By: OrePulse

South African diversified miner Afrimat reported a sharp decline in iron ore and manganese profit for the six months to the end of August 2026, as weak Chinese demand, softer prices and sharply higher freight costs squeezed its mining division.

The results underscore the pressure facing major diversified miners in South Africa, as soft Chinese steel demand has collided with freight costs pushed up by the conflict in Iran, and they test whether a newly acquired ore deposit can offset the decline of an aging mine.

Operating profit from the iron ore and manganese business fell to 11.3 million rand from 403.5 million rand a year earlier, the company said, even as revenue from the division slipped 7.9% to 1.2 billion rand. Mine-gate revenue per ton dropped 16.4% over the period, the company said.

Afrimat pointed to a mix of causes: softer domestic sales, lower prices realized on exports, rising mining costs, a bigger share of lower-margin manganese volumes, rand strength, and shipping costs that climbed 49.1% amid disruption tied to the conflict in Iran.

Export tonnage climbed 29.9% to 514,809 tons, a total that included 110,140 tons railed through Transnet's General Freight Business network during July and August; Afrimat said those additional rail volumes carried lower margins. Domestic iron ore sales fell 36.5% to 527,696 tons after a customer drew down stockpiles it had previously bought from another supplier. Afrimat said it expects monthly domestic demand to settle in a range of 90,000 to 100,000 tons.

At the group level, revenue fell 4.3% to 5.1 billion rand and operating profit dropped 32.8% to 255.2 million rand for the half-year. The company posted a headline loss of 58 cents per share and did not declare an interim dividend. Afrimat said preserving cash and reducing debt remain priorities while the iron ore and manganese business works to recover its earnings.

To help restore profitability in that business, Afrimat is turning to Doornfontein, a deposit it acquired during the period that will replace its aging Demaneng mine. The company said Doornfontein will initially be mined as direct-shipping ore, which it expects will lower production costs, with the company targeting first iron ore output in its 2027 financial year's final quarter. Afrimat has cast the project as central to reviving its mining earnings over the coming financial year.

The pressure on Afrimat's iron ore earnings reflects a broader imbalance in the seaborne market. UBS has said that supply in the iron ore market remains strong even as demand stays weak, with Chinese steel output down about 3% during the year's first seven months. Additional supply has also entered the market from Guinea's Simandou project, where September shipments hit roughly 39 million tons on an annualized basis.