Afrimat has announced that its sector classification on the JSE will be reclassified from the Basic Materials, Construction sector to the General Mining sector. FTSE Russell announced that the quarterly classification change was made after the market close on Friday, 17 March 2023 and will be effective on Monday, 20 March 2023.
Andries van Heerden, the CEO of Afrimat, states that the move is sensible given where most of the group’s earnings are now generated, and that the new classification will also better the position of Afrimat amongst its peers in the marketplace.
“After we listed in 2006, Afrimat was focused on aggregates and quarries, with our Construction Materials segment being the only contributor to profitability. We then embarked on a conscious diversification strategy to broaden our product offering through a multi-commodity portfolio to ensure the long-term success and sustainability of the business. This involved expanding into Industrial Minerals and later into Bulk Commodities, which now includes the mining, processing and sale of iron ore and anthracite. We are adding phosphate, rare earth elements and vermiculite to our product offering through the development of Glenover mine. The newly formed Future Materials and Metals segment will house the Glenover operation.”
Van Heerden explains that as a result of the diversification strategy, the group’s Construction Materials segment now contributes less than 20% towards operating profit. “The Bulk Commodities segment generates the majority of our revenue and operating profit and therefore, a sector change was required. “
An extract of The Industry Classification Benchmark Ground Rules defines General Mining as, “Companies engaged in the exploration, extraction or refining of minerals not defined elsewhere within the Mining sector. It also includes companies engaged in diversified metals and mining, marketing of mining commodities, and providers of contracted drilling services.”
Van Heerden indicates that Afrimat will continue with its diversification strategy to consistently deliver exceptional results. “This strategy, coupled with the innovation of traditional products and inputs, has effectively protected Afrimat against lower economic growth rates in South Africa. Deeper diversification into bulk and other commodities will help position the group as a Rand-hedge, able to earn foreign currency.”
The diversification strategy has also supported Afrimat in maintaining an outstanding Compound Annual Growth Rate (CAGR) of Profit After Tax of 22% from 2009 to 2022. An exacting focus on capital allocation and cash conversion will continue to be the foundation of stewardship.