Good afternoon, ladies and gentlemen, and to everyone dialed in. Thank you for making the time to come and listen to our presentation of our half-year results. As normal, we will run through a presentation where I will give a quick overview. Pieter will give the financial information. Collin will talk about the social side of the business, the softer side of the business. Then I will summarize again at the end, and thereafter we will handle questions. If there are any questions, please type it in. For those of you online, type it in under the Q&A block or the chat block, and we will read it here and answer the question.
If we look at the period that has just gone by, that we reported on up until 31 August, I think that first block is a good summary of what happened, where we really saw a number of challenges that converged on the business from various fronts, specifically in the bulk commodity space. But we personally, one of the highlights of this period was also in how the whole Afrimat team got together and how we managed to strategically realign the business to adjust to what could be a new normal in many of the cases, and how the team has executed with intent. I really hope to share with you the progress that has been made in the year so far. If we look at the successes, you will know that about three years ago, we announced that we were buying the Lafarge South Africa businesses.
Many people still confuse this Lafarge with cement. It is actually a very small part of the cement of the Lafarge business. The real value in the Lafarge business has always been the aggregates business and the positioning of their aggregates assets, as well as their fly ash business. That you will see has really come through in a big way this year. We have also been able to get access to our new iron ore deposit called Doornfontein, which is really critical for us to be able to adjust to what we call a new normal in that industry with a very high-quality material that has a low cost of production. During this period, we also saw a significant increase in our export of anthracite. You will remember that Nkomati Anthracite Mine was a dedicated mine to Glencore when we bought it out of business rescue.
Glencore decided to shut down, last year in August, they decided to shut their ferrochrome smelters, basically taking the market away from us overnight. The team really got together and you will see how the exports have increased. Fortunately, in anticipation of what could happen, we did start developing the export market before this happened, but we really had the opportunity to accelerate it very hard. We have been awarded a 240,000 ton a year allocation on what is called MECA III. That is a manganese export allocation. Transnet renews these allocations once every 10 years. There is seven years left on this allocation that we were awarded. Also as part of our cash generation, we managed to sell iron ore on what we call the GFB line, the General Freight Business line of Transnet.
It is a more expensive way, but it did give us the opportunity to sell redundant stock that we had in the iron ore business and turn that into cash. That did help us with cash generation to an extent. As I said in the beginning, it has been a very challenging first half. It has been the most challenging that we have ever had since the listing of Afrimat. By the way, Afrimat will be 20 years old on the 7th of November. Some of the challenges that we had, the reduced Rand price at the mine gate. We saw probably from where it was about a year ago, probably a good 25%-30% reduction in Rand price at the mine gate.
We also saw lower domestic iron ore sales, our local customer being ArcelorMittal, who decided to buy an extra stockpile of material from Beeshoek, which is a closed mine, but there was still some stock on there, and that impacted our sales in the first half of this year. On top of that, they also had their challenges. The cement market remained an over-traded space and the domestic or the inland cement market, our analysis is that the whole market has shrunk. If we look at what our competitors are saying that is true for most of the cement players in that northern region, supplying into Gauteng in the northern provinces. The thing that is very topical at the moment is the sharp increase in fuel prices.
As we speak, diesel is about 75% more expensive than what it was in the beginning of the financial year. That is in an open pit mining operation, quarrying operation, that does bring specific challenges with it. If we look at all these things, and we are not good at standing here and making excuses. That is not the Afrimat way. We normally try to be proactive and try to foresee things, and some of the things that changed in this first half was a little unforeseen and happened a little bit quicker than we thought. If we look what proactive actions were taken in this period, a lot of our loss-making operations were closed. We did not have many of them, but those that we did have, we did close them, and the non-core operations were sold.
For instance, we have now completely exited the concrete manufactured product market. We have sold all our brick and block businesses, all our factories. We focused very strongly on cash generation and debt reduction. We managed to reduce our centralized cost. There was quite a lot of cost that came with the Lafarge transaction, which we managed to engineer out of the business and is now completely out. We completed the divestitures that the Competition Commission expected of us to do. That deal was completed and the money was banked. Then we made very good progress on our strategic positioning of our Cement business. With the Lafarge business, we did get the Cement business.
It is a turnaround, and JD and his team has done an exceptional job to turn it around, and that has now given us very good opportunities to look at strategic alternatives, which we are working on. If we look at the different segments, there is a comparison on the screen for you in terms of revenue. We saw a marginal reduction in revenue from ZAR 5.3 billion- ZAR 5.1 billion. There you can see aggregates still being the dominant contributor in terms of revenue, but you will also see later now also in terms of profitability, quite a good contribution. Iron ore, constant, around about 24%-25% of revenue. If we then look at our construction materials business, which as I said in the beginning, that was really the star performer of this half year. There you can see what the revenue has done.
Year on year, the revenue has been relatively flat, both for aggregates as well as the Cement business actually had a slight reduction in revenue. The aggregates business revenue must also be seen against the backdrop that certain assets were disposed of in this period. The growth we saw in certain assets in terms of revenue was offset by the revenue that we lost by the disposal of certain assets. But the important slide or the important information on that slide is the operating profit and the margin. There you can see that the aggregates business is really now starting to come through. We will give you a little bit more detail in the next slide on exactly how that is done. If we look at the aggregates and Fly Ash business, we are very, very satisfied.
