Afrimat’s share price fell 4.5% on the JSE Tuesday morning after the group warned that iron export rand revenues fell in the first half, inclement weather affected operations, the cement market was overtraded, and there were sharp increases in fuel prices.
The share price of the multi-commodity, mid-tier mining company that produces and supplies construction materials, cement, iron ore, anthracite, phosphate, and high-quality industrial minerals was trading at R25.47 in the morning, a price that had fallen sharply from R40.10 over 12 months.
“In its 20-year history, these are some of the hardest times Afrimat has faced, yet its people and culture continue to show resilience, positivity, operational discipline, and leadership in adversity,” the groups directors said in a business update to its shareholders on Tuesday.
In the first quarter Afrimat’s results were impacted by reduced rand-denominated iron ore export revenues at mine gate, driven by a stronger rand, lower international iron ore prices, and much higher shipping rates resulting from the ongoing conflict in Iran.
Domestic iron ore sales normalised in the second quarter following erratic demand patterns in the first three months.
Anthracite sales to ferrochrome smelters started improving after smelters remained shut in the first quarter. The wet weather affected operations in the first quarter. There were also sharp increases and volatility in the price of fuel, linked to the Iran conflict.
“Afrimat management expects the second half of the financial year to improve relative to the first half, which continued to be adversely affected by concurrent external shocks,” the company directors said. There were some gains across the group’s diversified portfolio.
There was a growing contribution by the aggregates and fly ash operations, supporting the original rationale for the purchase of Lafarge South Africa.
A MECA (manganese export III manganese export capcaity allocation) of 240,000 tons per annum was secured.
An additional iron ore deposit (Doornfontein) was aimed at extending the life of operations and lowering production costs.
There were volume and market gains from securing additional domestic and export anthracite markets. Additional iron ore export capacity had been gained on the General Freight Business (GFB) rail line.
“The Construction Materials segment will be the most meaningful contributor to revenue and profitability in the first half of 2027,” the directors said.
Cash preservation remained a focus. Proceeds from the disposal of non-core marginal businesses and Competition Commission mandated divestitures had been applied to strengthen the balance sheet. The debt-to-equity ratio remained at roughly the same level as in the 2026 financial year.
“The rationale for the Lafarge acquisition is proving itself,” a director said.
“The integration drive has been successfully completed, with improvements already emerging,” the directors said.
From a market perspective, Afrimat was seeing volume growth from widespread spend as well as several projects across South Africa, including rail maintenance, provincial roads, water infrastructure, private and residential building contracts, and the rollout of renewable energy projects.
The cement and extender business had been rebuilt from the ground up, with systems, business procedures, and operations now running more consistently.
The Bulk Commodities segment was affected by a sharp decline in volumes as ArcelorMittal South Africa took volumes from a stockpile it had secured. Volumes improved in the second half.
In the iron ore segment, rail logistics were performing better and were becoming more reliable. A 10-day maintenance shutdown, although well executed, did impact volumes.
Another maintenance shutdown was due in October 2026. Afrimat expects that the maintenance shutdowns would keep volumes roughly 10% below the allocation of 870,000 tons per annum.
As Demaneng began to reach end-of-life, Doornfontein, a newly acquired lower-cost deposit, was expected to seamlessly replace Demaneng.
“The realised rand price at the mine is weaker than in the past, but Afrimat continues to liquidate excess stock and turn it into cash. This is primarily being done through the allocation received on the GFB line, albeit at a higher cost compared with the OREX line.”
The Nkomati Anthracite Mine was ramping up to supply the local market. Afrimat continued to export anthracite, although at lower prices.
A MECA III allocation of 240,000 tpa via Saldanha had been secured for the next seven years.
Edward.west@nationalmg.co.za