Integrated Annual Report 2019

Chairman's statement

Desmond Sacco

The year under review

I am delighted to report on another very successful year for Assore.

On the safety front, all operations recorded significant achievements.

Headline earnings for the year to June 2019 increased 25% to a record R6,4 billion while attributable earnings increased for a third consecutive year to R5,9 billion, 16% above the prior year. Assmang's contribution to headline earnings amounted to R5,0 billion (41% higher than the previous year), while Dwarsrivier's contribution amounted to R516 million (41% lower than the previous year).

The higher earnings were driven by the weaker rand/dollar exchange rate, an increased average price realised for iron ore and higher sales volumes of both manganese ore and alloy. These positive factors were offset by slightly reduced sales volumes in iron ore and lower realised prices for chrome ore, manganese ore and manganese alloys.

Headline earnings over the past five years by commodity are set out in the graph alongside.

Due to the continued difficult economic situation facing non-integrated ferroalloy producers, Assmang's investment in Sakura had to be impaired by R1 billion, of which Assore's share was just over R500 million. Significant progress was made in disposing of unproductive assets in the year. Assmang sold the Machadodorp works and Assore disposed of Rustenburg and Zeerust Chrome mines, and, subsequent to the year-end, Group Line Projects.

Expansion and capital expenditure

The group continues to spend significant capital in its operations. Assmang's Black Rock expansion project has reached 93% completion, while the Gloria Mine modernisation project has reached 25% completion. On completion, approximately R10 billion will have been invested in our manganese operations. These investments aim to provide an improved balance in Black Rock's resource, production and marketing capabilities, while increasing the overall production capacity of manganese ore from the Black Rock complex to five million tons per annum.

On a per-commodity basis, capital expenditure over the last five years has been as per the graph alongside.


The group's cash generation was strong this year due to the positive market conditions which prevailed. The net cash position of the group increased by R1,1 billion during the year to R9,0 billion at year-end. This enabled the board to approve a final dividend of R14 per share, taking the total dividend for the financial year to a record R24 per share.


This past year has been another very successful year for the group. I am proud of all our achievements, especially achieving record attributable earnings for the third consecutive year, a very healthy cash balance, no fatalities and continued safety achievements. I wish to commend the management team and all members of staff who have contributed to this success. In addition, such success could not be achieved without the significant contribution from our joint venture partners, trading partners and advisers. Likewise, I extend my thanks to them for their support during the year.

Patrick Sacco was appointed as deputy chief executive officer, in addition to his function as group marketing director, on 21 November 2018. We welcomed Mandla Tobela as executive: legal to the group's executive team on 1 January 2019. I wish them everything of the best in their new roles in the group.

Desmond Sacco


18 October 2019