ARM CEO: What the Nkomati nickel mine closure means for company’s profitably, earnings

African Rainbow Minerals (ARM), the mining company chaired by billionaire Patrice Motsepe, has recently announced a solid set of financial results. The diversified miner, with operations in gold, platinum, iron ore, and coal, has seen headline earnings increase by 9% to R5.2 billion. In a recent interview with CNBC Africa's Kopano Gumbi, CEO Mike Schmidt discussed the company's performance and future strategies. Schmidt highlighted the impact of the closure of the Nkomati nickel mine, the restructuring efforts in the coal sector, as well as the company's dividend policy and shareholder returns. The key theme of the interview revolved around the company's diversification strategy, mitigating price volatility, and ensuring profitability amidst challenging market conditions. Three key points emerged from the conversation: the closure of the Nkomati mine, the restructuring efforts in the coal sector, and the dividend policy update. Schmidt explained that the nickel business had been facing volatility due to low-grade ore and economic challenges. As a result, the decision was made to ramp down operations at the Nkomati mine by June 2020. This move is expected to improve the company's bottom line by stopping the cash drain from the nickel business. Additionally, Schmidt discussed the restructuring of the coal loans, which resulted in a significant reduction in debt and positioned the coal business for future profitability. He emphasized the importance of cost efficiencies, productivity, and technological advancements in buffering the company against price fluctuations. Furthermore, Schmidt revealed the company's updated dividend policy, which aims to distribute between 40% and 70% of free cash to shareholders. This move reflects ARM's commitment to providing returns to investors while ensuring sustainability and future growth. Shareholders can expect record-breaking dividends from the company's operations and a focus on maintaining a balance between returns to shareholders and reinvestment in the business. Overall, ARM's CEO Mike Schmidt expressed confidence in the company's ability to navigate market challenges and deliver value to stakeholders.