Good morning, ladies and gentlemen, thank you for joining us this morning for the presentation of the African Rainbow Minerals results for the six months ending 31 December 2022. Just to note that this is a hybrid presentation, I wish to remind participants that there will be a Q&A session at the end of the presentation. Please feel free to submit any questions that you may have during the course of the presentation. These will be addressed at the end. Without further ado, I would like to invite the African Rainbow Minerals Executive Chairman, Dr. Patrice Motsepe, to take us through the results. Over to you, Chairman.
Thank you, Becky. Where's Betty? I was asking, are those real flowers, Betty?
They're man-made.
Oh, okay. They are not real flowers.
No.
Yeah. Yeah, they have got a, I'm from the rural area, when I see flowers, I want to see maize rather, you know? Ummbila. Thank you so much. Thank you so much for all of you attending the interim results presentation. It's a great honor. The documents have been distributed, Mike, eh? I'm really going to highlight a few specific high points and then Mike and Sue and Philip and Andre and Thando will answer the questions. Usually the difficult questions goes to them, and the easy questions, I'm thinking the real easy ones I might try and answer. Our headline earnings for the first half of 2023 increased by 40% to ZAR 5.2 billion.
The equivalent period last year was ZAR 3.7 billion, and we declared an interim dividend of ZAR 14 per share. Our financial position remains robust with net cash of ZAR 9.6 billion at December 31, 2022, after settling the acquisition price for Bokoni Mine in cash. We paid about ZAR 3.5 billion for Bokoni in cash. What I usually do in the morning is to listen to Bloomberg, CNBC, and they were talking about the Chinese Central Communist Party Congress that took place last week and the 5% GDP growth that they pronounced and the impact that that will have on commodities and specifically on the minerals that African Rainbow Minerals mine and market and sell in partnership with our partners.
I want to Sumitomo express our gratitude for seeing our partners from Sumitomo. It's we're so grateful that you are here with us and our partnership is working very well. Overview of results. Our safety and health statistics indicate that there's been a 22% decrease in lost time injury frequency rate, and our total recordable injury frequency rate went down by 5% to 0.62. We unfortunately had one fatality at Two Rivers, and we once more express our condolences to our colleague and to his family and friends. Post the period end at Black Rock Mine, we achieved 11 million fatality free shifts. Now, the issue of safety and health cannot be sufficiently overemphasized.
I was at a meeting of the ICMM, I think sometime last week, with the CEOs of the largest mining companies in the world, and all of the ICMM members and ARM as well is committed to zero tolerance of circumstances and environment that can put our employees. In fact, put it more in the positive, we wanna make sure that the work environment is as safe as it possibly can be. Headline earnings increased by 4% at ARM Ferrous to ZAR 2.5 billion, and ARM Platinum increased 7% to ZAR 1.3 billion. ARM Coal. Now this is, you know, manganese is black. When we make money out of manganese, Mike tells me black is beautiful.
When we make money out of all of the other minerals, whether they are green, orange, white, I don't know, as long as they create value for shareholders, they're also beautiful. Coal has been a big challenge to us. you know, our duty is to shareholders, not just in the short term, but also in the long term. Mike and others will talk more about coal. What I do need to overemphasize is our commitment to a green economy and our commitment to what is regarded as a just and equitable and fair transition is very important to us.
I think there's a global recognition that there's a total commitment to Zero Emissions, pollution and the gases, CO2 emissions that harm and destroy our planet. There's absolutely no doubt about that. There's an equal realization that our commitment is to human beings, is to people. When we talk about climate change is because of the impact, of course, of our commitment to the climate, but also The living conditions and the lifestyles of our people worldwide.
We are committed as ARM to our shareholders and in the medium, short to medium term, in relation to coal, we will continue to deal with it in a manner that's responsible, that's, as I said, essentially committed to the just transition, but also recognizing that everything we do has to be in the best interest of our shareholders, our employees, our workers, as well as to our country as a whole and to the continent and to the world. Okay, that's ARM Ferrous. Six monthly headline earnings. You see that there's been a steady increase over the last four or five years in our six monthly headline earnings. I think this slide is self-explanatory, ZAR 5.1 billion. Dividends per share. Shareholders, shareholders own the company.
We have a duty to the workforce, the communities that live near our mines. We also have a duty to all of our, all of the stakeholders in its totality, women businesses, young boys and girls, job creation, the transition of skills and expertise. Dividends are key. Shareholders want to know when is my next dividend and what's happening to the share price. We are committed to being a globally competitive company in relation to the results, because it's the results that speak. Andre Joubert was reminding me that we are a shareholder in the Blue Bulls now. When the Blue Bulls don't win, don't remind me about them. Particularly when it's bonus time, you know, because Mike supports Western Province and Philip supports all of them. Philip is politically correct.
So the issue is, you know, shareholders want to see results. They wanna see dividends that consistently increase, and they also want to see a share price that is competitive and that's growing. That's why you will see when Mike talks about our performance, we can't blame everything in. Of course, our dividends are good and the revenues have been good to a large extent, to the diversified portfolio as well as to the contribution of coal. What we cannot deny is that Transnet and Eskom are critically, critically important. That you cannot. I cannot sufficiently emphasize the importance of a Transnet that is world-class, the importance of an Eskom that has zero tolerance on load shedding. Those are critically important issues.
You will see in our results, not just African Rainbow Minerals, but all of the mining companies and the economy as a whole have been negatively impacted by what has happened both in Transnet and Eskom. Our commitment as a company is to work together with the mining industry and work together with all other stakeholders and partners and businesses and also to work together with both Transnet and Eskom to make sure that those essential utilities are well-managed, well-run, globally competitive and, you know, the best people are employed with the best skills and expertise. There's absolute zero tolerance on corruption and improper behavior and favoritism and all sorts of nonsense that is contrary to global best practices.
The point I wanna make is, you know, we were talking last week that we take cognizance of the impact of both Transnet and Eskom on the increase of our costs, but we have to look beyond that and ask ourselves two issues. Those circumstances, measure steps that are under our control, we have to be innovative, we've got to be creative and make sure that despite the serious challenges of Eskom and Transnet, that we consistently create equity for, create value for shareholders. Mike will talk a little bit about that. But also that those factors that are under our control, the way we manage our employees, our efficiency, our productivity, and those operational management measures that are out under ARM's control, that we are world-class in that regard.
Dividends received from Eskom, ZAR 3.5 billion. Distributions received from ARM Coal, and there's a footnote there, ZAR 1.1 billion. Dividends received from ARM Mining Consortium, ZAR 500 million. You know, you never stop learning in the mining industry because there are times when things are so bad, either because the rand is too strong or usually because the prices of our commodities are going down and it's I was gonna say there's blood on the floor. We have to make sure that gets followed by periods when there's good profitability and occasionally a super cycle.
