Afrimat alternatives like a child in a sweet store

You can even hearken to this podcast on iono.fm right here.

SIMON BROWN: I’m chatting with Andries van Heerden, CEO of Afrimat. Outcomes for year-end February. Income up 4.9% at simply shy of R5 billion. Heps 15.7%, and a last dividend of 110 cents a share. Andries, the primary query, as we sit right here heading into winter with updates from Eskom, how dangerous is load shedding on your operations?

ANDRIES VAN HEERDEN: Simon, happily in quarrying and mining and smaller mining operations a whole lot of our exercise shouldn’t be truly so reliant on electrical energy, and the place we do want slightly little bit of electrical energy a diesel generator does the factor. So we’re a kind of few firms not impacted so badly. In our industrial minerals enterprise we’re slightly, however the remainder are moderately fantastic.

SIMON BROWN: Okay. You make plans to launch a renewable power venture at Glen Douglas Dolomite in Midvaal. Will that then be not on your personal use, however maybe extra for folks round you and into the grid?

ANDRIES VAN HEERDEN: No, no. It’s for our personal use. It’s a comparatively small plant. It’s a 1.8 megawatt plant, and it’s for our personal use.

SIMON BROWN: A variety of commodity costs are going in opposition to you, which you’ve clearly received no management of. However we noticed good elevated volumes from Jenkins coming into manufacturing, a turnaround from Nkomati, and good manufacturing coming by means of there. From a manufacturing facet a extremely robust 12 months.

ANDRIES VAN HEERDEN: Sure, completely. We noticed a giant enhance in quantity from Jenkins; that’s actually the star of the 12 months and, as you stated Nkomati – though we are literally nonetheless busy with with the turnaround.

Throughout the interval beneath evaluation we made heavy investments. We launched into a brand new technique to actually ramp up quantity. So we upgraded the washing plant and we opened up two extra open pits and an underground entry. Various capital went in there and we’re solely now ramping all of it up. So we anticipate to start out seeing good manufacturing from now onwards.

SIMON BROWN: Now we have chatted earlier than round this – how typically it’s. It’s nearly simply making little or possibly even main type of tweaks to processes that may in time have optimistic impacts on manufacturing.

ANDRIES VAN HEERDEN: Sure, completely. Within the case of Nkomati it’s a troublesome geology, and the large factor was to actually place the mine in such a method that you’re not reliant on a single working space. That’s why we have now two open pits and an underground space, so that you’ve got that versatility and that nearly diversification of the issue, lowering the dangers. That actually made a giant distinction on that mine.

SIMON BROWN: If you discuss underground, how deep?

ANDRIES VAN HEERDEN: It’s comparatively shallow. It’s a vertical-incline shaft that begins on floor, and it’s not that deep. It’s most likely at its deepest, I might guess, about 150 metres deep.

SIMON BROWN: Okay. That’s not deep in any respect. Driehoekspan – that is your new iron ore asset? In fact, your major iron ore asset goes to return to finish of mine quickly. That is the one which in essence will substitute that asset, and also you’ll begin to work on that. What’s the type of timeline to get that operational?

ANDRIES VAN HEERDEN: Sure, we’ve began producing from there on a small scale. That’s actually to start out testing the fabric and placing it by means of the beneficiation plant and see the way it performs in actual life. It’s a little bit of a luxurious to have the ability to do this, and it actually makes life a lot simpler for us. So a gradual ramp-up for the following two to 3 years, whereafter we’ll convey it to full manufacturing.

SIMON BROWN: And is that type of two to 3 years just about, if I recall appropriately, in sync with the tip of lifetime of the opposite asset?

ANDRIES VAN HEERDEN: Sure. There’s a much bigger plan that we have now, however extra of that later. For now that’s the plan.

SIMON BROWN: Considered one of your large plans is a brand new section you’re bringing in, future supplies and metals. A few of us have been saying that is funding into these new areas, however it’s nonetheless broadly inside the wheelhouse, which is essentially open-pit mining, largely industrial.

ANDRIES VAN HEERDEN: Sure, it’s open-pit mining – comparatively easy mining, happily. The sophistication is available in later with the beneficiation processes. So we’re busy with the implementation of the primary part, the place we’re constructing a single super-phosphate plant that will likely be commissioned later this 12 months. And we’re some attention-grabbing options for additional worth enhancement of that venture. Very, very thrilling. The opposite mineral in that mine is uncommon earth minerals. And that, as we all know, is a crucial part for the brand new power surroundings That’s one thing that basically excites us;  a number of upside there, however nonetheless some solution to go to develop our technique to actually enter that market in the proper method.

SIMON BROWN: It’s additionally going to incorporate fertiliser for agriculture, which indirectly strikes you into a special end-market, I suppose. However once more a similar-ish course of.

ANDRIES VAN HEERDEN: Sure. That’s the phosphate. The phosphate is the opposite product in that mine, and that’s what we use as a feedstock for the only tremendous phosphates that we’ll be making. After which additionally different feedstocks for additional value-enhanced product.

SIMON BROWN: Building supplies – a troublesome interval there. You discuss round a slowdown in financial exercise, which is honest sufficient. I feel all of us see that once we look out of the window or buy groceries. This in fact is the unique core Afrimat which over the 15, 16, 17 years you’ve been listed continues to be there, however it has diminished in significance.

ANDRIES VAN HEERDEN: It has diminished in significance. It’s nonetheless a really precious enterprise, and as a matter of reality we see a whole lot of development alternatives for that enterprise, particularly now for those who suppose that Warren Buffett stated you should be fearful when different persons are courageous. Possibly we’re silly or courageous – I’m unsure – however we predict that there’s alternative proper now in increasing that enterprise and we’re beginning to see some inexperienced shoots. We’re seeing slightly little bit of an uptick in volumes across the nation, and particularly on authorities infrastructure on the roads and issues like that. We predict a rise, on condition that a whole lot of the consulting engineers that we have now contact with have gotten fairly busy. That at all times bodes properly for the road-building business in 12 to 18 months.

SIMON BROWN: We noticed the identical from Raubex, which in fact is extra on the development and the bitumen facet. It did make simply shy of R130 million in operational revenue. So it’s completely not nothing.

A final query. You raised R680 million throughout the interval from a capital increase. That had been deliberate for an acquisition that didn’t occur in the long run; you couldn’t get the water licence. Plans for that? Is it going into present manufacturing? Are you and your acquisitive workforce crafting some Excel spreadsheets?

ANDRIES VAN HEERDEN: Simon, possibly only a correction. It wasn’t actually raised for the Gravenhage transaction. It was truly raised for the Glenover transaction and for the enhancements in Nkomati. We’ve invested slightly below a billion rand of capital on this 12 months beneath evaluation in these property and we predict to see some actually good returns within the very close to future from there.

In your query whether or not we’re spreadsheets and alternatives, we’re slightly like a child in a sweet retailer. The quantity of alternative out there proper now could be completely superb, and we’re sitting with a debt-free stability sheet. That’s actually serving to us and it’s a little like a child in a sweet retailer.

SIMON BROWN: That’s what I believed. A debt-free stability sheet and big money era.

We’ll go away it there. Andries van Heerden, CEO of Afrimat, I at all times recognize the time.

Hearken to the total MoneywebNOW podcast each weekday morning right here.