When I stood here six months ago, I was asked the question, what margins do we hope to see in the aggregates business? I made the comment to say I would really hope to see it go above 20%, and we did break through the 20% margin. The margin that you will see in our financials are actually higher than that, but remember, that does include the profit that were made on disposals, which we have now stripped out. What you see there in front of you is the real operational business and what was made in that business. The Lafarge businesses are now fully integrated into our business and working as a unit. There is no more Lafarge and Afrimat, it is fully integrated. We did spend a bit of capital to make sure that all those businesses, and it is an ongoing process.
We will always make sure that we remain relevant in terms of capital. We did dispose of certain businesses that were relatively high revenue businesses but low margin businesses. Typically, some of our ready-mix businesses as well as all the brick and block businesses has been disposed of. The star performer is really the Fly Ash business that although it is not a big business, the margins in that business is very healthy, and it is a business with a very solid moat around it. But there you can see on the graph the operating profit for half year periods over the last six years, and that green circle block around it, that is after the Lafarge transaction.
There you can see how that has changed our aggregates business, and there you can see the reason why we bought Lafarge. If we look at the footprint, you will see that our footprint, with the exception maybe of the Southern Cape, that is a very lively part of the country, but the rest is wherever there is good economic activity, we have a very strong presence. For instance, we own more than 50% of the accredited quarries that can supply Transnet, which I think is a very valuable competitive advantage. Transnet and provincial roads is a big driver of the performance of this business.
In addition to private building, there is quite a lot of private building going on around the country, and we see that residential building in certain parts of the country is accelerating, and the renewable energy market is definitely accelerating and using more of our products. The Cement business, this has been a very difficult turnaround in a market that is extremely depressed. Anybody that analyzes cement industry should agree that, especially in that northern part with all the cement factories being in a relatively small radius near Lichtenburg in northwest, the market is extremely tough for those guys. JD and his team has had a tough job to turn this business around. But operationally, they have done a fantastic job. The factory is in a very good state, and what is interesting is the prospects for that industry is actually very good.
Government is really coming to the party in terms of protection measures that is coming in against imports, and there is some other actions coming in against low-value blenders. The longer-term prospects for this industry and for this business is not bad. That gives us the opportunity to look at very interesting strategic alternatives for the business. We are looking at a few very exciting opportunities in this space. As soon as we have got everything firmed up, we will talk to the market a lot more. Bulk Commodities. You will remember that just about two years ago, our Bulk Commodities business was about 80% of our profits. I get the question very often nowadays that you said you are a diversified business, but your diversification didn't help you. Our answer to that is if we didn't have the diversification, we didn't have the Aggregates business, we would have been in trouble.
You will see that we have generated cash, which I think is the important measure that we have actually built. We have reduced debt a little bit, but unfortunately, our Bulk Commodities business was under a lot of pressure, and specifically on the iron ore side. We had a combination of factors. We are reaching the end of life in Demaneng, which is making the cost higher, the quality lower. We have to buy in to blend the product to keep our export market alive. Doornfontein, which is the mine that we acquired and the guys did a fantastic job to get a very good business there at a reasonably good price. But then we had to fight the South African system, and we even had to go to court to get the license. We got that all done.
We got the approval, and we actually have a team on-site as we speak, busy developing the mine. It is a low-cost mine, and we should start seeing sales from here towards the end of this financial year because it is a mine with a very low strip ratio, and it is a direct shipping ore for a certain part of it. If we look at the domestic market, I touched on that just now. ArcelorMittal closed Newcastle. They acquired a dump or a stockpile, not a dump, a stockpile of material. Because it is our competitor, I would call it a dump, but it is probably unfair. They acquired that material, and that had an impact on the volumes that they acquired from us.
They are moving through that stockpile, and we are starting to see an improvement in sales, and we expect a stabilization of around 90,000 to 100,000 tons. We have already seen in the second quarter an improvement, and as we speak, it seems to be reasonably stable around those volumes. The average realized price is lower than in the past, but we also have now a different structure in place that will hopefully improve the pricing a little bit in the not-too-distant future. On the export side, we have seen a very good, and you will see in the next graph how the improvement in Transnet is starting to become a reality. We have seen more reliable work or logistics from Transnet. On the downside, they have now gone from one shutdown to two shutdowns.
We are still seeing that our actual material transported is still below our rail allocation specifically because of these shutdowns. There was a derailment, but Gerhard, I am only aware of one derailment this year. Yeah. Okay. Gerhard and I have a little inside joke because Gerhard always predicts the derailment to be just after the shut. Anyway, we also exported 110,000 tons of mostly fines that were slow-moving or redundant stock. We decided to export that, albeit at a higher cost. The GFB export line is more expensive than the normal Sishen-Saldanha line. Given the cash that we could generate, and it was redundant stock, we did decide to do that. It generated cash, but it was not really profitable, but it did generate cash and free up cash for stock that was actually dead stock. The average price at mine gate did reduce.
