Afrimat impacted by iron price slip

Construction and industrial materials maker Afrimat recently unveiled its interim results for the half-year to August. Despite facing challenges such as declining iron ore prices and rising costs, the company managed to maintain its momentum. Group revenue saw a significant increase of over 7%, but headline earnings per share slipped by almost 15%. CNBC Africa had the opportunity to speak with Andries van Heerden, CEO of Afrimat, to delve deeper into the operating environment and the company's strategic plans moving forward. Heerden highlighted the positive aspects of the period, emphasizing the successful ramp-up of their Gain Cuts mine and the turnaround of their commodity mine, which started generating profits. He mentioned the impact of the lower international iron ore prices compared to the previous year, attributing a significant portion of the year-on-year results to this decline. Additionally, domestic challenges such as rising diesel prices and infrastructure issues added to the complexity of the operating environment. Despite the headwinds faced by Afrimat, Heerden expressed satisfaction with the results achieved under the circumstances. The company's diversification strategy played a crucial role in mitigating risks and enhancing resilience. Previously focused primarily on the export iron ore market, Afrimat diversified its portfolio to include a local iron ore business, the anthracite business, and the recent acquisition of Glenover, a unique mineral deposit with phosphates, rare earth minerals, and other resources. Looking ahead, Afrimat's strategic focus on diversified investments like phosphates and minerals is expected to yield strong returns. The company anticipates significant growth potential from ventures such as Glenover, which align with their broader diversification strategy. Heerden highlighted the promising returns on capital from these investments, underscoring their role in reducing reliance on iron ore and bolstering long-term sustainability. When discussing growth potential and concerns for the future, Heerden pointed to the uncertainties in the global economy, particularly in China, as well as local challenges like infrastructure constraints and energy supply issues. Despite these hurdles, he emphasized the importance of proactive positioning to mitigate exposure to external risks. In terms of growth opportunities, Afrimat sees potential in their Gammati anthracite mine and the Glenover project. These ventures have demonstrated consistent growth rates, with Afrimat achieving an impressive 22.5% growth in after-tax profits over the past 14 years. Heerden believes that sustained growth will be driven by projects like Gammati and Glenover, underpinning Afrimat's long-term expansion plans. In conclusion, Afrimat's resilience in the face of economic challenges, coupled with its strategic diversification efforts, positions the company well for continued growth and stability in the dynamic market landscape.