JOHANNESBURG (miningweekly.com) – African Rainbow Minerals (ARM) chairperson Patrice Motsepe said on Friday that, while the company had been looking at opportunities in Africa “very seriously”, potential strategic partnerships and projects on the continent had come into conflict with what he described as the company’s “strong principles of ethics and good governance”.

“I see opportunities in the medium to long term in Africa but, on numerous occasions, [the] issue of ethics and corporate governance [has arisen], which [goes against] principles that we, as a company, stand for.

“Opportunities are being made available to us, but we unfortunately have to walk away from some of these, owing to our very strong principles,” he said at the diversified asset developer’s year-end results presentation, in Johannesburg.

Motsepe noted that the company had a “huge” competitive advantage in Africa and continued to explore opportunities in Zimbabwe and elsewhere, adding that, on assessing a potential partnership or project, the group prioritised its medium- to long-term prospects over shorter-term gains.

“Wherever we go in Africa, doors are opened, but we have to take a 5-, 10-, 15-year perspective,” he held.

ARM CEO Mike Schmidt added that, in the company’s pursuit of opportunities and projects on the continent, be they greenfield, brownfield or “value-enhancement” projects, the company adhered to a strict due-diligence process, which aligned with its guiding principles.

“If the opportunity doesn’t meet these principles, then we exit,” he said.

ARM, which posted a 66% increase in headline earnings to R2.34-billion for the year ended December 31 – largely on improved contributions from its ferrous metals and platinum businesses – continued to focus on the growth of its portfolio of assets through both organic and acquisitive growth.

ARM EXPLORATION

ARM Exploration continued to fund Rovuma Resources’ exploration activities, in northern Mozambique, which explored numerous occurrences of copper, zinc, nickel, platinum-group elements, chromite and graphite mineralisation.

ARM, which would have exclusive rights to buy prospecting or mining rights to the resources, had committed to funding of $4-million until April.

“The prospective geological units have a strike extent of about 80 km and four target cluster areas have been defined. Each cluster comprises numerous identified areas of base metal mineralisation, with three of the four clusters having been drill tested during the 2013 field season,” the group stated.

Further, the company would look to expand and improve the efficiency of its iron-ore and manganese ore operations, in line with Transnet’s Market Demand Strategy (MDS), which would see the expansion of South Africa’s iron-ore and manganese ore export capacity.

“ARM’s acquisition criteria is based on our strategy of being an owner-operator of long-life, low unit cost operations,” noted Schmidt.

GROWTH PROJECTS

Meanwhile, over the fiscal year, the group successfully ramped up three of its growth projects – the Khumani iron-ore mine, in the North West, the Goedgevonden coal mine and the Nkomati nickel mine, both in Mpumalanga.

In addition, ramp-up of the Lubambe copper mine, in Zambia, was progressing “well”, with challenges previously experienced with the concentrate having been resolved.

The plant was now producing concentrate to the specification of the contracted Zambian smelters.

Delays were experienced with the commissioning of the vertical shaft, owing to variations in the shaft bottom excavations and the original drawings of the mine from the 1950s.

“In addition, the ore and waste passes built in the early 1950s were found to have been incorrectly constructed, which affected the targeted production ramp-up. The shaft ore-handling system, however, was commissioned at the end of December and the mine remains on track to deliver the steady-state 45 000 t by 2016,” the miner stated.

Meanwhile, 50% ARM-owned Assmang, the China Steel Corporation and trading firm Sumitomo Corporation had approved development of the Sakura ferroalloy project, in Malaysia.

Land for the $328-million smelting project had been acquired, while the power purchase agreement was signed in October.

Metix had been appointed as the main contractor of the project, which was scheduled to achieve design production output of 170 000 t/y of manganese alloy in the second half of 2016.

Further, a detailed review of the Black Rock mine expansion project, in the Northern Cape, from 3.2-million tonnes a year to 4.6-million tonnes a year was completed in October.

The expansion would enable the exploitation of the Seam 2 resource within the Nchwaning mine lease area and would be developed in conjunction with the expansion of the Coega manganese export channel, which was part of Transnet’s MDS.