African Rainbow Minerals Inc does not believe high nickel prices are sustainable because of concerns about the future of its Nkomati mine, Chief Executive Mike Schmidt said on Thursday, Reuters reported.
The Nkomati open-pit mine in South Africa, which ARM co-owns with Russia's Nornickel, underwent care and maintenance in March 2021 due to low nickel prices.
With nickel prices hitting record highs earlier this year, Schmidt has said ARM could consider resuming operations at Nkomati, which has 16,000 tonnes of annual production and is nearing the end of its useful life.
However, on Thursday's earnings call, Schmidt said mining Nkomati's remaining low-grade underground ore was costly and required a supportive long-term pricing environment.
"Nickel prices are up today, but if you look at the long-term outlook or consensus, it's not there yet," Schmidt said, adding that ARM and Nornickel would continue to evaluate the situation before deciding whether to close or restart mines.
ARM earlier reported a 13 per cent fall in full-year profit, hit by lower iron ore and platinum group metals prices and higher mining costs.
The company's overall earnings per share (HEPS), the most common profit measure in South Africa, fell to 57.87 rand ($3.37) for the year ended June 30 from 66.88 rand the previous year.
The diversified miner said its iron ore division was negatively impacted by lower average realized US dollar prices, lower sales volumes and higher freight rates.
PGM prices also fell from the record high of the first part.
ARM said lower earnings from iron ore and platinum group metals were partly offset by high prices for coal and manganese.
Its operating costs rose, driven by higher prices for diesel, freight, explosives and other goods.
ARM declared a final dividend of R20 per share, bringing total dividends for the year to R32 per share.