We've gotta use the profits that we derive during the periods when the prices of our commodities are very good and invest in the future, in the long term, and consistently over an extended period of time, create value for shareholders. The dividends we receive from Two Rivers are ZAR 400 million. Segmental EBITDA split by commodities. Commodities, you can see it speaks for itself. I mean, PGMs have been great over the years. If you look at 2018, 19% of our segmental EBITDA's split came from PGMs, and that has sequentially increased over the years. We say that we want the Ferrous division to grow, both in terms of revenues and profitability and volume, but specifically in terms of profitability. In the overall mix of our portfolio, we want.
There was a time when there was a disproportionate dependence on ferrous. I think the management team has done great work and the benefits of diversification are coming through. The ARM strategy. You know, you can place your strategy and put it forward in the best possible manner, but again, as we've always said, we are judged by results over an extended period. The growth projects, I think, Mike, I want you to talk a little bit on Bokoni and Two Rivers and the Two Rivers plant expansion, the Two Rivers Merensky, as well as the Two Rivers plant expansion and what's happening at Black Rock and Gloria. I think these slides are self-explanatory, but in the mining industry, you have to extensively invest in the future.
You've got to be careful as well because you've got to buy the best possible ore bodies. You've got to make sure that your cost structure is at the lowest possible percentile. What is also important is you've got to have a competitive growth strategy. You know, we are very privileged that some of the smartest people in this company, when they reach retirement age, we always try and persuade them to continue delivering their unique skills and expertise, and in particular, contribute to the growth of the company. This slide is self-explanatory. I'm not going to spend too much time on that. Strong PGM growth expected, you can see in 2027, in terms of the ounce contribution of PGMs and there's some creative things going on.
I spend a little bit more time going to Silicon Valley than I used to, and it's partly because of the disproportionate impact on technology, not just on the way we live, but also on the way we run our businesses. Many of the things they tell me on technology goes above my head. I don't understand it because it's highly technical. We've got smart, bright, and usually younger people in African Rainbow Minerals that see what how technology can indeed be a game changer. Mike and Andre, we've spoken about Smelt Direct and Chlor-Reach previously, and we've invested hundreds of millions of ZAR as ARM in how we can use technology to be more efficient, more profitable and and to create more value. Okay.
Can we clap hands for Mike, as he comes to make his presentation?
Thank you very much, Patrice. Okay. I'll just test my sound. Can everyone hear me? Patrice, thank you very much. I mean, I normally say this, and I'll say it again. You've said anything. I'm not sure what I can add, but I think you touched on such an important point about cost and cost control. Whilst we can look at issues like logistics, power, and water concerns, that's maybe for our bolts, but certainly no excuse for our platinum operations. That's where there's a lot of work to be done. These exogenous factors, as important as they are, need to be addressed. I wanna give you, and hope to give you some comfort before I move off this podium, that we absolutely recognize the importance of dealing with that, with those costs, and particularly within the platinum operations.
With that, I just really wanna acknowledge all of our executive teams, management teams, our partners, and most important, Patrice, to you and our board, who've been so supportive of us. And in vigor of that, we have a number of board members online and quite a number of our board members present today, and thank you to you all. A very warm welcome to everyone. For those of you who joined online. Generally, we're pretty pleased with the overall performance, notwithstanding the logistical, water, and power challenges experienced over the reporting period. Above-inflation unit costs at the Ferrous operations were negatively impacted by logistical power and water constraints, together with big increases in diesel explosives and reductant costs. Sorry, Betty. Can you see?
The unit cost increases in the platinum, and I wanna dwell on them, were undoubtedly still impacted by diesel and explosives, together with some power constraints. It has impacted us, but by far the biggest challenge we're sitting is grade and volume drops, which we need to put a lot of time and effort improving grade recovery and output. We remain pretty cautious but optimistic that many of the above challenges I referred to are showing early signs of improvements. Evidence in fact is we see fuel prices that are well off the highs of the second quarter and other local and global inflation readings are trending downwards in the last couple of months, which is pleasing. We are also seeing early signs of improved performance at our rail and our ports.
Great challenges, I alluded to that, and I cannot overstress that at Two Rivers and Modikwa are being addressed with positive indicators, albeit early signs. We have realized improvements to all our safety indicators.
When will you change your operation?
I'm just doing an overview.
Oh, okay. Good.
Apologies. I can put the headline in and out. I'm sticking to that slide. I'm not moving off that slide for a while.
Great. Great.
We have realized improvements on all of our safety indicators. Our main focus is ultimately to achieve zero harm to our people, our surrounding communities, and to the environment at large. ARM has been a member of ICMM and has long recognized that economic growth should never be at the expense of people and planet. Sustainability remains a priority for us. We continue to make significant contributions to the social and economic development in all the regions in which we operate. We aim to find the right balance in terms of short-term performance requirements and the long-term ESG goals that embedded in these principle across all aspects of our business. In line with our commitment to paying dividends while pursuing quality growth and maintaining a robust financial position, we are pleased with the interim dividend. The fundamentals for the metals we mine remain robust.
All of our operations maintain strong margins and remain well-positioned on the global cost curve. A little bit on Bokoni. The DFS, which we spoke about, is proceeding well. It's on track to present the DFS to the investment and the board by June of this year. It's a definitive feasibility study that to optimize and rightsize that ore body. There's been a number of enhancements and improvements we've already recognized in terms of the pre-feasibility, and they also will be implemented. We have already put operational and specialist teams on site. We are busy with preparations for on-reef development and early stoping. A decision in the meanwhile has been made to recommission the 60 KT plant to process the on-reef development and stoping ore from Middelpunt Shaft until the main concentrator plant is commissioned, and we expect that round about 2026.
The focus remains on developing the UG2 ore body while studies continue on the existing Merensky and the Brakfontein shafts and already identified further open pit or open cost opportunities. In terms of the Merensky, the construction of the Merensky concentrator plant has been delayed by approximately eight months due to geotechnical challenges on the plant footprint, which require deeper excavations than initially planned with a redesigned strengthening of the civils. This, however, has been completed and plant construction is well on its way. The overall project completion date, however, remains unaffected. Pleasing, the mining is proceeding well with current stockpiles circa 400,000 tons on stock.
