African Rainbow profit slumps 90% after platinum losses deepen

South African miner African Rainbow Minerals, backed by billionaire Patrice Motsepe, said profit in the last fiscal year fell 90% due to weaker iron ore prices and a writedown on its Bokoni platinum mine.

Profit dropped to R330 million ($19 million) in the 12 months through June, from R3.15 billion the previous year, the company known as ARM said Friday in a statement. The firm took an impairment of R2.2 billion at its Bokoni mine, which lost about R1.4 billion over the period.

The Johannesburg-listed company – with a portfolio that also spans coal, gold and manganese – said operations at Bokoni were suspended at the end of the fiscal year as it considers a less ambitious development plan. South African platinum miners have been hit by a prolonged market slump, although there have been recent signs of improvement with steep gains in platinum and palladium since the beginning of May.

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Weaker iron ore prices have also impacted the mining industry, including ARM, as demand for the steelmaking ingredient softened in China. ARM’s iron ore division, which accounts for most of its profit, posted a 36% decline in full-year earnings to R3.16 billion.

“Despite the ongoing commodity market volatility, ARM remains optimistic about the medium to long-term outlook for the mining sector,” the company said.

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ARM is also the second-biggest shareholder of Harmony Gold Mining Co, the largest producer of South African gold.

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