South African mining heavyweight faces ‘some of the hardest times’ in its history

AFRIMAT

Cape Town – Afrimat has warned that it is facing some of the most difficult trading conditions in its 20-year history, with a stronger rand, weaker iron ore prices, higher shipping costs and volatile fuel prices expected to weigh on its first-half results.

In a business update issued on Tuesday, the diversified mining and materials group said several external shocks had hit the business simultaneously during the first quarter of its 2027 financial year.

These included “reduced Rand-denominated iron ore export revenues at mine gate” caused by the stronger rand and lower international iron ore prices, as well as “significantly higher shipping rates resulting from the ongoing conflict in Iran”.

Afrimat also reported an “overtraded cement market”, inclement weather and “sharp increases and volatility in the price of fuel, again linked to the Iran conflict”.

“In its 20-year history, these are some of the hardest times Afrimat has faced,” the company said, although it added that its people and culture continued to show “resilience, positivity, operational discipline and leadership in adversity”.

Construction Materials

Despite the difficult first quarter, Afrimat said conditions improved slightly in the second quarter and management expects the second half of the financial year to perform better than the first.

“The Construction Materials segment will be the most meaningful contributor to revenue and profitability in HY1 2027,” the company said.

The aggregates business has been a particular bright spot, benefiting from infrastructure spending on rail maintenance, roads, water infrastructure, residential construction and renewable-energy projects.

Afrimat said the integration of its Lafarge South Africa acquisition had also been completed, with improvements emerging from the strengthened business.

In its iron ore operations, domestic sales improved in the second quarter after a sharp decline in the first quarter. International iron ore exports, meanwhile, continue to face pressure from lower prices, higher shipping costs and rail maintenance.

Maintenance shutdowns

Afrimat expects maintenance shutdowns on the rail network to keep export volumes about 10% below its annual allocation of 870,000 tonnes.

The company has also secured a 240,000-tonne-per-year manganese export allocation through Saldanha for the next seven years, with the first confirmed vessel departing on 4 August.

Afrimat said its immediate priorities remained protecting cash and reducing debt.

“Cash generation and debt reduction are the main priorities,” the company said.

The company expects anthracite volumes to improve as ferrochrome smelters reopen following a reduced electricity tariff approved by the National Energy Regulator of South Africa.

Afrimat said it would provide a further update to the market in September once management has greater certainty about its financial position.

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