Integrated Annual Report 2019
Switch to AFS 2019
Assore is a mining holding company engaged principally in ventures involving base minerals and metals.
Group performance

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).

Chairman's statement

Headline earnings by commodity
(R million)

Overview

Group at a glance

JOINT-VENTURE ENTITY (ASSMANG) SUBSIDIARY COMPANIES
Iron Ore division Manganese division Dwarsriver Chrome Mine Ore & Metal Company African Mining and Trust Company Minerais U.S. LLC Wonderstone
Iron Ore Magnesium ore and alloys Chrome ore Marketing and distribution Marketing and distribution (Management services) Marketing and distribution, USA Wonderstone

R21 410,2m

Revenue generated*

(2018: R15 135,3 million)


R6 796,1m

Attributable profit

2018: R3 343,5 million)


Refer to Chief executive officer's report

Type of operation

  • Mining, crushing, screening and jigging of run-of-mine ore and tertiary recovery of fine iron ore product

Description

Iron ore is mined in the Northern Cape province in open-pit operations at the Khumani Iron Ore Mine which is located near Kathu and at the Beeshoek Iron Ore Mine which is located outside Postmasburg. The ore produced is sold both on the export market and locally.


* Note that, in terms of International Financial Reporting Standards (IFRS), Assmang is accounted for on the equity accounting basis. Therefore, "Revenue generated", which is stated at 50% of its reported figure, as included in this analysis, does not form part of the group's reported revenue as reported in terms of IFRS.
 
2019 2018  
Production volumes (Metric tons '000)
– Khumani
– Beeshoek		 14 146
3 640		 14 694
3 884		  
LTIFR
– Khumani
– Beeshoek		 0,08
0,06		 0,10
0,07		  
Total employees and contractors
– Khumani
– Beeshoek		 3 827
1 445		 5 066
1 378		  
 

R14 817,1m

Revenue generated*

(2018: R12 859,6 million)


R2 301,7m

Attributable profit

(2018: R3 772,0 million)


Refer to Chief executive officer's report

Type of operation

  • Mining, crushing, washing and screening of ore
  • Smelting of ferromanganese
  • Production of refined ferromanganese

Description

Various grades of manganese ore are mined at the Nchwaning and Gloria mines, located in the Black Rock area of the Northern Cape province, and manganese alloys are produced at the Cato Ridge Works in KwaZulu-Natal. Cato Ridge Alloys, a joint venture with Japanese partners, produces refined ferromanganese at the Cato Ridge Works. Feed for the Cato Ridge Works is derived mainly from Assmang's manganese mines. The ore and alloy produced are both sold on the export market and locally. Sakura Ferroalloys, a joint venture smelting operation in Malaysia in which Assmang holds a 54,36% stake, produces high carbon ferromanganese from ores sourced in the market. The smelting plant has been designed to allow for switching production capacity to silico manganese. Alloy produced is sold in the export market.

* Note that, in terms of International Financial Reporting Standards (IFRS), Assmang is accounted for on the equity accounting basis. Therefore, "Revenue generated", which is stated at 50% of its reported figure, as included in this analysis, does not form part of the group's reported revenue as reported in terms of IFRS.

 

 
  2019 2018  
Production volumes (Metric tons'000)
– Black Rock 3 409 3 717  
– Sakura 249 244  
– Cato Ridge Works 143 151  
LTIFR      
–  Black Rock 0,33 0,20  
– Sakura 0,52 0,26  
–  Cato Ridge Works – –  
Total employees and contractors
– Black Rock 5 528 4 623  
– Sakura 447 475  
– Cato Ridge Works 552 612  
 

R3 720,8m

Revenue generated

(2018: R3 892,8 million)


R516,0m

Attributable profit

(2018: R875,4 million)


Refer to Chief executive officer's report

Type of operation

  • Mining, crushing and concentrating of ore

Description

Iron ore is mined in the Northern Cape province in open-pit operations at the Khumani Iron Ore Mine which is located near Kathu and at the Beeshoek Iron Ore Mine which is located outside Postmasburg. The ore produced is sold both on the export market and locally.


  2019 2018  
Production volumes (Metric tons'000)
(Metric tons'000) 1 551 1 619  
LTIFR 0,17 0,19  
Total employees and contractors 2 625 2 262  

R909,3m

Revenue generated

(2018: R831,0 million)


R611,6m

Attributable profit

(2018: R409,8 million)


Refer to Chief executive officer's report

Type of operation

  • Marketing, sales and shipping of ores and alloys

Description

Ore & Metal Company Limited is responsible for the marketing, sales and shipping of all the group's products, including those produced by the three divisions of Assmang. Strong relationships have been established with customers in Europe, North America, South America, India and the Far East.