The projects remains robust, value accretive, and will deliver PGMs on the bottom half of the cost curve. The capital costs, as indicated on the previous slide with Patrice, have increased by ZAR 1.5 billion, so moving to ZAR 7.2 billion by end of project, owing to the scope changes in geotechnical and some of the global procurement challenges and cost overruns we've alluded to, similar faced by the operations. The much improved coal earnings was due to significantly improved realized prices, which we are now starting to see normalization to pre-Russian, Ukraine conflict levels. We see that similar trend with other commodities like oil and gas. The logistical challenges still remain a serious problem on the coal line. As part of the EV and hydrogen evolution, the world requires much safer and cleaner and greener metals. That's a topic you hear all the time.
ARM is investing significant resources into technologies that will satisfy the above requirements by reducing costs, improving productivity, and are lowering our carbon intensity. Some of the legacy around environmental issues and tailing dams are also being aggressively addressed. Our focus is on alternative smelting and metallurgical extraction technologies, and the development of an autonomous ref cutting system, which, if successful, will enhance safety, productivity, and certainly reduce our dependency on explosives. Coal margins will reduce, and I move on to slide 16. If we look at the margins, coal margins will reduce as prices normalize. The manganese margins are likely to improve with increased volume and further efficiency improvements due to the upgraded ore handling belt systems and a reduction in our underground trucking.
The manganese and iron ore are likely to be beneficiaries of China abandoning its zero-COVID policies and introducing stimulus measures to arrest its housing market slump. One more, Betty. I've got it. Thank you. As seen on the profit variance graph, we can see the huge impact on volume variance out of the Ferrous division. A drop in the manganese alloy prices will have a material impact on margins. The on-mine unit costs will improve as input costs normalize and volumes increase over time. Khumani remains a flagship high grade, low stripping ratios of 2.6. 55% of our production is more than 65% hard lumpy, which is highly sought of with blast furnaces. We're currently doing 14 million tons and has a life expectancy still of more than 20 years.
The mine has state-of-the-art rapid load-out facilities, a highly water-efficient paste disposal facility consuming 80% less of water per ton than conventional processes. There's a lesson Thando to you in the Platinum. Operates a fleet of efficient and modern load and haul equipment. The mine has achieved and maintained very high, I'm talking Black Rock now, particularly. The mine has achieved and maintained a high standard of safety and operational efficiency. This has manifested itself in the record-breaking 11 million fatality free shifts, which happened recently on the February 23rd. I wanna just dwell there a moment. We look at our Northern Cape operations. You've got Black Rock, it's got been running 14 years fatal-free. Beeshoek Underground, Black Rock Underground, Beeshoek open pit mine's gone 19 years fatality-free.
Cumulatively, the three operations are sitting more than 25 million fatality free shifts. Undoubtedly world-class record. The mine has achieved, this is a high-grade manganese ore mine with top class management team, with a new mine shaft and infrastructure, and I'll touch on the capital we've invested in terms of the modernization and upgrade. We've just, as I said, spent ZAR 10 billion over the last couple of years. The installed capacity on that mine is up to 4.6 million tons of saleable ore. The complex consists of three mines, also rapid load-out facilities and excellent facilities to deliver good quality, high grade manganese into the market. We are starting to see the benefits of the capital program and Black Rock through much lower unit cost increases relative to the market, especially in this high inflationary environment.
The mine has a life still in excess of 30 years. The mine has also recently commissioned a fleet of battery electric vehicles to reduce carbon emissions and diesel particulates underground to further improve efficiencies. There are a number of ongoing studies to review in terms of the alloy position, to review our options, to look at outputs and to improve our cost position. Input costs have been exorbitantly high. The raw materials, the reductants coming in. We recently commissioned a bricks and a sinter plant at Cato Ridge which is performing exceptionally well. The plan is also then to move a sinter across to Sakura. These technologies will undoubtedly assist in reducing our input and improving our furnace efficiencies. On the platinum side, I think these graphs are self-explanatory.
They indicate the highlight, the challenge and the focus area that's need to improve and require to arrest cost concerns. I'm just on the next slide, wanna touch a little bit. I think the major advantage or opportunity we have is grade. We've been talking about ever declining grades at Two Rivers, and we're seeing areas at Modikwa, and we have to put a lot more focus intended. We have put in new teams, new sampling teams, sampling crews. Every single phase will be measured every day. Grade, grade is king. That, together with volumes, will drive our cost. There's no doubt that we have to drive costs on the controllables that are under our control, and they are many.
We have also brought in additional development crews to improve the mining reserve and improve on our flexibility. At Bokoni Mine, the site establishment and debottlenecking is proceeding well, with first stoping expected as early as July 2023. We intend commissioning the 60 KT plant by the end of September this year. That's probably more than a year ahead of what was initially planned. As I said, the DFS, which is the definitive study, will be out by June 2023. Just briefly touch on Komati. The mine still remains on care and maintenance. We continue with a lot of water study, closure studies and optimization studies if it presents itself. Understandably, Komati is a pretty low-grade operation.
We closed it back in 2020 due to the pit, which we said has virtually exhausted itself and the underground resources are complete different bottle of fish that need to be attended to. On coal, we do see that on the profit variance analysis, you can see the material impact on the earnings due to price rally. Also reflected on the unit cost of production is the negative impact we've seen on unit costs, and that is primarily due to logistical constraints. Whilst prices are expected to normalize to, as I said, pre-Ukrainian conflict levels, we anticipate over the next couple of months improved volume delivery. Both GGV and PCB are sitting on significant stockpiles to date, which need to be processed as we can move these logistically.
We're doing about 30% of our volumes on truck. Everyone appreciates the impact on roads, the impact on cost and the trucking cost. It really is in all of our interest to address the issues of, in the first instance, logistics. I wanna just maybe in conclusion say as an industry, we do face a number of headwinds and ARM's included in that. I say cost, probably topping it all is cost if I can use that poetic license, cost sustainability. Costs are a problem we have to go. Whilst cost pressures we're facing are really exogenous type of costing, it still remains our collective responsibility to address and arrest these cost pressures to ensure a sustainable future. Pleasingly, there's a lot of positive engagements and collaboration on multiple fronts to get us back on track.
With that, we do have a sense of determination and urgency to collectively address logistical challenges with all stakeholders and partners. Pointing fingers is not gonna help the situation. We need collaboration, we need partnerships, and we'll move our industry forward. Patrice, with that, thank you very much.
Thank you.
Thank you.
Good morning again, ladies and gentlemen. On this slide, we have our guiding capital allocation principles that we have communicated in previous results. When we look at our principles, we prioritize investing in our existing business as well as repaying debt. Now, sustaining capital expenditure or stay in business capital, is what we mean when we talk about investing in our existing business. If we move to the next column after the debt repayment, we always actively seek to grow our existing business as well as pursue mergers and acquisitions that make commercial sense to ARM. These opportunities battle it out for capital, so people don't just get what they ask for. They need to actually show that these are value-accretive projects if we're to pursue them.