On average, over the period was 16.4% down, in spite of the fact that for the period, the average dollar price in the first half of this year was 3.3% up. The strengthening of the rand, and the big thing was the increase in the shipping cost of almost 50%. That reduced the rand price at the mine gate for us. Looking at our bulk commodities, Demaneng is at the end of life, and we will probably start seeing the last of that towards the end of this year. There is still a little bit of material left, but one day when Ernie, who is in the audience here, who does our sales and marketing, when he pays us a better price for our iron ore, we can go back and fetch the stuff from Demaneng. For now, he is not paying us enough.
Doornfontein, that's an exciting new opportunity. On the site, we're doing two things simultaneously. One is the obvious material that we can see there. We started producing from there, but we have a team on-site that does the exploration so that we can do a proper competent person's report. When we stand here 6 months from now, we'll be able to do a proper report on the material. I can tell you, this is a bargain of a lifetime. We bought Jenkins a couple of years ago for ZAR 300 million. We paid ZAR 150 million for this mine, and I don't want to quote any figures from here, but I think we bought significantly more iron ore in the ground than what we did in the case of Jenkins. The exploration is ongoing and will be done towards the end of this financial year. I'm very excited about that.
Jenkins will be focused on the domestic market. It is a low-cost operation, and we will focus that on the domestic market. Here's a slide that I wanted to show you. If you look at the graph, and this goes back all the way to September 2023, and the different colors shows the different modes of transport on the export line, the GFB line, domestic rail, and domestic trucks. Can you see that from July, in July, we did a little bit by road still, but as from August, nothing has gone by road. That speaks to the changes that we are seeing at Transnet. There's a definite change in the quality of, I want to call it quality of management of Transnet.
There you can see some of the trends in the iron ore market, what the 61%, 62% flat price has done in the last three years, what the lump premium has done, and also the freight rates, which fortunately, as we speak, are starting to come back. We were in excess of $30 a ton, and I think it's at the moment around about $25. So it's starting to look better. Manganese, at this stage, we're still using Driehoekspan. It's not a great quality manganese deposit, but it is an extra with no extra overheads. It's an operation that we do at marginal cost. We're exporting through there. Doornfontein, on the other hand, there is a certain part of the farm that has reasonably good quality manganese, and this allocation is definitely going to help us to get full value from Doornfontein.
If you ever wanted to see what the culture of Afrimat really means, just go and look at what happened at Nkomati. On the 15th of August 2025, I was in Botswana on a short vacation, and my colleague, Gerhard, our COO, sent me a WhatsApp to tell me that the ferrochrome smelters are not starting up again. My wife says my legs literally gave way under me because of the impact that would have on Nkomati, because we were a dedicated mine for Glencore. We did start exporting a little bit of what we call high phos, the material with higher levels of phosphorus in the material, which was out of spec for and used to be a waste product. We did start exporting that at a low level, but our focus was Glencore. The team got together, they managed to reduce cost dramatically.
And the marketing team and with Richard sitting in the room here and some of our other people, they really got going. As we speak, Richard is now at a point where he says he sold out as from November, December, in volumes. This is what Afrimat's people does. We can never control the external environment, but we can control how we react to it. We had the best excuse. Your market falls away and the guys just got in there, and the ladies, and they turned this into an opportunity where we actually think that there is enormous value in this asset now, the way they have positioned it. So we are quite excited. A good balance between our domestic market now, where we are not only supplying Glencore anymore, we are also supplying a few other users of anthracite.
We are exporting and the good news is we are starting to see export prices ticking up with international energy prices going up. We see the same starting to happen in this market. This is a team that I am extremely proud of. Industrial minerals, I have said it a couple of times that South Africa is deindustrializing. So when we went into industrial minerals 15 years ago, it was a big focus to have a consistent off-take, counter the cyclicality in construction. As we speak, we are actually turning a big part of our Industrial Minerals business, specifically marble. We are turning that more towards an aggregate supplier in the construction space again, because we are deindustrializing. We have lost Newcastle. Ferrochrome smelters are coming back, granted, but we are also seeing that our glass and chemical customers are battling against cheap Chinese imports, and I think government should wake up.
We are losing our industry at a hell of a rate because of these cheap imports that is being dumped in our market. We see a little bit of action in certain markets, but I think they are moving too slow. This business, we are going to turn it into an aggregate supplier again because the industrial market is just falling away. What we call our future Materials and Metals business, that is Glenover. So there are two sides to it. On the one hand, we are doing a little bit of fertilizer out of it. Cash generation is okay. From an accounting perspective, it is actually losing a little bit of money, but it is really the non-cash component, the depreciation part that is causing that. We are generating a little bit of cash, but that is not the focus. The focus is on the right side of this graph.
The iron phosphate is a very good precursor to the battery minerals space. There are some very interesting things going on in that space, which hopefully we will be able to make an announcement within the next six to eight months on where that is going. A byproduct of that process is rare earths. Dr. Campbell Parry can tell you a lot more about the markets for rare earths. He is an absolute expert on where that can go. But it is a very exciting project for the future where we see the market developing to and this can be a big game changer for us in 18 months or two years from now. I am going to hand over to Pieter. Pieter, good luck explaining these financials.
