KEY POINTS
- ARM seeks to maximize its equity in Harmony Gold through strategic options.
- Copper investments are key to ARM’s future growth in the mining sector.
- ARM is improving efficiency to navigate lower PGM prices and rising costs.
African Rainbow Minerals (ARM), founded by Patrice Motsepe, has set its sights on maximizing its equity in Harmony Gold despite the persisting pressure in the global mining sector. Motsepe pointed out that the company will deepen its stake in Harmony Gold as part of the long-term vision despite a 43% reduction in headline earnings for the year ending June 30, 2024.
“We are pleased with the progress of Harmony over the years,” said Motsepe, emphasizing the synergy that has existed between the two companies for over two decades. While other competitors in the mining industry are affected by market volatility, Harmony Gold continues to do exceptionally well, especially due to its expansion into copper mining in Australia and Papua New Guinea. Motsepe also noted that it is possible for ARM to leverage the high equity value of Harmony to secure bank loans or cash, adding that ARM is exploring multiple strategic options.
Strategic Opportunities for Harmony Gold
While evaluating the future of the ARM-Harmony alliance, Motsepe emphasized that the company’s position is not a passive one. ‘We are not mere shareholders but give strategic directions that go beyond boardroom meetings, he said. He also mentioned that ARM has played an active part in the management of Harmony, especially in its focus on copper, which is considered vital for long-term growth.
“There’s no rush to make decisions,” said Motsepe, noting that while some shareholders asked whether they should sell Harmony shares at the current high prices, ARM is committed to making the decision that would be beneficial for all the shareholders in the long run.
Copper Investments Paving the Way Forward
In addition to Harmony Gold, ARM is expanding its copper assets, believing that copper is crucial for the development of the mining industry. According to a report by Mining Weekly, ARM has also diversified its access to metals such as copper, molybdenum and silver through the acquisition of a 15 per cent stake in Surge Copper in Canada showing it is geared for growth regardless of market conditions.
Motsepe, who still believes that ARM can overcome the current challenges, emphasized that profitability and stakeholders’ value are at the heart of every decision. “We do not fall in love with assets; We fall in love with their capacity to generate value,” he said. This statement further affirmed ARM’s commitment to maximizing returns while being flexible to the market.
ARM continues to struggle with exploding costs of production and declining prices of platinum Group Metals (PGM). Despite this challenge, the company continues to pursue cost controls and operational efficiency, especially in the iron ore and chrome divisions. Motsepe also emphasized that it was necessary to have a long-term vision and strategy, stating, “These challenging times create opportunities for those of us who’ve been in the industry long enough to adapt and thrive.”
Regarding future perspectives, ARM has a major interest in Harmony Gold, and there is always a possibility of additional value creation through various further operations. ARM’s copper investments, as well as constant efficiency campaigns, indicate that it is preparing to weather the existing market storms.
