasts a 55% drop in H1 2025 headline earnings, citing weaker iron ore prices, lower sales, and rising costs.
• ARM’s iron ore revenue fell due to a 22% decline in realized prices, weaker sales, and higher costs, partially offset by increased PGM production.
• Despite lower headline earnings, ARM expects an 8-18% rise in basic earnings due to reduced impairments, with results set for release on March 7.

African Rainbow Minerals (ARM), the diversified South African mining company led by Patrice Motsepe, Africa’s first Black billionaire, is bracing for another tough financial stretch. The company expects its headline earnings for the first half of its 2025 fiscal year to drop by as much as 55 percent, blaming weaker iron ore prices, lower sales volumes, and rising costs.

ARM’s profit drops on weak metal prices

This outlook follows a rough 2024 fiscal year, when ARM posted its lowest profit in seven years. In a trading statement, the company projected headline earnings for the first half of 2025 to be between R1.33 billion ($72 million) and R1.625 billion ($88 million), down from R2.955 billion ($160 million) a year earlier. That translates to headline earnings per share (HEPS) of R6.78 ($0.366) to R8.29 ($0.448), a steep decline from R15.07 ($0.815) in the same period of 2024.

ARM pointed to a 22 percent drop in average realized U.S. dollar iron ore prices, weaker iron ore and manganese ore sales, higher cash costs, and a stronger rand-dollar exchange rate as key factors behind the decline. The impact was only partially softened by an uptick in platinum group metals (PGM) production.

ARM expects higher basic earnings growth

Despite the decline in headline earnings, ARM expects basic earnings to rise between 8 and 18 percent, reaching between R1.313 billion ($71 million) and R1.435 billion ($77.63 million), compared to R1.216 billion ($65.8 million) in the first half of 2024. Basic earnings per share (EPS) are projected at R6.7 ($0.362) to R7.32 ($0.396), up from R6.2 ($0.335) a year ago.

The increase in EPS is largely due to lower impairments compared to the previous period when the company recorded R1.739 billion ($94.1 million) in impairments. This time, impairments include R96 million ($5.2 million) on Beeshoek’s property, plant, and equipment (after tax), R36 million ($1.95 million) on Assmang’s investment in Sakura Ferroalloys (no tax effect), and R4 million ($217,000) on Cato Ridge Works’ property, plant, and equipment (after tax).

Motsepe’s ARM battles falling mining profits

ARM, is a diversified mining company with operations in iron ore, manganese, platinum group metals, coal, and base metals. Motsepe, Africa’s first Black billionaire, owns 45.9 percent of the company, making it a key part of his wealth portfolio. The mining group is set to release its first-half financial results on March 7, 2025.

ARM’s earnings have been under pressure due to volatility in commodity prices and currency fluctuations. At the end of its 2024 fiscal year, the company reported a profit of R2.29 billion ($128.5 million), a steep decline from R9.32 billion ($521.5 million) in 2023. This marked the lowest profit since 2017 when it posted R1.43 billion ($80 million). The sharp drop was driven by lower revenue and rising operational costs, reflecting the challenges facing the mining industry.

Revenue fell to R12.92 billion ($722.9 million) from R16.1 billion ($900.8 million) the previous year, largely due to lower prices for 6E platinum group metals (PGMs) and thermal coal. Additionally, higher unit costs from reduced production volumes, rising electricity expenses, and increased waste-stripping costs at ARM’s iron ore operations further squeezed earnings.