Afrimat takes conservative approach to production build up amid stunted demand

AFRIMAT, the Johannesburg-listed materials and industrial minerals group, adopted a conservative approach to resuming full production from its open cast mines, saying in an update today that supply would be linked to market demand.

South African government amendments to COVID-19 lockdown regulations stipulate that open cast mines can ramp up to 100% production from a baseline of 50% during the 21-day lockdown implemented in late March.

“All Afrimat mines are opencast mines and therefore may operate at full capacity. However, due to the restrictions on certain markets, Afrimat is ramping up operations according to market demand and in line with regulations from government and therefore certain Afrimat mines are not operating at full capacity,” the company was quoted to have said in an article by BusinessLive.

The group said in a trading update it expects headline earnings per share in its year to end-February to rise by 44% and 54% from the prior period’s 234.1 South African cents per share, having given guidance of an increase of 38% to 58% in April, said BusinessLive.

The group then reported strong growth in its industrial minerals business, which includes the production of agricultural lime, which is used to reduce soil acidity. The group also reported a “healthy contribution” from its Demaneng iron ore mine, said BusinessLive.

Afrimat benefited from rising iron ore prices in 2019, and Demaneng produces high-grade ore. Afrimat acquired the mine, then known as Diro Iron Ore, in 2016 for R400m.