Really how we look at it is that we look at a number of metrics, and these include return on capital employed, payback period, hurdle rates, et cetera. These are all used to assess the opportunities as and when they come. We also look at returning capital to shareholders, and we look at doing that in the form of either dividends, so dividend payments, and/or share buybacks. The slide on screen illustrates how we generated cash and how that cash was allocated in the six months ending December 31, 2022. We generated around ZAR 5.3 billion from the operations. This equates to an increase of approximately 10% compared to the corresponding period, and also takes into account a ZAR 641 million decrease in net working capital.
We received ZAR 3.5 billion in dividends from Assmang, which equals the dividend received in the corresponding period. We also received a ZAR 17 million dividend from Harmony, which together makes up that amount, the 3,517 million or ZAR 3.5 billion. These funds were applied as follows: We paid out ZAR 3.9 billion to ARM shareholders. Another sizable outflow was the acquisition of Bokoni, with a net cash outflow of ZAR 3.4 billion. It was the ZAR 3.5 billion consideration price together with or offset against some of the cash that was actually already sitting within the Bokoni business. Then we also invested ZAR 1.8 billion in capital expenditure, which was for both stay-in-business capital as well as expansionary capital.
If we look at the increase year-on-year, this was close to about ZAR 1 billion increase year-on-year. In terms of our net cash and debt, our total borrowings reduced by ZAR 200 million during the period to a balance of ZAR 289 million as at the end of December 2022. The balance really relates to mostly IFRS 16 lease liabilities, as well as the RMB ETrust loan owing to Harmony Gold. If we look at where we sat on our net cash, or our net cash position, we closed the six months at a net cash to equity position of just over 18%. Late last week, Assmang declared a dividend of ZAR 3 billion, of which ZAR 1.5 billion is attributable to ARM.
This amount is not included in the numbers depicted on the slide. The capital expenditure for the reporting period was covered, partly covered by Mike, in terms of his presentation. It is covered in the presentation or the uploaded presentation in each one of the division sections. Some of the things that you can note, segmental capital expenditure, which is capital expenditure on an attributable basis, was ZAR 2.9 billion for the six months under review, which is ZAR 1 billion up, when we compare it to the prior corresponding period. Most of this was spent at our PGM operations. About ZAR 1.7 billion of it was spent there. ZAR 1 billion was for ferrous and then ZAR 230 odd million for coal.
If we look at guidance for 2023, financial year ending 2023, full year, that guidance has increased by ZAR 1.1 billion - ZAR 8.3 billion or 8,275 that you see there on the slide, relative to the ZAR 7.2 billion which we had communicated last year in August. This is due to the increase in capital expenditure at our ARM Platinum operations as we see an increase in costs for the Merensky project, that Mike mentioned, as well as capital brought forward for Bokoni to deliver early ounces. If we look at CapEx from 2024, 2025, those figures there, those 7.8s, roughly ZAR 7.8 for both years, include approximately about ZAR 3.5 billion on a normalized level of sustaining CapEx per annum. Thank you very much.
Thank you. Yeah, thank you.
Yeah.
All right. Are we on, Betty?
Yes, we are.
Okay. What is the next issue now?
Chair, next we'll go to our Q&A.
Oh, okay.
If that's okay.
So, uh-
Chairman, I'll read them out.
Yes, please.
Thank you, Chair. The first question comes from Martin Creamer from Mining Weekly.
Ask him why is he not here.
Martin, you are asked why you are not here.
We miss him very much because it's always great to see him. What is his first question?
Okay. What, in your view, should be done to ensure that South Africa's energy and logistics are globally competitive?
Sorry, just repeat.
What, in your view, should be done to ensure that South Africa's energy and logistics are globally competitive? That's the first question.
It's an ARM question.
Yes.
Okay. What is-
Okay. I'll just read them.
Yeah. What's the other question?
Can you-
We'll answer at the end.
Yeah. Okay. All right.
What is the other one?
The next question is, can you please provide details on the options you are exploring for Nkomati? Would you say the current nickel fundamentals are supportive of a restart of operations at Nkomati?
Very good.
The second question.
I think Nkomati is very simple. I think, you know, Mike will make announcements in that regard in due course. I mean, he'll just make a few broad remarks. Mike will say a few remarks on Nkomati in terms of the status quo.
Okay.
What else?
Thank you, Chair. Next question.
Please.
Good morning, Chair and your team. Congratulations on the robust results. Question, with the likelihood of commodity prices going up in the foreseeable future, do you anticipate any M&A or mergers and acquisition opportunities at these lofty valuations?
At these lofty valuations.
Yes.
You wanna take that? Okay, Philip will take that.
Okay. The last question, Chair, for now. One of South Africa's iron ore producers has disclosed unsuccessful attempts with Transnet to operate the Northern Cape Saldanha Bay rail line privately. Has ARM, together with its partners, made any progress with engagements to improve efficiencies on the rail line?
Okay. Andre, you'll deal with that, eh? Yeah. Let me just... Is that the last?
That's the last question.
Yeah. The others will come later.
Yes.
We'll take questions here as well. Just two issues. The, there are serious challenges with both Transnet and Eskom and of course, as always happens behind closed doors, there is hard, there are hard and very serious discussions taking place. That's why in the public domain, it's critically important to overemphasize the commitment for results long term. We have found over the years that, you don't actually solve the problem. You don't achieve what you want to achieve by making pronouncements in public, which pronouncements are factually correct in relation to deficiencies and poor performances in parastatals.
The key issue is we've learned that, you know, what we want is we wanna get out of this mess and make sure that there's significant progress, both from in relation to our companies in the mining industry and the globe, in the South African economy as well. I've got no doubt that government as well needs the taxes. The taxes that comes from the business has been able to export more, and the efficiency that goes with the Transnet and an Eskom that functions as they should. There should be more income, more taxes for the government, and the government should be able to use that to build infrastructure and improve the living conditions of the citizens of this country.
So, so in our response on these issues, you will find that we tend to be a little bit more objective in saying what needs to be done. As I said, we find that, you know, there's a commitment on the government side, but we need more, we need more than commitments, all of us. We need results. We need, you know, properly, globally, competitive Transnet. I mean, if you look at Australia, but the difference with Australia is that their rail is privately owned since. Every time when I go to China, they tell me that, you know, Australia, including Brazil, their rail network is world-class. World-class.