Thank you, Andries, and good afternoon, everyone. Just before we look at the financials, I want to reiterate what Andries was saying, we as management want to build a sustainable business for the long- term. This is not a one-day game. This is a five-day game for us. The results are unfortunately a finite game. There are some headwinds. The team has done a lot of work to reposition the business. You can either become a victim of the headwinds or you can reposition yourself. We see ourselves as that team that will reposition the business and that is what we have done. If we look at the financial results, the summary of the financial results, the group revenue is slightly down 4.3% to ZAR 5.1 billion. The headline earnings per share went from a profit of ZAR 1.01 to a loss of ZAR 0.58.
It is slightly different to the operating profit. The operating profit was ZAR 252 million. There are a few things that make the difference. The first one is the profits. Andries alluded to the profits that we made with the divestitures, which is ZAR 95 million. We made a profit with the divestitures that the Competition Commission wants us to divest. There are also other non-core businesses like the ready mix and the brick and block businesses that we sold that was also a profit of ZAR 31 million. So that is the first one. Then there is the tax entry. The Cement business made a loss of ZAR 140 million, and because of that loss, we cannot recognize the deferred tax asset. So there is no tax entry on the ZAR 140 million loss. So that increases your tax expense and your income statement. Their profits are also then added back.
Like I said, the profits with the sale of the assets are also added back for headline earnings, and that is why we have got a loss in that. With the loss, there is also then no interim dividend that we are going to declare. The other two figures there, return on net operating assets 7.2% and the operating profit margins, that is below par and we are working hard to improve that to where we expect that to be. The one good thing that we do manage to get right is the reduction of debt. Andries has alluded to the cash that we generated through the working capital. We sold extra stock that is in the iron ore business, through the GFB line, and that has generated cash and that allowed us to reduce the debt to equity from in August last year, it was 52.5%, February it was 50%, it is now 46%.
If we look at the revenue, like I said, the revenue is down 4.3%. The operating profit is down 32%. If you strip out those once-off things, the operating profit is down 66%. If you look at what is the difference between this year and last year, this graph explains that it starts with last year's operating profit and it ends with this year's operating profit. So the first one, and Andries said this, it is a good performance from the Aggregates business. If you look at that extra profit, this is on top of what we did last year with the aggregates, we added another ZAR 240 million. The comma is not right on this thing. Another ZAR 242 million of profit. If you exclude the once offs, it is another ZAR 119 million that we added on top of what we have done last year.
It's a 37% improvement if you exclude the once offs. It's exceptional performance from the Aggregates. The shared services, you will see Andries also touch on that. I'll give a bit of color on that. There's a 36% saving on our centralized service costs. The other big one is on the iron ore side. There we saw a reduction of ZAR 390 million in our profits. The two biggest things that impacted that. The first one is on the pricing, the export pricing. We saw a significant drop, specifically on the shipping that went up almost 50%. The second one is on our domestic volumes. It was very erratic during the six months. Last year in August, we sold 200,000 tons to our domestic customer. The average that we did this six months is 64,000.
For a mine to ramp up and ramp down, it's difficult. A mine is like a manufacturing plant. You want to run at full capacity all the time to get the cost per ton down. The erratic volumes had two impacts. The one is revenue. Because the volumes are lower, you get less revenue, and secondly, your cost per ton goes up because you're not that efficient, because firstly you ramp up and you produce 100 to 200,000 tons, and then your customer don't take it, and you sit with that and you have to cut production down and you have to sell the excess stock. That is what we did during this period. We did generate the cash with excess stock. We're not on excess stock levels anymore. Like Andries said, it has stabilized now going forward.
The focus of the business for the six months was to generate cash. You will see the cash generation for the six months is 20% higher than what it was last year. We generated over ZAR 200 million out of our operations. We used that to reduce our debt. Like I said, the debt to equity levels came down to 46%. That's the second graph there. The shared services, a 30% reduction in our shared service cost. The biggest one of that is the SAP cost of the Old Lafarge business that's now out of the system. The head office cost is now also out of the system. On the balance sheet, I'm not going to stand still on the balance sheet. It looks similar to what it is in February. The only material change or biggest change is the reduction in the debt.
Came down from 2.4 to 2.2. Like I said, 46% debt to equity. There's no other material changes since February in our balance sheet. If you look at the capital that we spent, it's planned FY 2027, it's broken up. What we already spent on replacement capital is ZAR 173 million. You can see there, construction material 64, cement 48, mining 53. That adds up to 173. About 37% of the budget of 465. There's still ZAR 291 million remaining. But we are, as management, very prudent and stringent on our capital spend. There's a high likelihood that we're not going to spend the full budget because we do want to preserve the cash, but we also don't want to hamper the business. We do challenge the teams on return on investments when we look at the capital.
If you look at the improvement capital, the only big improvement capital is the Doornfontein. What we paid for Doornfontein, ZAR 150 million, ZAR 160 million in there. There is a few other costs that is in there. The planned spend there is the additional cost that we are going to spend on the mine. It is predominantly the drilling work that we are going to do. That adds up to ZAR 196 million. That gives you the ZAR 662 million that is planned for the year. If you take the improvement out, it is below ZAR 500 million where we see the replacement capital is around 4% of your revenue. We are still doing our replacement capital, but we are just very stringent on when we do spend the capital.
Once again, to conclude, our focus areas is to generate cash, improve our operational efficiencies, get the loss-making things to perform, use technology to help us improve our operational efficiencies, and then the cash that we generate, we are going to use to reduce our debt levels to where we are more comfortable with our debt. Those are my comments on the finances. I am going to hand over to Collin for the social part.
