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MINING holding company Assore reported a steep increase in interim profit, with its key investment in Assmang performing strongly.
Assore holds 50% of Assmang, sharing the unlisted manganese, iron ore and chrome company with African Rainbow Minerals.
Assore, which is tightly held and thinly traded on the JSE, on Wednesday reported a 119% increase in headline earnings to R2.4bn for the six months to end-December. It said the rise was in large part due to a 104% year-on-year increase in headline earnings in Assmang to R4.3bn.
"Earnings for the half year were at record levels and the group is well-positioned to take advantage of the growth in world steel production, which is continuing," said Assore chairman Des Sacco.
Assore declared an interim dividend of R4.50 a share compared with R2.50 a year earlier. Revenue was R1.3bn compared to R988m.
The drivers of increased revenue in Assmang were a 13% improvement in iron-ore prices during the interim period and a weaker rand versus the dollar, Assore said.
Iron-ore sales volumes from Assmang’s Beeshoek mine in the Northern Cape were boosted by higher domestic sales. The Khumani mine had a difficult six months, with problems at the plant and an "unreliable" water supply.
Assmang’s iron ore sales were 4% higher at 7.7-million tonnes.
Manganese alloy sales were 9% higher at 117,000 tonnes.
Sales of charge chrome were down by 65% to 17,000 tonnes and chrome ore sales dipped 1% to 477,000 tonnes. Manganese ore sales fell 7% to 1.4-million tonnes.
The manganese and chrome divisions met their "budgeted export sales volumes" but local manganese ore sales were lower, Assore said.
Iron ore, manganese and chrome are all used to make steel.
Assore said while global steel production was expected to rise from record levels last year it was difficult to forecast developments in China’s steel sector in the short term.
"The short-term outlook for the Chinese steel industry is clouded by environmental concerns and the gradual transition from an economy based on high fixed domestic investment to a more consumer-oriented economy," Assore said.
Kumba Iron Ore, South Africa’s largest miner of the steel-making feedstock, forecast iron-ore prices would come under pressure in the second half of the year, with increased supplies from Australia and Brazil.
"Some concern exists regarding supply side developments in all of the group’s markets," Assore said.
"Australian miners exported over 90-million tonnes of additional iron ore in the 2013 calendar year and a similar increment is expected during this calendar year," it said.
"Manganese ore producers, particularly in SA, continue to ramp up production, while South African chrome ore exports are at record levels and are increasing," it said.