When the price of your commodities are very high and you don't increase your exports, not only have you lost revenue and income for the companies, but, I can overemphasize from a government perspective as well, you've lost this important and essential funding that this country desperately needs. I wanna conclude more on a positive outlook in terms of the commitment both on the government side. I'm proud of the companies this country has and the CEOs. In the mining industry and in the South African economy as a whole, you know, business doesn't always get the credit it deserves. I mean, we've got world-class. We've got some of the best managers, executives, CEOs, companies in the world. That's what gives me confidence.
That's why the partnerships and our commitment to work together with Transnet in particular, and whatever contributions can be made to make Eskom much more efficient, much more reliable, and stop this nonsense of load shedding. Load shedding is not good for the economy, for business, and for ordinary citizens. Will you respond, Andre, to the first question about. We need to give hope, and we need to stay on the positive side. As I said, we need to get results. Yes, Andre.
All right. Thank you, Patrice, and to the questions. I think the Transnet issue, of course, we're not happy and not very satisfied about the performance of Transnet, but that doesn't help us much, you know. We've taken the approach of to say, "Well, it's not maybe it's not our fault, but it is definitely our problem." Through various engagements, we started in late last year, also with the help of Transnet, and I must say, very, very good support from the Transnet board. We set up joint working sessions. To that effect, I think we're making, not I think, we are making very good progress. I'm actually leading the program in engagement with Transnet related to the manganese channels.
I really have to say that there's very, very positive engagements with the Transnet management team. In fact, I'm meeting with them not almost, I'm meeting with them on a weekly basis. We also have input from the Transnet board on a bi-weekly basis. At this point in time, if you look the first half of the year compared to the second half of the year, I can definitely say there is improvements. We're not there yet. There's a lot of challenges, and also taking into account that Transnet did go through a very difficult patch with the state capture and all the challenges they had with their locals, et cetera, et cetera. There is definitely light at the end of the tunnel. We are making good progress. It's not gonna be a quick fix.
This is a long-term. There's been some short-term issues identified, and we can already see the fruits of that bearing. Then there's, of course, the longer-term issues to grow the industry, to grow the export capacity of South Africa. Again, I'm very hopeful and that there is gonna be improvement in output. Now, I'm not basing my hope just because I wanna be positive. I'm basing my hope on the actual results that I am seeing. From that perspective, ARM is really taking and in collaboration with not only our partners, but also the other players and other participants in the various export lines. We are making very positive progress in that regard.
As I said, I think from an industry perspective, it'll take us another two years, maybe a little bit longer, to get back to the contractual commitments and the nameplate capacity that we've seen before. Definitely a positive outlook and good positive energy and progress has been made to date. Thank you, Chair.
Thank you. Philip.
Thank you very much, Chair. Thanks for that question that was asked regarding the appetite for mergers and acquisition. I mean, going back to slide 31, where our colleague, Sue, basically took us through the allocation of funds, you would have realized that one of the basket there talks through mergers and acquisitions. You know, the fact that we have it as a consideration really talks to our intent, you know, that we're not just satisfied where we are as is. Obviously, we continue to look for opportunities, those opportunities should really be value accretive. You know, it's not just going to be an issue of me-measure or acquisition at all costs. You know, we need to continue to look at what is our investment criteria, investment matrix.
If there's an opportunity, is it really going to add or is it going to value be very destructive? Our commitment is to make sure that we continue to improve the quality of our portfolio, the quality of our assets. As and when these opportunities come our way, we basically review and reflect on that objectively. I think a classical example is Bokoni Platinum Mine acquisition, which is a recent one that we're basically looking at. We have seen an opportunity, we saw a gap, and we believe that the price was right and the timing as well, and we went for it. It's not going to be just acquisition for the sake of doing it. It's in line with our growth and our investment proposition and also our investment criteria as well. Thank you very much.
Absolutely. Philip is 100% correct. You know, Mike on the Nkomati.
Thank you. There was a question raised around the Nkomati. I did touch that on one of the slides to say, the options are still open for consideration. We are pursuing current appropriate rehab as we talk. We are pursuing all our optionality around closure and water requirements. I trust everyone, you know that we're in a very eco and environmentally sensitive area. We did announce a couple of years ago that the open pit, by and large, had come to its economic end. The ore resource that remains is underground. Some of the limitations, it's not that well-defined or drilled. Access or limited access is quite a challenge with the current shaft infrastructure. These things have to be carefully considered with the partners over time. That's the position we still stand. Nkomati remains on care and maintenance. Thank you, Patrice.
Just two quick points. On the Martin Creamer question, what should be done? What do we think should be done to make Transnet and Eskom globally competitive? I mean, if you look at some of the most successful.
There are some examples of parastatals that are really world-class. I mean, Aramco in Saudi, world-class, and various others. Step number one, employ the best people. Employ the people with the best skills and expertise. Non-negotiable. Step number two, pay them well. Pay them as close as what they would get in the private sector. Many years ago, I was on the board of I was on the advisory council of JP Morgan, and worked with one of the most respected people in the world, Lee Kuan Yew, and from Singapore. Singapore employs some of the smartest and the brightest in the private sector, and makes them ministers, and let them run corporations or enterprises, some of which either the government has a huge amount of equity or they're essentially government-owned.
You've got some of the smartest and the most talented people in government. That's one of the things I think, you know, developing countries, including South Africa, should do. We should attract some of the best skills and expertise. The last thing is zero tolerance on corruption. Absolute, absolute zero tolerance. Don't talk about it. We should be seen to be taking the right steps that reflects this zero tolerance of corruption. If we do that over an extended period of time, not even over an extended period, in the medium to short term, both Transnet and Eskom should be globally competitive. With an answer rather short and quick because we don't usually want to keep you longer than what is required. There are some questions here. Yes.
Just introduce, tell us what your name is and we'll try and answer quickly and of course, at the end, we're gonna stay behind. Mike and the team will stay behind. Mike will be going for all interviews and deal with whatever questions you have will be dealt with. We saw a hand there.
Yeah. Thank you very much. My name is Thabang Thlaku from SBG Securities. I've got three questions on my side.
Only three.
Only three, Patrice.
Yeah.
you know, the first question is, when you guys put together your current dividend policy, ARM wasn't in a fantastic cash position, we understood why you wanted a conservative, you know, guiding policy. Now you guys are sitting on ZAR 12.5 billion of cash, including the cash sitting at S nine. you know, the market is expecting that you pay a dividend that's perhaps more related to your earnings. Can you give us some idea as to how you're thinking about your dividends at the moment?
Sue says she'll answer. That's an excellent question. Sue will answer that. Question number two.
It's directed specifically at her, Patrice.
