Recasts with company's diversification strategy
Sept 6 (Reuters) - African Rainbow Minerals (ARM) ARIJ.J is pursuing chrome and copper opportunities after weaker platinum group metal (PGM) and coal prices drove its annual profit 43% lower, the diversified miner said on Friday.
ARM's headline earnings slumped to 5.08 billion rand ($286.89 million) in the year ended June 30, from a restated 8.98 billion the previous year, mainly due to lower PGM and coal prices.
The company's board has approved the construction of a chrome recovery plant at its Bokoni platinum mine, where the platinum ramp up will be "phased and measured" due to the lower prices.
The basket price of PGMs fell about 40% last year and the slide has continued into 2024.
South African platinum miners are increasingly turning to chrome, which is a by-product of their primary production, to offset the impact of low PGM prices.
"That is additional revenue. It comes on top of what you already have in terms of fixed costs, therefore diluting your overall operating costs," ARM CEO Phillip Tobias said during a results call.
"If you look at the trends, you would have seen that China has been buying a lot of chrome ore," he added.
Other miners, including Sibanye Stillwater SSWJ.J and Harmony Gold HARJ.J have recently diversified into critical metals such as lithium and copper, which are vital for renewable energy systems.
In May, ARM acquired a 15% stake in Surge Copper SURG.V, which has two copper exploration projects in Canada.
"We want to get in there. It is part of ARM's strategy of diversification into copper," Mike Schmidt, ARM's executive for growth and strategic development, said during the same call.
Tobias said the ARM board considered its 12% shareholding in Harmony Gold HARJ.J to be more strategic due to the gold miner's copper assets.
Harmony expects to start producing from its Eva Copper project in Australia by 2028. It also jointly owns the Wafi-Golpu gold-copper project in Papua New Guinea with Newmont NEM.N.
($1=17.6982 rand)
(Reporting by Nelson Banya; Editing by Clarence Fernandez and David Evans)