African Rainbow Minerals Ltd. is considering buying mining assets that will boost long-term profit, according to Patrice Motsepe, the South African company’s billionaire chairman.
“We continue to look at opportunities, this is a good time to buy,” Motsepe, who is the richest black South African and has expressed interest in platinum assets for the last year, said at a presentation in Johannesburg today. “You cannot be affected by short-term periods of volatility as well as uncertainty.”
Shares in South African platinum producers have dropped since violence and illegal strikes broke out at operations in the second half of 2012, shutting production. That’s cut the costs of buying the assets.
The miner of minerals including iron ore, nickel, copper, and manganese will next week meet investors in Europe and the U.S., Motsepe said. “We have no intentions of overpaying” for assets, he said.
The company has looked at copper assets in Papua New Guinea in its search for exploration opportunities outside of Africa, Motsepe said.
African Rainbow said earnings excluding one-time items fell 30 percent to 1.41 billion rand ($160 million) in the first half through December as iron-ore prices dropped and costs rose at a rate above inflation.
Motsepe said he was “very excited” about prospects for the company’s coal business, which increased sales to Eskom Holdings SOC Ltd., the utility generating more than 90 percent of South Africa’s power, by 21 percent to 2.28 million metric tons during the period.
Africa’s biggest economy is expanding its electricity-generation base to avoid a repeat of power shortages that halted mines for at least five days in January 2008. Eskom, which uses coal for more than 80 percent of generation, is building what will be the world’s third- and fourth-biggest plants that use the fuel to make electricity.
Motsepe, who is also chairman of Harmony Gold Mining Co., pledged some of his wealth to charity last month, joining Warren Buffett’s initiative to boost philanthropy.
The stock declined for a second day, losing 2.3 percent to 188.51 rand in Johannesburg.
African Rainbow minerals began producing copper in Zambia, Africa’s biggest miner of the metal, through a joint venture with Brazil’s Vale SA last year. The Lubambe Copper Project started production in October 2012, with a second phase progressing with six exploration drill rigs being deployed.
As the project has been mined, the ground has been found to require more structure and support than anticipated, the company’s CEO Mike Schmidt said in an interview. “That slows down your development rate and has a cost impact,” though it won’t materially affect the project, he said.
Zambia’s state-owned ZCCM Investment Holdings is a 20 percent stakeholder in Lubambe. “It’s a very enabling environment to operate in,” Schmidt said.