Yes, absolutely.
Um-
Question number two.
My second question is around coal. You mean you're talking about price increases of 56% at GGV and 63% at PCB, and granted your cost increases are double digit, but one would have still expected you know, a margin expansion, but your EBITDA is actually 9%. Can you please explain that to us, Thando?
Very, very good question. You already know who you like. Thando, she's chosen you.
Again.
You know, you know, remember when we were at high school, and we had a high school dance, and the wonderful girl said, "I think I wanna dance with you." When she does it, you freeze a bit. "You mean me?" You know. Of course. Thando, she chose you.
Got it.
Okay. Next question.
My last question is for Andre.
Yeah.
Next dance is for you, Andre. I just wanted to clarify something, you know, with regards to the Transnet announcement on the February 23rd, you know, that they'd be giving allocation to junior miners. I just wanted to see or understand how it impacts your manganese operations. Obviously, you guys built Black Rock in anticipation of higher capacity, and my understanding is according to Mega 2, you're sitting on about 4 million. Now, of that 4 million, is the full four guaranteed or is only 85% of it guaranteed? Just as a follow-up to your earlier comment, Andre, when you say that it's going to take a few years to get back to nominal capacity, you know, how many years are we talking about?
Very good question. Just you said, what is your company called? S?
Standard Bank Group Securities.
Great. They are lucky to have you at Standard Bank, eh?
I agree, Patrice.
Yeah. I so he's an old friend. We used to work together, many years ago at Bowmans. I'm gonna tell him he must look after you, otherwise we might steal you know. We will compete. Any other questions? Let's take all the questions.
There's a question, sir.
Yes, there's another question.
Hi. Thanks very much. Brian Morgan, RMB Morgan Stanley. Just a question on.
Great, great company. Great company, eh?
Thank you. Just a question on the Merensky project. Quite a big capital overrun there. Could you just give us a little bit more color, a little bit more detail on what's changed there, if you don't mind?
Perfect. That's question... Is that your only question?
Yeah.
Okay. Mike will deal with it. Any other questions? Okay. Yeah, there's another question there. There are no other questions, Sue.
Actually, there are.
There are. Okay. Let's take all of them then.
There is one more question from the floor.
Okay. Let's take the one from the floor.
Afternoon, everyone. Shilan Modi from HSBC. You're guiding volume growth in almost all of your operations. What sort of load shedding allowance are you making?
What sort of?
Load shedding allowance. Are you expecting electricity availability to improve and therefore you guiding growth, or what allowance have you made? Specifically with the PGM operations, a lot of the processing All the companies that do processing are impacted a bit more than the miners on by load shedding. What happens if they don't have enough capacity because of load shedding?
Very good question. Mike, you'll...
I'll do that.
You can do something about load shedding, Mike?
Mm-hmm.
Okay. I think let's take this question as well, Betty.
Online.
Online.
All right. No problem. Chair, there's some questions. There's one question from Lisa Steyn from News24. Her questions are really around logistics. I think the first question Andre already actually answered, it said that, "Please could ARM provide an update on how the joint steering committee meetings with Transnet are progressing?" I think this was asked.
I think, Andre. You've answered that, Andre.
Yeah.
Yeah. You've answered that.
The next question.
Yeah.
Still under logistics.
Yeah.
If the benchmark coal price falls below $100
Coal. Is it coal?
Coal.
Yeah.
If the benchmark coal price falls below $100 per ton, will ARM Coal continue to truck 30% of its product, or what is the percentage likely to fall to?
Good question.
Thank you.
Thando? Usisipho?
Yes.
Yeah. Okay.
Okay.
There it goes. Next.
Still on Lisa's question, please advise what sort of private sector part-participation is truly possible on the Transnet coal/manganese and iron ore lines, and what role could ARM possibly play?
Yeah. You'll deal with that. Okay.
The last question, Chair, from online, from Warren Riley from Bateleur Capital. Iron ore export guidance for financial year 2023 implies over 7 million tons in export sales in H2. Is the iron ore line now running optimally? Please could you give an indication of iron ore stockpiles at the mine and at the port?
Now we should share that we shouldn't... Mike, you think you can help Andre there as well, eh? That we don't let him answer all the difficult ones. Is that all?
That's all, Chair.
Okay. Thank you.
He wants.
Let's start with you. Sorry. Let's start with Thando. Thando is a member of the Communist Party, that's why he sits on the left.
Okay. Let me start with the first question from Thabang. Yeah, Thabang, a good observation on that. If you recall about four years ago, we did announce the restructurings of the ARM Coal loans. Those earnings are really impacted with the loans remeasurement. If you look at the realized price increases compared to the earnings. The remeasurement related to about ZAR 246 million on loans. Pleasingly, though, that the loans have been paid off, going forward, we won't be seeing those remeasurements on the loans. Thank you, Chair.
Is it all? Yeah.
That's all.
Thank you. Thando sent me a note. He's a social democrat, not a communist. Is it all, Thando?
Chairperson, can I take the second question?
Okay.
That's related to the trucking. Obviously, the trucking is a opportunity which we are utilizing with the current challenges on Transnet. Of course, it is a process that we engage with the truckers all the time. A couple of factors that affect the price that we pay and the margin that the truckers do make. Currently it is still viable at the current prices of between $130-$140 per ton. Indications are that it will come under pressure if we were to come below $110 per ton. At $100 per ton, I think most probably not. It's not viable and we wouldn't be continuing with it if it's not viable.
Thank you.
Thanks, Thando. Andre?
Thank you. Thabang, I'm also gonna take your question first. I think firstly on the manganese side, we're not opposed to new entrants entering onto the railway line. In fact, at our Khumani Mine, we've been assisting a new entrant since... Rolette, if you can just help me there. Since 2011, eh? It's called Sedibeng Iron Ore, and we load close to 1 million tons for them through our load-out facility for quite a while, before, even before this latest issues evolved. Our guaranteed allocation is 85%. There is that 15% discretionary portion that Transnet can allocate to us at their discretion.
There's also legal issues in terms of the contract, in terms of notice periods, et cetera, et cetera, that we are defending at this point in time. If you look at beyond that time, also, the manganese industry, if we form the consortium with a few other, five other, mining, excuse me, manganese producers. To that effect, we're going to put a bid in for the to transform the port of Ngqura into that capacity that we feel we can get out of that new port. Unfortunately, that's going to take about five years to get through that process. In the meanwhile, with our capacity, if you take that 15% out, then it's about 3.4 million-3.6 million tons, depending on Transnet's actual performance of the day.