Thank you, Pieter. Good afternoon, everyone. It is a pleasure again to stand in front of you just to share with you a bit of what we continue doing in Afrimat regarding our people and also how we look after our environment. I think the story is despite of what is happening in the short term, we continue to investing in our people. We want to make sure that we always set up for the long term and not just on the short term. If we look at the metrics first on the employee side is we now have 3,143 employees, which has dropped from last year and mainly because of the divestitures that we had and also the disposal of some of those non-core assets.
We did have a little bit of some retrenchments, which is something again, we are not really proud of as a company because we just want to see creating more and more jobs going forward. But because of the environment where things were, we had to really re-look at some of our businesses, and we shed off some employees there. But we continue to still create jobs in some other areas, especially in the Aggregate business as you would have seen there. We continue training people. We had still over 5,700 days, which in total was about 33%-34% of our employees were exposed to some training. Although the number of days are reducing, we still see that number of people increasing because we are moving more towards the technological side of things in terms of training people.
Then we continue giving more bursaries obviously for people who are wanting to go outside. We do have our own internal programs, and at the same time, we also send people out to universities, to colleges, and FET colleges. Some of the highlights which we are proud of is we have seen a number of employees who now have medical aid or what do you call it, medical insurance, jumping up from 19% to 50%. We understand this country it's getting tougher and tougher, but we are continuing trying to engage insurance companies and stuff to try and still make it possible for employees to have access to good medical covers and stuff. Then we continue to look at our attendance, which is still looking good. Then also the labor turnover, it still remains low for the industry, which is sitting at 11%.
I must also say that on that 11%, about 5% of that it is due to retrenchment. But people, they don't really leave Afrimat when they join Afrimat, which is great. Then continuing on the training and development, we do spend still a lot of time and money on our artisanal skills and also technical graduates. So technical skills, again, as you will know, it's a mining company. It is important. Especially on the artisanal side, we realize that the quality out there, it's dropping and dropping in most FET colleges. So we creating our own internal sort of expertise or strength to build those skills internally. And we are looking at different skills. Obviously, you can see there at the bottom, the areas that we spend on in terms of learnership.
We do spend a lot of time training our boilermakers, electricians, the millwrights, the fitter and turners, diesel mechanics is really one of the areas that requires our attention. Then in terms of the graduates, which is typically the engineering qualification coming out of the university, that's another area that we spend a lot of time on. Mechanical engineering, engineers, that's one area we've been spending a lot of time. We have realized that some areas that we need to focus on is areas like metallurgy, mechanical engineering, and we are trying to change that forecast to make it more, I call it heavy mining skills, which we never had previously, to make sure that we have our own internal skills, especially for our bulk commodity business.
One of the gems that we did acquired when we bought Lafarge was the technical center or technical academy, which really they were underutilizing it. As we bought it, we then started improving the utilization where it's now at 90% utilized. And the quality of the education there, it's really world standards, which we're really proud ourself of. That training is not only just for Afrimat as well. We bring people from other part of the industry to come and learn from that academy These are the trades that we offer: fitter, turner, millwright, electricians, welder, and boilermakers. Then going forward, again, we continue looking at what are the scarce skills that are becoming more problematic for ourselves, which is diesel mechanic is one of those. So we are preparing ourself at the moment to bring those trades into our academy.
That will be happening next year. Every time I stand here, every six months, I always promise you that I will introduce you to one of our success stories, especially introducing individuals, because I believe numbers don't give you a proper story. Today, I just want to introduce you to Mbuso Biyela. Mbuso is currently in Richards Bay Quarry, and I want to encourage all of us, if you are going that side of the world, you're welcome to pop in there and go and greet and say hi. They will appreciate visitors. Our quarries are in remote places, and it can be lonely in those places. If you're passing by and you're visiting that site, please pop in and go and greet him and ask him about some of his journey in Afrimat, and he will give you this story himself.
He joined us in 2014 as an intern, and he always talks about when he came here, he thought he was going to be in the office in a nice air con, fancy office. Then he was sent straight into the plant to be with the broom to clean up the plant and stuff. Those are the kind of experiences that he proud himself with and cherished because now no one can tell him, I almost used the word, but you know what I'm saying. He's now got the skills and he has developed. He's becoming all around Quarry Manager, which is one of the Quarry Managers I actually proud of. When we took over Lafarge, this Richards Bay Quarry, it was shut down because they couldn't run it because of the community.
Afrimat being Afrimat, because we try to make sure that we are diverse in our skills and we know how to operate everywhere in the country, we send him with some of our guys who know how to engage the communities. He went and met the chief in the area, and he was able to negotiate with them to be able to open up that quarry. He then get into that quarry and he developed it from almost no money. Darwin didn't give him any money to CapEx to build that, but he managed to make money, profit in the first, Darwin, I don't know how many, first three, four months. Five months, he was already profitable. That quarry today, I think last year, full year was over ZAR 10 million profit that he made from nothing.
