DIVERSIFIED miner African Rainbow Minerals (ARM) was considering an investment in a world-class platinum group metals ore body in Zimbabwe, but was concerned about ensuring that it acquired any assets in that country legally and ethically, chairman Patrice Motsepe said yesterday.

“Some of the assets we want in Zimbabwe are owned by other people, and we don’t want to acquire assets in any way that can be questioned,” he said.

Motsepe was answering questions at a presentation on the group’s results for the six months to December, which showed headline earnings at a quarter of the level of a year ago, at 214c per share compared with 1055c per share.

Although volumes of minerals produced in almost all divisions continued to rise, revenue fell to R4,4bn from R6,7bn because of lower average commodity prices and a strong rand.

Most of ARM’s headline earnings were contributed by its ferrous metals division.

The Khumani iron-ore mine realised lower prices than Kumba Iron Ore because most of its output was sold on contract to secure prices during the construction phase, while Kumba sold most of its product on the spot market.

Iron-ore spot prices are almost double contract prices, but contract prices are expected to catch up when the new agreements begin on April 1.

ARM’s latest interim results were below those for the 2008 interim period, but were still a significant improvement on the first half of last year. Motsepe said both demand and prices for commodities were rising, but even if the global recession turned out to be a “double dip”, he was confident ARM would still do well.

It was investing in its businesses and would be spending about R8bn on capital projects between now and 2012. At the end of December, ARM held R2,3bn in cash and net debt was only 8,4% of equity. CEO André Wilkens said ARM had enough cash to continue with its growth projects and consider new opportunities.

All ARM’s assets had potential for significant expansion, Wilkens said. At Konkola North in Zambia, a feasibility study should be completed by the middle of this year, then the board would decide whether to proceed with building a mine. ARM was also talking to its partners at the Modikwa Platinum Mine about expansion. Smelter expansions were also on the cards, depending on the availability of electricity.

Motsepe said r ecent legislation passed in Zimbabwe requiring 51% indigenous ownership of any business worth more than 500000 was “an issue”, but he believed SA’s high commissioner would engage in discussions with the Zimbabwe government.

By BusinessDay