Wrap Text
Afrimat business update and pre-close briefing session
AFRIMAT LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2006/022534/06)
Share code: AFT
ISIN: ZAE000086302
(“Afrimat” or “the Company”)
AFRIMAT BUSINESS UPDATE AND PRE-CLOSE BRIEFING SESSION
Afrimat is a successful multi-commodity, mid-tier mining company that produces and supplies
construction materials, cement, iron ore, anthracite, phosphate, and high-quality industrial
minerals.
In the first quarter of the new financial year, conditions deteriorated and Afrimat’s results were
impacted by a number of factors that converged concurrently, having a cumulative effect on
the HY1 2027 results. These include:
• reduced Rand-denominated iron ore export revenues at mine gate, driven by a
stronger Rand, lower international iron ore prices and significantly higher shipping
rates resulting from the ongoing conflict in Iran. These factors are expected to
adversely impact the interim results;
• domestic iron ore sales normalised in Q2 following erratic demand patterns in Q1;
• anthracite sales to ferrochrome smelters started improving after smelters remained
shut in Q1;
• an overtraded cement market;
• inclement weather in Q1; and
• sharp increases and volatility in the price of fuel, again linked to the Iran conflict.
In its 20-year history, these are some of the hardest times Afrimat has faced, yet its people
and culture continue to show resilience, positivity, operational discipline and leadership in
adversity.
Afrimat management expects the second half of the financial year to improve relative to the
first half, which continued to be adversely affected by concurrent external shocks.
Despite these headwinds, Afrimat’s diversified portfolio and resources delivered gains across
the business, including:
• a meaningful and growing contribution by the aggregates and fly ash operations,
supporting the original rationale for the purchase of Lafarge South Africa;
• securing a MECA III manganese export allocation of 240,000 tons per annum (tpa);
and
• gaining an additional iron ore deposit (Doornfontein), aimed at extending the life of
operations and lowering production costs.
At the same time, volume and market gains were achieved by:
• securing additional domestic and export anthracite markets; and
• additional iron ore export capacity on the General Freight Business (GFB) rail line.
These strategic initiatives demonstrate the Afrimat diversification strategy at work.
1
The Construction Materials segment will be the most meaningful contributor to revenue and
profitability in HY1 2027.
A strong focus on cash preservation remains in place. Proceeds realised from the disposal of
non-core marginal businesses and Competition Commission mandated divestitures have
been applied to strengthening the balance sheet. The debt-to-equity ratio remains at roughly
the same level as reported in FY2026.
Construction Materials
Aggregates
The rationale for the Lafarge acquisition is proving itself. The Compound Annual Growth Rate
in aggregates’ operating profit from FY2022 – FY2026 was 36.29%, with an operating profit
margin of 18%. Afrimat has divested the necessary quarries, as directed by the Competition
Commission, and has fixed and turned around many of the poorly performing quarries it
acquired. The integration drive has been successfully completed, with improvements already
emerging from the strengthened platform now in place.
From a market perspective, Afrimat is seeing volume growth from widespread spend as well
as several projects across the country, including rail maintenance, provincial roads, water
infrastructure, private and residential building contracts and the rollout of renewable energy
projects.
Cement and extenders
The business has been painstakingly rebuilt from the ground up, with systems, business
procedures and operations now running much more consistently. Kiln 4 is operating at a
steady production level, while Kiln 3 was switched off over winter due to higher energy costs.
Afrimat and its subsidiaries (“the Group”) recognise the value of the integrated cement
operation and, with improved performance, various strategic alternatives are being
investigated.
Bulk Commodities
The Bulk Commodities segment has been affected by several structural factors in the South
African economy.
Iron ore – domestic
Early in Q1, Afrimat experienced a sharp decline in volumes as Arcelor Mittal South Africa
took volumes from a stockpile it had secured. Q2 saw improved volumes, averaging roughly
90 000 tons per month (tpm) (HY1 2026: 830 662 tons; HY2 2026: 681 888 tons).
