African Rainbow Minerals – Over the Rainbow
African Rainbow Minerals (ARM) is a relatively young company, having been founded in its current form in 1994. Today it is a leading South African diversified mining and minerals company with long-life, low unit cost operations. We take a look at a young, entrepreneurial mining company seeking out new opportunities in South Africa.
ARM mines and beneficiates iron ore, manganese ore, chrome ore, platinum group metals (PGMs), nickel, and coal. ARM also produces manganese and chrome alloys, and has an investment in gold through its shareholding in Harmony.
“ARM’s strategy is to deliver competitive returns for shareholders while creating value for all stakeholders. “ We deliver our strategy by operating our assets safely, responsibly and efficiently while allocating capital to value-creating investments and focusing on value-enhancing growth” says Chief Executive of ARM Ferrous, Andre Joubert.
Within the group, ARM Ferrous is the division that owns and operates the iron ore, manganese ore and manganese alloy operations in South Africa and Malaysia. These assets are held through Assmang (Pty) Ltd (Assmang) with ARM owning 50% of Assmang and Assore (Pty) Ltd owning the other 50%.
Joubert’s specific role and responsibility in ARM is the management of the Assmang operations in the Northern Cape and in Malaysia.
“One of the key elements I’m very proud of has been our ability as the ARM Ferrous team to deliver projects on time and within budget,” Joubert tells us. “Currently we are busy with a major modernisation project at our Black Rock Manganese Ore Mine. Covid has delayed the project slightly however with that taken into account the project is still due on time and within budget.”
As well as delivering projects in a timely and cost-efficient manner, ARM Ferrous also takes pride in its safety record. “We have two operations which have operated for more than ten years without any fatalities, and each of our ARM Ferrous operations has exceeded the 1 million fatality-free man-hours benchmark. It’s a safety performance we continuously strive to improve.”
The mining industry is not without its challenges. Regardless of howefficient a mining operation is, it is ultimately vulnerable to changes in the market.
“As a mining company, we’re not price-setters, we’re price takers,” Joubert points out. “One of the big challenges is containing unit cost increases and improving efficiencies. For example one of the challenges relating to this has been the high cost and low reliability of the electrical grid.
“We’re however not sitting back and waiting for this to impact on us,” Joubert insists. “We’re taking proactive steps and in the smelting business we are looking at technology that we can use to produce at significantly lower electricity consumption rates. We’re also doing a great deal of research work to make use of cleaner energy in our processes.”
“On the mining side we are modernising our Black Rock Mine,” says Joubert. “We’re going to maintain a strong focus on information technology, digitalisation and in the process, the whole surface section of the mine is to be fully digitised and centrally controlled. We are working very closely with original equipment suppliers Epiroc with an order for a loader and a better electric 20-ton dump truck. The emissions of these units will be zero, improving efficiencies and working conditions.”
A More Sustainable Mine
The working environment is not the only environment that ARM cares about. ARM works hard to balance the economic, social and environmental aspects of its business. Each of these elements is essential to the long-term sustainability of the company.
Maintaining that balance is possible thanks to the strong relationships ARM continues to develop with all its stakeholders, from staff to shareholders, to local communities. The mining company’s values, governance structures and ethical leadership guide its actions to conduct business activities with integrity and respect for the environmental and societal contexts it operates within.
ARM is a leading company in the mining and minerals sector, and its leadership is cognizant not only of its impact on the world around it but also the opportunities it possesses to make a positive contribution to the growth and development of the communities it operates within. This is a responsibility specifically acknowledged by ARM’s values of good corporate governance, improving the lives of those living in communities within which it operates and environmental stewardship. The company sees these as essential aspects of generating economic value for shareholders and social benefit for stakeholders. But beyond that, ARM takes a broader view to include non-financial aspects that will help ensure the company’s long-term sustainability.
ARM has introduced climate change and water management strategies that draw on various frameworks, guidelines, good practice and regulatory compliance requirements as well as meeting evolving stakeholder reporting requirements. The company recognises that these are issues that must be comprehensively addressed and for that reason, it has published a supplementary report on climate and water management at the end of last year. The report has been compiled using the core framework of recommendations from the Task Force on Climate-Related Financial Disclosures, alongside the Position Statement of the International Council on Mining and Minerals on Water Stewardship.
