ASSMANG PROVISIONAL RESULTS FOR THE YEAR ENDING 30 JUNE 2010
For the financial year ended 30 June 2010, Assmang Limited (“Assmang”) reported a 57% decrease in
headline earnings to R2.7 billion (F2009: R6.3 billion). Despite challenging market conditions, especially
pronounced in the first half of the financial year under review, Assmang achieved increased sales volumes
across all commodities. The decrease in earnings was due mainly to the decline in dollar commodity prices
and a strengthening of the Rand versus the US Dollar. Realised prices decreased in US Dollar terms for iron
ore (14%), manganese (57%), ferromanganese (49%) and ferrochrome (17%) when compared to the 2009
Iron ore sales volumes increased by 32.3% to 9.8 million tonnes, whilst sales of manganese ore increased
by 43.8% to 3.1 million tonnes.
Manganese export sales are limited by export capacity from Port Elizabeth, Assmang has successfully
secured additional export capacity through Durban and Richards Bay to take advantage of improving market
conditions and increasing demand. This additional export capacity however incurs higher logistics cost.
There was a marked improvement in prices and thus headline earnings in the last quarter of the financial
year. Iron ore prices increased by 42% in the second half of the year while manganese, ferromanganese
and ferrochrome prices increased by 15%, 33% and 27% respectively owing to an improvement in market
conditions. Assmang’s headline earnings in the second half of the year increased by 252% to R2 127 million
when compared to the first half year earnings of R604 million.
The iron ore operations achieved a decrease in unit production costs of 6% owing to increased production at
the Khumani mine as the 10 mtpa expansion ramped up. On mine production unit costs at the manganese
operations increased as a result of lower mined production with the increase in sales of manganese ore
achieved from inventory. Above inflation cost increases at the manganese alloys and charge chrome
operations were due mainly to an increase in electricity and reductants.
Total capital expenditure was R3.3 billion (F2009: R2.8 billion). The main expenditure items include the
ongoing infrastructure development at the Khumani 16 mtpa Expansion Project (R2.1 billion) and the upgrading
of the beneficiation plant at Nchwaning Mine (R305 million), while development at the Nchwaning Mine
amounted to R63 million. At Cato Ridge and Machadodorp Works, R258 million was spent on rebuilding
furnaces, with a further R46 million incurred at Machadodorp Works on the conversion of a chrome furnace to
a manganese furnace. The remaining capital was spent on IT related projects, vehicles and other equipment