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ARM to focus on coal and copper

The processing plant
at ARM’s Goedgevonden
coal mine
Johannesburg, South Africa — MININGREVIEW.COM — 23 February 2010 – African Rainbow Minerals (ARM) “’ a leading South African diversified mining and minerals company “’ expects to focus its diversification strategy on coal and copper, with a new coal mine envisaged within the next three to four years.

Making this announcement here, ARM Coal Unit head Mangisi Gule said the growing power demand in the country justified the investment, and added that the new mine would most likely be built in the north-eastern Mpumalanga, where the necessary infrastructure was already available. He went on to say that in the future the company would also be looking to grow in the northern Waterberg region, touted to become South Africa’s new coal hub, and in other parts of the continent.

ARM “’ which is developing all of its coal projects in a joint venture with Xstrata “’ late last year commissioned the Goedgevonden coal mine, which is expected to produce 6.7Mtpa of thermal coal by 2011. Of this projected output, 3.2Mt will be exported by 2011, and 2.5Mt is scheduled to be shipped this year.

ARM has been promised its own export allocation of 3.2Mt at the Richards Bay Coal Terminal (RBCT), which is expanding from 76 Mtpa to export up to 91Mt of the mineral. But bottlenecks on the rail lines to the port have dented confidence in logistics group Transnet and its ability to bring more coal to the port than the 61Mt it managed to rail last year.

Gule said it was likely ARM would only get part of its export allocation this year, and would seek to export the remaining coal via Xstrata’s allowance.

Separately, executive director for business development Stompie Shiels said that Transnet had agreed to grant three manganese producers, including ARM, a total rail allocation to Port Elizabeth of 4.4Mt. He declined to say how much of that would go to ARM, but confirmed that the company would be seeking alternative routes via the ports in Durban, Richards Bay and Saldanha Bay.

ARM “’ which has interests in nickel, coal, iron ore, platinum, chrome and manganese “’ reported an 80% drop in headline earnings per share for the six months to the end of December 2009, owing to lower commodity prices and a strong rand against the U.S. dollar.