This is an all-around Quarry Manager who knows how to engage the community, who know how to engage the DMR, who know how to look after his employees. That's the kind of skill we need going forward, and we're proud when we see those guys becoming strong like that. Please visit him when you go that side. Then if we look at from the mineral resources side, we always share the number of mining rights. It's really an administrative burden, but at the same time, it created a skill that we never thought we'll have. When you have many mining rights, you end up having to engage the DMR more often, which creates that relationship with them. Now we obviously try and go and create what we call a collaborative relationships with them instead of having this hostile relationship. It worked for us.
Whenever we need to get things done, sometimes it takes long, sometimes it is frustrating, sometimes we take each other to court, but at the same time, we always agree that it is not personal, and it is a business, and then we continue work with them. We got 58 mining rights. They have come down a little bit due to divestitures, obviously. Then we continue looking at areas that we are not there with mining permits and prospecting rights, which is how we look at the new market. We always talk about shooting a small gun before you shoot a cannon. That is how we test some of the markets quickly and see if there is market before we can go big. There are a few mining rights which are not active at the moment, and I think that still create opportunity for us.
We are still investigating some of them if there is opportunity to reopen them, and we are sure that sometimes there will be opportunities to do that. Communities, as I have said before, it is one of the areas that, again, we try hard to really keep our feelers on the pulse. It is not an easy one, especially coming now with the elections. We really, really trying to understand what is happening. We checking. We have always our people on the guard to make sure if there is any unrest, our people are safe and how we can continue operating. We do have this matrix where we check which are the heat rates, and wherever there is heat rates, we try and get close to those sites to try and engage and see how we can maintain good relations so that we can continue operating.
I am proud to say that last year, again, or last six months, we have not really had any stoppages due to any community unrest. In terms of safety, again, safety, it is one of our core values. We want to see everyone getting home unharmed. It did took a bit of a dip in the last couple of months, but our two COOs with the rest of the team really turn things around again and make sure that we prioritize safety, and we can see that it is coming down. Same with medical treatment cases that are coming down, and we are improving again. We have really tried to lower our targets, which used to be sitting at 0.3. Now we have put it at 0.25, which we are looking forward to see that coming down and continue to drop it further as time goes.
Part of some of the things that helps us to continue with the safety standards, obviously, it is our audits. We are part of the ASPASA association, which there is annual audits that gets done to those quarries. Each year, those audits get tougher and tougher. We can see this year it is little bit tougher because the stats have dropped a little bit in some of those sites that we have audited already. But there is still more sites that needs to be audited. Hopefully, we can see that improving. But it does help us to make sure that we look after our employees. Then medicals, that is something just to show you how we do it. We do not do everything in the beginning of the year. There is periodic audit medicals that gets done to individuals to make sure each and every year that we do not harm them.
This is more from the health side specifically, not from the injury side, because with health, you can have someone having a disease and dropping over the time, and if you do not do annual checks, you can really end up hurting people. We do not want to see, once again, people retiring in Afrimat and been suffering from silicosis and all the other diseases. Lastly, if you look at from the environmental side, especially with the carbon emissions, we can see that in all of our businesses, there is a slight improvement. Cement is the only one that has emitted a bit more than the previous year, but it is mainly purely because of the volumes that clinker has produced more. It shows the efficiency that is happening in the Cement . It is not necessarily because we are just polluting more. If you look at in terms of intensity, it is reducing.
Also last year, why we had a bit less emissions is because we bought more clinker in, but this time we are producing it ourself, which obviously has an impact on emissions. Electricity as well, we continue to be more efficient. We have an electrical engineer who is been looking at our power factors. Power factor, it is something that you fit on your plant, so that you do not have wasted energy, if I may say that in a simple term. That is to try and improve in your utilization of your kilowatts, and then we see that improving all the time in the last few months. The other areas, it is also water consumptions.
We have been intentional on that, trying to reduce the clean water that we use, and so that we use more recycled water, and that is really been going well in every part of our business, and we are proud on that. General waste also, it is one area that we trying to minimize that. Used oil, as you can see with Cement there, you see that number has gone up a bit. It is because in our kilns, as they are becoming stable, we have also started introducing alternative fuel on that. That is one of the way of reducing carbon emissions and also using cheap fuel, which we got. It is a waste oil that get used on the kilns, which really it is been doing so well because then it can reduce coal in the utilization on that. In a nutshell, that is what is happening on the people side and the environmental side.
I will hand over to Andries to finish.
Thank you, Collin. Ladies and gentlemen, what that leaves us with is where we are now and where we are heading. If we look at our Aggregates business, we are still gaining a little bit of momentum with our initiatives, refining our strategy a little bit more. We will maintain our margins. We should maintain our margins north of 20%. We see strong demand, specifically from the rail sector, the road sector, excluding SANRAL, unfortunately. The only thing that worries us a little bit is the fuel cost rising and that in some cases it is becoming more and more difficult to pass that cost on to customers. Cement, the turnaround is mostly done. There is still a little bit of work to be done, but the strategic options remain open, and we are quite excited about that.
The Industrial Minerals business, that is the one business that we do not think in the Industrial Mineral space we are going to see huge improvements other than the improvements from the ferrochrome smelters. But a bigger focus on agricultural lime and the aggregate sector in that space will hopefully keep this business alive and will probably just integrate it into the construction materials business. Glenover, a lot of work going on behind the scenes to really make sure that we bank and that we lock in the best possible value in what is absolutely a unique resource. Iron ore, Doornfontein, you will hear a lot about Doornfontein in future. That is really the big game changer in that market. We are talking, I just lost my screen here, but there it is back. It is just our IT guys playing some tricks on me.