  2019 2018  
Total employees and contractors 57 52  

R644,6m

Revenue generated

(2018: R488,1 million)


R254,9m

Attributable profit

(2018: R164,6 million)


Refer to Chief executive officer's report

Type of operation

  • Operational management, exploration and technical adviser

Description

In order to support Ore & Metal Company in its activities, African Mining and Trust Company Limited is technical adviser to Assmang and other group companies and provides operational management services to group mines and plants.


  2019 2018
Total employees and contractors 96 79

R2 586,0m

Revenue generated

(2018: R2 444,8 million)


R29,8m

Attributable profit

(2018: R65,3 million)


Refer to Chief executive officer's report

Type of operation

  • Marketing of minerals and alloys in the USA

Description

Minerais U.S. LLC is responsible for marketing and sales administration of the group's products in the United States of America (USA), in particular manganese alloys, and trades in various related commodities.


  2019 2018
Total employees and contractors 10 9

R58,7m

Revenue generated

(2018: R53,4 million)


R3,7m

Attributable loss

(2018: R1,43 million)


Refer to Chief executive officer's report

Type of operation

  • Mining and manufacturing of pyrophyllite products

Description

The company mines a type of pyrophyllite which, for trade purposes, is referred to as Wonderstone. The bulk of the material mined is beneficiated to produce high-precision components manufactured to customers' specification and are exported to the United States of America, the United Kingdom and the Far East.


  2019 2018
LTIFR 1,19 2,44
Total employees and contractors 94 78
Group performance

Sustainability report

Lost-time injury frequency rates (LTIs)
  Dwarsrivier   5  
  Wonderstone   2  
7
(2018: 8)		   Total Assore
operations

Lost-time injury frequency rates (LTIFRs)
  Dwarsrivier   0,17  
  Wonderstone   1,19  
0,22
(2018: 0,27)		   Total Assore
operations

Occupational health surveillance
 
 3 691
Audiometric surveillance tests		    5 847
Medicals performed

Total Assore operations: Workforce composition
 
 1 579
Temporary/contract employees		    1 204
Permanent employees

Focus of CED funding
 

34
Learnerships		  
38
Bursaries

Focus of CED funding
 

R12,2 million
was allocated to infrastructure development		  
R24,9 million
to education
 
R44,4 million
(2018: R31,5 million)		   Total CED spend per Assore operations
Sustainability report

Alien and invasive plant control

Dwarsrivier Chrome Mine developed a comprehensive Biodiversity Action Plan (BAP) in early 2015. The BAP was compiled with the assistance of various ecological specialists in the field of biodiversity management. Protecting, and even enhancing, the biodiversity of the mining area is key to long-term sustainable mining in the Steelpoort Valley. The mining and surrounding areas fall within the Endangered Sekhukhune Mountainlands region and are formally classified as a Critical Biodiversity Area (CBA).

For these reasons, biodiversity management is a key pillar of the Environmental Management System at the mine. One of the biggest biodiversity threats in the area is the proliferation of alien and invasive plant species. Eradication of alien and invasive plant species is one of the aspects addressed in the mine's BAP.

As part of the planning process the mine, together with the ecological specialists, identified a number of priority areas – ranging from riparian areas (high priority) to mining office blocks (low priority). In addition, a number of priority invasive plants were identified in line with the latest legislative requirements. The initial focus of the programme concentrated on high priority plant species located in the high priority sensitive areas such as the riparian areas.

It was also important for the mine to clearly decide on and set out the principles of the Alien and Invasive Plants Control Plan (AIPCP). Some of these principles include the following:

  • Avoiding impacts by not performing environmentally detrimental actions.
  • Minimising impacts by limiting aspects of an action which could lead to environmental damage.
  • Rectifying impacts through rehabilitation and restoration of the affected environment.
  • Minimising impacts by optimising processes, structural elements, and other design features.
  • Provide ongoing monitoring and management of environmental impacts of development and documenting of any digressions and good performances.

To implement the requirements of the BAP, in relation to alien and invasive plant species, the mine partnered with a specialist company in 2018. As part of the partnership agreement, the specialist company provides a qualified supervisor to oversee the invasive plant removal programme and provide training to local employees. Over time the trained employees would be able to assist with increasing awareness on biodiversity threats in the area, specifically those relating to alien and invasive plants.

A number of successes have been achieved since the initiation of the AIPCP. Within a relatively short period, several alien and invasive plant species have been successfully controlled at our South Shaft. There has also been good capacity building with the appointment of local employees from the Steelpoort area.

The AIPCP is in its first year of implementation and we hope to build on the successes already achieved in the coming years.

Alien and invasive pest control at Dwarsrivier

Alien and invasive pest control at Dwarsrivier