ARM works in some of the poorest and most remote parts of the country, making the employment opportunities, skills development and educational support it provides essential to local communities. At the same time, the company is making infrastructure investments and providing support to social projects among those communities to encourage socio-economic development.
ARM practices a preferential procurement and enterprise development programme to support entrepreneurship and economic growth among local communities, particularly with Historically Disadvantaged South Africans (HDSAs). These policies not only promote job creation but also build market access for South African capital goods and services, increasing economic activity in the areas around its operations.
The material benefits of ARM efforts over the last five years include R12.2 billion paid to the country in taxes and royalties and a further R675 million invested in community development. The company has given work to over 21,000 employees and contractors and has improved HDSA representation among its own management from 53% in 2016 to 65% in 2020. It has paid R18.8 billion to its employees as salaries, wages and benefits and invested R1.1 billion in training initiatives to improve the skills of employees while providing 858 bursaries. ARM also paid R55 billion in procurement, over the past five years with preferential procurement plans ensuring that money goes to contractors and suppliers that are HDSA, women and youth-owned companies.
All these expenditures are driven by ARM’s commitment to creating value for all its stakeholders, allowing it to support the development of the communities in which it operates through social investment and local economic development projects. These projects do not just help local communities, but the most vulnerable of disadvantaged members of those communities, with initiatives aimed at building capacity in communities while prioritising women, HIV and Aids projects, the upliftment of people living with disabilities, youth and the socially destitute.
ARM sees its collaboration with communities and stakeholders as a partnership. In addition to the sustainable benefits that these projects create for communities the company itself benefits by strengthening its relationships with host communities. Through regular engagements, ARM improves its understanding of community needs and expectations, while promoting the community’s ownership of projects.
A Rainbow of Talent
ARM is working hard to upgrade its facilities, including investment in increasing the level of automation at its facilities, but people are still a vital part of its operations. “In terms of training and recruiting our people, diversity is a key element for us in terms of age, gender, background, race and more,” he says. “Potential employees are assessed in terms of skills, health and physical ability to operate in the mining environment. They go through very rigorous training programmes.”
Every employee in the organisation receives their own individual development plan. Through a combination of the company’s training programme and employees’ hard work, they can advance through their careers, including lateral advancement that broadens their skill levels and vertical advancement through leadership courses and training partnered with the leading South African universities.
Indeed, ARM has provided adult education and training (AET) to 623 employees and 1,637 community members at ARM facilities since 2015, increasing their confidence and employability. This is because ARM knows that in order to succeed as a company it needs to combine the talents of a diverse range of people. By the same token, it has decided to make a positive impact on local communities it needs to combine the talents of a diverse range of businesses and organisations.
“In the Northern Cape we realised that individual mines and companies spend a lot of money on Corporate Social Investment, and what we call Enterprise Development,” Joubert recalls. “We facilitate supply development and community engagement and involvement. It is a very formal process that we go through. We have assisted local municipalities with water and road projects and realised that to make a real impact, mining companies need to work together. So, we started a process called ‘Impact Catalyst’. Through this, we use the skillset of people who are skilled and experienced in the area of social engineering.”
As well as encouraging collaboration between businesses, ARM also works with and listens to the communities it has set out to support.
“We work with municipalities on their own integrated development plans, but it’s not each mine on its own. It’s all the mines in the Northern Cape working together with the government and the Minerals Council of South Africa,” says Joubert. “Through that entity, we formed the Northern Cape Mines Leadership Forum and through that, we’ve identified projects where we can work together to make a bigger impact on communities.”
Looking to the future, ARM Ferrous has a lot to be excited about. “We’ve got long-life low unit cost operations. Our Khumani Mine Iron Ore Mine has in excess of a 25-year life while our Black Rock Manganese Ore Operations have in excess of 30 years life of mine. We are also exploring some exciting value-adding growth prospects. Whatever happens, there is one thing Joubert is sure of. He tells us, “We have world-class ore bodies, infrastructure and people and are confident and excited about our future.”