Johannesburg - African Rainbow Minerals will cut jobs and capital expenditure and reduced its dividend after the South African mining company’s full-year profit fell 58% due to a slump in commodity prices.
Earnings excluding one-time items plunged to R1.7bn, or R8.03 a share, for the year ended June 30 from R4.1bn, or R19 a share, a year earlier, the Johannesburg-based company said in a statement on Friday. Profit from the ferrous unit, which includes iron ore, manganese and chrome, comprised 91% of total earnings and dropped 57%. African Rainbow also mines coal, platinum, copper and manganese.
Iron-ore prices have plunged as producers including BHP Billiton and Fortescue Metals Group expanded supplies, pushing the market into a glut, while demand from China, the companies’ biggest customer, slowed. Reduced demand from the country has also hurt the prices of other commodities including copper, which has declined 18% this year. Coal has fallen 15% over the same period.
“The downward pressure on commodity prices has continued for most of the commodities that African Rainbow Minerals produce,” the company said in the statement.
“Capital expenditure is to be curtailed as far as possible,” it said, referring to a R500m reduction in estimated spending for the 2016 fiscal year to R2.4bn.
African Rainbow will pay a full-year dividend of R3.50 compared to R6.00 last year, it said in the statement. The company is in talks with unions at the Black Rock manganese operations over possible job cuts, it said.