We will be able, because of our economics and finances and payback and profitability of manganese ore, which we will continuously monitor, we should be able to move about 500,000 tons of manganese ore on road. Making our package still in the order of the 4 million tons per annum as per the current Mega 2 contract. Also I have to stress that we're also working very hard with Transnet and all the issues that I mentioned before. It's not just hype and nice talking. I think that based on those results that we're seeing and the improvement that's been identified, that in about three years from now, we will not be on road anymore.
The effort is to replace that road on rail again, and then once Ngqura is commissioned in 2027, we will be able to get back to our four and a half million tons on manganese ore. The other question that was asked is the one about the Transnet performance in the second part of this year. Yeah, we are predicting the 7 million tons. Currently, remember the first half of the year we had the Transnet strike, and we also had the shutdown that Transnet has in that period. There were those two major events that impacted our business.
Going forward, the next six months, if I can say that, is a relatively clean period, and in that period, we've currently seeing that we're performing at about 95% of our contractual commitments on Transnet. Yes, the seven is maybe a push, but I'm pretty confident that we're gonna get there. In terms of the different models, the public-private partnerships, we know what happened to one of our other big iron ore producers in terms of privatizing that line, but we're still engaging with Transnet. We're still working. There's many options. There's many possible permutations in terms of improving the output and working together, and we still continuing with Transnet in that regard, both iron ore and the manganese side. Recently, we had.
As a manganese producers, we had a meeting with the CEO of Transnet, I'm talking a week ago. That meeting was very positive in terms of working together and maybe finding a solution to funding some of these projects that we need to improve the output of South Africa's iron ore and manganese exports. Finally, we also, on the manganese side, we're not just looking at the Ngquraa side of things. We're also looking at the Saldanha side of things, and there's a lot of initiatives. I am again very encouraged by that. For instance, on the iron ore side, we're looking at the loadout stations in Postmasburg, where it's very inefficient.
They're loading 100 ton payload wagons at 63 tons. We're working with Transnet to see if we, as the majors, can't absorb and assist the new entrants in getting those better efficiencies through our loadout stations. That will improve the overall throughput and efficiencies of the iron ore line, and it will have a knock-on effect on the manganese side. There's a lot of engagement. There's a lot of talk. There's a lot of brainpower. There's a lot of positive engagement. Yes, it's still a long road. It's not gonna be easy. It's gonna happen overnight. At least I can see a positive trend and an outcome to the benefit of everybody on the long run. That long run, I'm talking two to three years.
The other important thing, I don't see a deterioration in performance. I certainly see improvement in output. Thank you.
Just one quick issue. We want new entrants, not just want new entrants, we wanna support them. The strategy clearly has to be to create new capacity.
Yeah
... to expand the infrastructure rather than to diminish and to reduce the capacity, the rail infrastructure and capacity for those who are currently exporting and have invested huge amounts for increased exports, whether it's manganese or iron ore. These are really, the sort of strategies that are in the interest of the country, the new entrants, the industry. It's just... It's self-explanatory. Did you wanna say something?
Just on the issue of the logistics, Chair, as Andre says, I mean, we start where we are. There's already installed capacity. There are some bottlenecks. That will basically yield the low-hanging fruits. You know, some of the investments will require additional capital. You basically have to prioritize and make sure that at least you bank those low-hanging fruit, create that additional capacity, you know, get to the 100% because, as Andre says, we are currently operating obviously below that.
Okay.
We need to get to the 100%, increase the piece of the cake so that all the players can really benefit from that. You can't want to increase the piece of the cake when it's already under, you know, the installed capacity. We have to sweat that installed infrastructure from Transnet. Collaboration is very key. We come with some technical skills. They bring in their experience as well. I believe that through that we'll be able to really come up with.
Yeah
long-term sustainable solutions.
If I may just add one more thing. In iron, we're also not just stuck on logistics. We're also doing very good and very positive work in terms of research and development. Mike mentioned that in terms of our smelting technology, where through that process, we can actually reduce our dependency on both Transnet and Eskom by exporting. If you can beneficiate, you export less, you export 50% of the product that you need to export and then also the energy efficiency side of things. A lot of work has been done, and so far, very promising results in terms of reducing our energy consumption, which will also put ARM in a very positive position into the future.
Excellent. Mike?
Yeah. Brian, thanks for that question. I mean, I'm probably not gonna do justice to you on this platform, but I am gonna set Jacques, who's our lead project, up with you so I can get the granularity. I'm gonna touch the highlights and maybe the key lessons, probably more important. You know, did we make a mistake? Could we have done something better? Undoubtedly. I think the key lesson to us, and that's what we're gonna apply with Bokoni, is don't assume. The front-end engineering is absolutely key. Here we sit with Two Rivers, where we have two plants, enhanced two plants, done extensions, all the silos, all the civils done, and virtually a stone throw from that, the new Merensky plant.
We had a number of infill holes which determined what the grounding or founding conditions look like and what's required, and on that balance, moved forward in terms of starting with the excavations or the civil excavations. What we found is that we anticipated we have to go down approximately 2 meters to get solid, do the right G5 backfill, the stability engineering, and move forward. As we went, we found laminations and cross-faulting, and we found ground instability, and we ended up going down in some places as much as 6 meters to get into solid. I don't have to share around this platform the implications of a 6-meter excavation on a plant of that magnitude, plus take out all that material, bring in solid G5 material, do the civils, and get back out of the ground.
In essence, Brian, front-end engineering has probably cost us six months of the eight months we're talking about. We've also experienced a lot of challenge with lead times, with long lead items like mills and delays. We've also seen IT challenges. We've seen a lot of changes with suppliers and challenges in terms of delivery times and lead times. One thing we've also realized is where we would conclude these contracts within six to eight months, it's now taking 12-14 months to conclude contracts because most contractors and suppliers have become extremely cautious and risk-averse and are not taking any of these risks on. There were small, a couple of smaller issues, but not insignificant, in terms of machinery delivery and in terms of changes to legislation that came about.
Previous legislation required that the full suppression and fire-resistant belts were in the main declines. Legislation changed and wants all strike belts to comply with that same type of legislation. You would appreciate that strike belts are, by magnitude, 10-fold the amount of belting that's required to be installed to get the project going. Last not least, Brian, is we're simply seeing quite significant above-inflation cost increases on steel. Those, the granularity lies with Jacques, and I'm going to ask him to please sit with you, if you don't mind. Thank you.
Okay, thank you. Have you answered all the questions?
Yes, Chair, it was just mine from Thabang on the dividend.
Oh, yes. No, no.
Yes, yes.
You wanna deal it, deal it privately?
No, no. I can speak to it. It's fine.
