How Afrimat plans to unlock value from new iron ore asset Diro

Afrimat, a leading open-pit mining company, recently announced its interim results, showcasing a 7.4 per cent increase in headline earnings per share, even though revenue remained flat at R1.2 billion. The standout performer in Afrimat's portfolio was the acquisition of Diro Iron Ore Mine, which is shaping up to be a strategic move for the company. In a recent interview with CNBC Africa, Pieter de Wit, the Chief Financial Officer of Afrimat, shed light on the company's performance and future prospects. The journey with the Diro Iron Ore venture began last year, and the results have been impactful. Despite a slow start in the first quarter of the year, Afrimat managed to bounce back in the second quarter, demonstrating resilience in the face of challenges. De Wit expressed contentment with the results, emphasizing that the investment in Diro Iron Ore Mine is essential for the company's future growth. One of the key factors influencing Afrimat's performance was the political landscape, particularly Vence's reshuffle, which had a temporary impact on business confidence. Industrial customers pulled back initially, affecting the construction sector. However, the situation improved in the second quarter, indicating a return to normalcy in operations. Another challenge that Afrimat faced was the high number of public holidays, especially during the Easter period, which led to a decrease in trading days. The construction industry experienced disruptions due to the holidays and leave taken by employees, resulting in a slowdown in operations. Despite these obstacles, Afrimat remains optimistic about its ability to adapt and thrive in changing market conditions. The acquisition of the Diro Iron Ore Mine was a strategic move by Afrimat, taking over a business that faced financial difficulties under previous ownership. De Wit highlighted the importance of cost management in the mining industry, especially during price fluctuations. Afrimat's cost-effective approach, coupled with skilled personnel from larger iron ore mines, has allowed the company to achieve production levels between 40 and 50%. Looking ahead, Afrimat is focused on reaching full production capacity by March next year. A significant aspect of their strategy is the agreement with Transnet for an on-load facility, enabling them to export the iron ore to international markets. This partnership is expected to enhance Afrimat's competitiveness and position them as a key player in the global iron ore market. Overall, Afrimat's performance in the first half of the year reflects a mix of challenges and opportunities. The company's ability to navigate through market uncertainties and leverage strategic acquisitions like Diro Iron Ore Mine bodes well for their future growth prospects. With a strong focus on operational efficiency and market relevance, Afrimat is poised for continued success in the mining sector.