South African Africa Rainbow Minerals posted a 58 percent fall in annual headline earnings on Friday reflecting lower commodity prices which forced it to shut down several manganese alloy furnaces.
It said above-inflation cost increases, especially for electricity and labour, made manganese alloy operations “unprofitable”.
It placed all furnaces at its Machadodorp Works and three furnaces at the Cato Ridge Works on care and maintenance.
Headline earnings per share, a measure used in South Africa which strips off some one-off items, fell to 803 cents from 1,900 cents a year earlier.
“The reduction in headline earnings was largely as a result of a decline in average realised U.S. dollar prices for iron ore, manganese ore, platinum, nickel, export thermal coal and copper,” ARM said in a statement outlining the company’s results.
It said the U.S. dollar price for iron ore fell by about 42 percent, due to increased supply from the major global producers coupled with a slowdown in demand, especially from China.
That resulted in a 61 percent slump in ARM’s iron ore division.
Iron ore, used in making steel, has recovered from a decade-low of $44.10 in July but expectations of additional supply later in the year have capped further gains.
South Africa’s miners sell their commodities in dollars while paying costs in rand and the company painted a dim outlook, projecting further price falls.
“The business environment for mining will remain challenging and U.S. dollar prices are expected to be low for longer in certain commodities,” ARM said.
It said it would trim capital expenditure by 1 billion rand ($73.26 million) in response to lower commodity prices.
ARM declared a dividend of 350 cents, down from 600 cents paid a year earlier.