Iron ore – international
Rail logistics are performing better and are becoming more reliable. A 10-day maintenance
shutdown, essential for future performance, although well executed, did impact volumes.
Another maintenance shutdown is due in October 2026. Despite improved operational
efficiency at Transnet, Afrimat expects that the maintenance shutdowns will keep volumes
roughly 10% below the allocation of 870 000 tons per annum.
As Demaneng begins to reach end-of-life, Doornfontein, a newly acquired lower-cost deposit,
will seamlessly replace Demaneng.
2
It is expected that HY1 2027 will be impacted by lower US Dollar prices, increased shipping
costs due to the war in Iran, and the strengthening of the Rand. The realised Rand price at
the mine is weaker than in the past, but Afrimat continues to liquidate excess stock and turn it
into cash. This is primarily being done through the allocation received on the GFB line, albeit
at a higher cost compared with the OREX line.
Anthracite – domestic
Fortunately, the ferrochrome smelters are beginning to reopen due to the National Energy
Regulator of South Africa approving a reduced electricity tariff for smelters. Thankfully, this
has preserved several jobs across the industry. The Nkomati Anthracite Mine is slowly
ramping up to supply the local market.
Anthracite – international
Afrimat has continued to export anthracite although at lower prices. For FY2027, Afrimat
expects to export a total of 240,000 tons with three (3) vessels (or 120,000 tons) already
executed and a further four (4) vessels confirmed.
Manganese
Afrimat has secured a MECA III allocation of 240 000 tpa via Saldanha for the next seven (7)
years. The first confirmed vessel departed on 4 August 2026, and Afrimat expects to fill one
vessel per quarter for the remainder of the financial year.
Glenover
The Glenover resource comprises both a rare earth stream and an iron phosphate stream.
The rare earth has been successfully recovered from a rare earth-rich slag and the iron
phosphate stream produces an Fe-P alloy, a feed source with potential to produce battery
precursor material. The Company is currently in discussions with local and international parties
in this regard.
Industrial Minerals
The reopening of the ferrochrome smelters is good news for this segment, in addition to new
markets being sourced and supplied. The upcoming agricultural planting season should
increase demand for agricultural lime.
Prospects
Afrimat continues to build on its strengths, with acquisitions, particularly in aggregates,
beginning to deliver. The diversified commodity base, focused on open-pit mining, is coming
to fruition.
Overall, Afrimat faced a challenging Q1, but saw a slight improvement in Q2.
Within the Construction Materials segment, aggregates had a strong start to the new financial
year with margin expansion on track, but volatile energy cost pressure has impacted HY1
2027 slightly.
Operational improvements are now complete in the cement business, and Afrimat hopes to
update the market on the strategic alternative project shortly.
In the iron ore business, profits from international sales are expected to be constrained by
lower realised Rand revenue, and shipping costs will continue to be impacted as long as the
war in Iran continues.
3
Domestic iron ore demand will remain under pressure from ongoing steel sector headwinds.
Anthracite volumes are expected to improve as more smelters come online, supported by the
export strategy the Company has implemented.
External shocks have been managed and mitigated as far as possible, with several new
initiatives in place. Cash generation and debt reduction are the main priorities.
Pre-close briefing session
Afrimat shareholders are advised that the Company will host a pre-close briefing session
relating to its business activities for the six months ended 31 August 2026 via a virtual
discussion webinar from 11:00 to 12:00 on Friday, 28 August 2026.
Shareholders interested in attending the briefing session should contact Keyter Rech Investor
Solutions at antoinette@kris.co.za for the link.
A recording of the session can be requested by contacting Keyter Rech Investor Solutions at
the abovementioned email address.
Further update
Afrimat will update the market in September 2026 once management has greater certainty
about the Company’s financial position.
This announcement contains forward-looking statements based on Afrimat’s current beliefs
and expectations of future events. The financial information contained in this announcement
has not been reviewed by the Group's external auditors.
Cape Town
25 August 2026
Sponsor
Valeo Capital (Pty) Ltd
4
Date: 25/08/2026 05:05:00
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