ARM’s headline earnings surge 134%, looks to double PGM portfolio

African Rainbow Minerals (ARM) has reported a staggering 134 per cent increase in headline earnings for the six months ending December 2020. The company's CEO, Mike Schmidt, attributes this success to higher metal prices and the weaker rand. In an interview with CNBC Africa, Schmidt discussed the company's strategy for capitalizing on the current upswing in commodity prices. Schmidt expressed optimism about the sustainability of current metal prices, predicting that they will remain robust for the next six months. While he acknowledged that prices may eventually come down in the medium to long term, he highlighted the positive outlook for platinum group metals (PGMs). Schmidt noted that PGMs, particularly platinum, are poised for long-term growth after a decade of challenges. ARM's focus on organic growth in the PGM sector is evident in their recent announcements. The company is ramping up production at Mediqua and Chrome projects, with plans to double its PGM portfolio by ramping up production at Two Rivers mine. Additionally, ARM is investing in manganese production, expecting to increase output from 4,000,000 to 5,000,000 tons. As governments look to the mining sector for economic recovery, Schmidt mentioned ARM's exploration activities in the base metals space, particularly in vanadium. The company is strategically positioning itself for future opportunities in commodities that show promise for long-term growth. In addressing less favored commodities like coal, Schmidt emphasized ARM's commitment to responsible mining practices and sustainable operations. Despite challenges faced during the pandemic, he remains positive about the rebound in coal demand, especially in markets like China and India. One key partnership for ARM is with the South African power utility, Eskom. While acknowledging the importance of Eskom as a partner with long-term contracts, Schmidt believes the impact on ARM's cash flows and balance sheet will be mitigated by diversifying their market reach. As ARM continues to navigate the volatile commodity market, Schmidt's forward-thinking approach and focus on sustainable growth position the company for long-term success.