The rail allocation Transnet is busy with reevaluating the rail allocation. We do have an expectation there is a little bit of communication between us and them, and I think at this stage it is still confidential. But there is an indication that we will see an increased rail allocation as from probably from about February 2028, is when the new rail allocation will be active. International sales should increase. At the moment, the international sales are still under pressure from higher shipping rates, albeit lower now than what it was a couple of weeks ago. We expect our domestic demand to stabilize between 90,000 and 100,000 tons a month. On the anthracite side, as we said just now, it is an exciting time for us. The market is opening up quite nicely. The guys have got their costs down very nicely. That is a positive.
On the manganese side, it is a little bit of marginal income. It is not a big allocation, but it is a marginal income for us in that space. We tried to show you that we saw a combination of factors that impacted the business and all of them external and out of our control. But the management team really did try to react. We did strategically realign the business. The one thing that the team did is they really executed with intent and tried to move as quickly as they possibly can. With that, thank you very much. I will now take some questions. I know there are some questions online, so we will take two or three questions online, and then we will also take questions in the audience.
Andries, the first question online is from Keith. He asked if diesel prices came down to the same average levels of 2024, 2025. With everything else kept the same, what would the impact have been to the first half of 2027 profits?
Keith, that's not an easy question to answer. To give you an indication, we burn about 2 million liters of diesel per month in the group. You can then go and look at over the six months as I don't have that data in front of me. But you can see what the impact would have been in total, the additional cost as a base from where it was in March. That's one way. Then there's still the distribution costs which in the Aggregates business specifically, it's a delivery cost. But that's very difficult to quantify because most of that we have been able to recover, Devin, if I'm right, in the Aggregates business. So there's not a big impact in the first half. But we do see a bit of pushback from certain customers which could change in the second half. Anton, do you agree? Good.
The next question is from Marty. Will beneficiation capacity be moved from Demaneng to Doornfontein or will run of mine be transported to Demaneng?
Marty, for a start, we'll transport while we're still establishing. But as Andrew always says, in the fullness of time, the entire beneficiation operation will happen on site, but that will probably only happen in the next financial year.
The next one is from Clarence. Bulk commodities, considering current fuel prices and moving of transport to rail, what is the anticipated benefit from a cost perspective for Afrimat?
There's no effect because we sell to our domestic customer at mine gate.
The next one is from Catherine. At the pre-close you had said you hope to update the market by these results on the next steps for Cement. What are the main things holding this up? Is there anything more we can say on the most promising strategic options?
Catherine, it's always dangerous to put a timeline on negotiations because you must never push a negotiation, then you don't get full value. We are very close to what I consider a good prospect, but there's still a little bit of work to be done, and as soon as we're ready, we will communicate. You must please trust us that we will put the full value and the full benefit of what we can do ahead of trying to reach specific reporting dates for investors. We think it's more value for investors to make sure that we get the best possible deal, even if it takes a few weeks or a few months longer.
Okay, next one is from Tim. Please talk through the domestic iron ore and how long Beeshoek will be impacting offtake. Will this make domestic sales tick up at some point?
It's very difficult to predict, and I see Gerhard is laughing because he knows it's difficult for us to say exactly where AMSA is with a Beeshoek stockpile. We think they're very close to it, but we don't have accurate information, and unfortunately, we don't have access to the property to see what's going on there. It could improve our volumes when that is done. But for now, our guidance is 90,000 to 100,000 tonnes that we're quite certain about. Anything more than that would be pure speculation.
Andries, if there's questions from the audience, we can all fill that in between.
Campbell?
Thanks, guys. Is there likely to be any further shared services benefit going forward? Secondly, spoke about AMSA. I don't know if you noticed this morning, IDC's. Basically, AMSA's been nationalized now, IDC buying out ArcelorMittal stake. Do you see any effect long- term with that?
Yeah, I think in terms of the shared services and centralized costs, we can see some more marginal improvements, but not the quantum that we've seen so far, because remember, we do everything there. That is all our centralized engineering, metallurgical, IT, social, all the compliance, everything centralized. None of it is on mine sites. That makes it look quite high. There is not a lot of scope left, but there is a bit more scope to tweak the costs. So there should be a little bit more in the full year, but not that much. On ArcelorMittal, we think it will bring stability. There is a bit of a cash injection coming into that business. I think it does create certain new opportunities, which I do not want to speculate about too much now.
But I think in all, I think it is actually a very positive development which will stabilize the business and create new opportunity.
From Tim, please talk through the Nkomati offtake to Glencore now that they are ramping up. What has happened to price? You mentioned having other customers. Has the break in offtake changed the contract offtake terms with Glencore?
I am going to try and answer, and Gerhard, I am going to put you on the spot if I get stuck. In terms of the contract with Glencore, that contract has now changed. It is no longer a dedicated mine, and we are now free to trade with other customers. Do not worry, Rikus, I will not give the price away. It is a highly competitive environment now, and our commercial manager is very worried in there that I might give the prices away, which will give an opportunity to some of our competitors. But we have seen reasonably good pricing in the market, and we do see very good improvement in volumes. Sorry, Tim, it is a very competitive space right now, and we think we are in a very strong position, so I do not want to give away too much.
Another question from Marty. Please state increase of profit on old Afrimat Aggregates business if Lafarge is excluded to understand Lafarge's contribution better.
I am just looking at the financial director of the construction materials division. Lafarge is about 50% of our operating profit? She nods yes. It is about 50% of the stated operating profit comes from ex Lafarge assets.
Another question from-
Maybe. Sorry, Pieter, are there any questions? If you have a question, just put up your hand. Otherwise, we will carry on. There is a question there.
Yes. Good afternoon. I was just thinking with everybody speaking AI, to what extent is technology helping to increase your efficiencies?
Yeah, that is a very interesting topic. Unfortunately, Francois, are you in the audience? Francois Landsberg. He is not here. We have a team who is responsible for our operational efficiency under the leadership of Francois Landsberg. He is part of our Exco. We have seen some really exciting work coming out of that, specifically in gathering data. I do not want to get into too much detail, but one of the interesting developments that we are starting to see is where in the past we would almost inundate operational people with data. With AI running in the background now, we can actually literally run black screens with information going to them. Just on the information side, we have already seen enormous progress on that side. I get quite excited because I see a very exciting future with that in our business.
Let us suffice and say we are starting to see some of the improvements you see in margin is because of much better control and much better insight in what is happening.
Yeah. On that, we have got one new employee in the business. His name is Claude.
He's overworked and underpaid.
Another question from Tim. Please talk through the potential to get more rail allocation on the Sishen line for export iron ore. When could you receive this? I think you've answered that already. Maybe just-
I think communication. We have had communication from Transnet to give us an early indication of what it's probably going to be. Now there's certain information that they require from us, which we will give in time. Then hopefully the formal announcement is probably going to be in February next year, I think I heard. I just want to confirm.
Yeah.
So we'll be able to announce hopefully, and Catherine, maybe I mustn't make another date, but we've been told by Transnet that hopefully early in the new year we'll be able to make the announcement for implementation early in 2028.
Another question from Tim: What do you see as your break-even export iron ore price in U.S. dollar FOB?
It's a very difficult question to answer, and I see my colleagues laughing at me at the back there. It's a very difficult question because, to be able to answer that, you must please tell me what the shipping rate is and what the lump premium is. But in rand terms for Demaneng, we are at break-even at the moment. If I can give it, that's for Demaneng. At Doornfontein, we expect costs to be more closer to what Jenkins is, slightly above Jenkins cost, which will then open up margin. If you need more information, we can try and get that together, but that'll give you an indication. But we're at break-even at the moment with Demaneng.
Another one from Catherine: Can you give any guidance on expected profit contribution from manganese?
I think I'll be on thin ice to give any profit contributions, but it's a relatively small contribution, thinking it's 20,000 tons a month. It's not a high margin business, but it's a little contributor. It does pay the overheads of that operation.
A question from Charles: The results reflect proceeds from equity raise of ZAR 50 million. Please can you provide some clarity on this? Are any further equity capital raises contemplated?
It was just something that we did as a prudent measure at the time, early in the year when we were a little nervous about a few things, but no more.
Okay.
Any more questions in the audience? There is a question, please. Please just wait for the so that they can hear it online.
Thank you.
Thanks.
Are you budgeting for a resumption of dividends in the second half, or is that going to be extended further?
Depends on the results of the second half. Obviously, if the results are what we think it will be, there should be a resumption, but I do not want to commit to that until we have more certainty on the second half.
There's still a few under the chat function. From Alan: Are you seeing any pickup in anthracite sales for ferrochrome production? Can you answer?
Yes. They're definitely ramping up. We can see that.
Then one from Bruce: Hi, Andries, can you please give us an indication of the average dollar export anthracite price realized versus the Rand domestic price realized?
It's slightly below the Rand price.
One from Zolani: How much have you put into the Cement business, and how much do you reasonably believe you can get from it?
I think it's published what the capital is that we put in this year and previous years. We don't know yet what we'll be able to get out.
Another one from Bruce. Andries, what percentage of SA ferrochrome production do you estimate is back in production?
I guess you say 80%. We agree. That's our colleagues that work with it. They say about 80% is back.
Yeah. I heard from someone that Cement Co will be fully up and running by December.
Yes.
Okay. Then one from Ryan, which we already answered, is the source of the ZAR 50 million equity raise.
Okay.
That is all under the chat. Let me see the Q&A. There is nothing more.
Right. Ladies and gentlemen, that wraps up what we have for this half. It has been a tough half. It has been exceptionally stressful for the entire team. They have come through, and they have positioned the business a lot better for the second half, and especially going into the future. There are still a few challenges in the market out there. The geopolitical situation worldwide remains a challenge. Fuel prices remain a challenge. But the team is driving, wide awake and ready for work every morning and doing their best, and I think the business is being positioned extremely well for the longer- term. With that, thank you very much. Those of you in the audience, please join us for a light lunch afterwards. Obviously, you are free to interact with management that is present.
Those of you online, thank you very much for spending the time and best of luck with everything you do. Thank you.