Yeah, do that.
Okay.
You see, usually when there's a complicated question.
Yeah.
You wanna talk privately.
Yeah.
This is a beautiful one. This is an easy one. Why don't you go ahead?
Thabang, to your question on the dividend in terms of how we're looking at it going forward. Yes, currently, our dividend guiding principle is we look at the cash coming through from the underlying group companies, which I think is not a bad, it's not a bad way of thinking about it, because you look at how much cash that you're actually controlling at corporate that you're then able to declare as a dividend. In terms of going forward, we are looking at perhaps other metrics or another way of calculating dividend, which is more predictable, I would say, or easier to model.
I think the concerns that we have heard is that, you know, it's very difficult for the market to be able to see what the dividends are actually that come through from the underlying companies and to model it on that basis. In terms of going forward, what we're looking at, a number of iterations, but you know, we haven't landed. We still need to workshop it and discuss it in detail with our board, our investment committee firstly, and then our board. You know, it's, you know, looking at, you know, perhaps the percentage of headline earnings, but then also looking at the project pipeline as well, taking that into consideration, and then maybe working that into some kind of minimal buffer.
Yeah.
at a corporate level. Those are the discussions, but we haven't landed as yet, Thabang, so don't quote me on it.
Yeah, I just wanna add, I mean.
We're gonna. Yeah.
Yeah. I think she, I think there's much more-
Work to be done.
good progress that has been done because I think Tshusi is correct. What is a dividend policy? A dividend policy has to be as concise, as consistent, as predictable as it possibly can be. Because it's meant to give not just shareholders, but the investment community, a reliable, clear perception of what the policy of the company is. We spent specific time looking at how do we make sure that this dividend policy is as reliable, as consistent, as sustainable as we possibly can be or as it possibly can be.
I think what Sue is saying is that, you know, we have to listen because. That's why we put the parameters and described it the way it is, because it was as specific as we could be at the time, taking into account the volatility and the unpredictability of the prices of our commodities and the income in the medium to long term. There's a greater degree of comfort and confidence right now, and that's why there has been ongoing discussions. As I said, you know, the issue for us, one of the issues for us is to listen what people like yourself, Thabang, and various others are saying, because we can think that we've done a good job.
When you consistently say, "But it's not as good as you think it is," you know, we've got to review and respond accordingly. It's significantly more positive and significantly more definitive than it might appear. I think Sue is correct, we'll make announcements in that regard. For what where we are now, it serves the purpose of where we come from. There's a request that we should tighten it, and we'll do so. We are looking at it. Is there anything else, Sue?
Yes, Chair. There is one question from the floor.
Yeah.
from Nedbank.
From Nedbank?
Nedbank.
The bank that always gives us loans. You know, banks give you loans when you don't want the money. When you want it, they say, "We've got you now. The interest rates are high." Continue.
Yes. Hi, everyone. My name is Tobela Piet, client, as said, from Nedbank. My questions actually relate to, I think, topic that we just, you just spoke to now, which is capital allocation. I think, you know, given your capital allocation that you have mergers and acquisitions ahead of shareholder returns, could you maybe tell us a bit more as to why that is the case, that you have mergers and acquisitions ahead of shareholder returns? From companies that we look into, usually it's the other way around. That's the first question. I think your capital allocation perhaps suggests that you are saying that you can deploy capital better than shareholders can.
Maybe if you can tell us as to what are the next growth avenues for ARM in terms of commodities that you're perhaps excited about. Finally, I think two questions, they are related. One is, could you categorically tell us as to what your IRR targets and payback periods are? Also speaking specifically to Bokoni as to what return metrics you currently see in that project. I think it's important for us to understand those because, like I said, your M&A activity comes ahead of shareholder returns. I think getting an understanding as to what your targets are when it comes to return is quite critical for shareholders. Thank you.
Good. Your plan is to be CEO of Nedbank at some stage. Brian Kennedy was one of the most senior people at Nedbank and thank you for those excellent questions. I'll vote for you to be CEO. Maybe we should start in buying shares in Nedbank, Brian. Just two issues. It's incorrect to say that our mergers and acquisitions are ahead of shareholder returns. I mean, that's incorrect. When you're a listed company, the success of a listed company doesn't just depend on the plans and the strategies of management and their goals. It depends significantly more on what the market's perceptions are of the company.
Sometimes, I guess we don't do a good job in telling the investment community what our plans are and where we are going, and maybe even convincing them. I think this is the excitement of the free market economy and listed companies that if we consistently do the things that excites our shareholders and the investment community, our share price will benefit from that confidence that people like yourself from Nedbank and others have. There's a clear-On our side to make sure that at all times, we run ARM as a globally competitive company. Equally importantly, that our shareholders and investment communities have got confidence in the track record we've built.
When it comes to mergers and acquisitions in particular and capital allocation, the mergers and acquisitions are done primarily because they are value accretive. They create value for shareholders. They may not create significant value in the short term, but there's a clear expectation that they will create value for short in the medium to long term. If we've got money on our, you know, on our balance sheet and money at ARM, and we think that the shareholders that the money is better in the hands of shareholders rather than in our hands, we will give it to shareholders and increase the dividends as we have. I mean, I'm, you know, we are a big shareholder. We started this company, and the people that are critically important to us are the shareholders.
The future of this company is in their hands, not in our hands. We've got to make sure that they are excited and confident based on the value we create in the medium to long term. I don't know what were the other questions he was asking. I mean, it's just a whole litany of them. What is the other one, Sue? I think that was the one that I think is the most important.
Sure, if you can just remind us.
Well, he mustn't remind us.
Okay.
I think what we'll do is you'll spend some time with him and address those questions. I just want to conclude by saying, you know, management has to run ARM. We can never abuse the word globally competitive, and it starts with attracting and training the best managers and executive. You know, Mike mentioned the board we have. I mean, we are so privileged to have world-class board members. Thank you so much for those board members who are with us. The third thing is that the investment community listens, but they are more interested in your track record. The issue of how...
We have to listen as well and respond as best we can. There may be instances where shareholders say, "Give us the money," but we think that the best manner to create value for shareholders is not to give the money back to them by way of dividends, but to make a value accretive acquisition, because that will create significantly more money in the long term. The last issue is that, you know, our stakeholders mean the communities that live near our mines. We've got duties to women-owned businesses, to businesses that are owned by the youth. We've got a duty to create opportunities to all South Africans, Black South Africans, white South Africans. We've got a duty to the poor, to the marginalized, and make them part of the economy.
We recognize that as much as, you know, we have to create dividends that are globally competitive, we've got a duty to stakeholders, and we have to make our contribution to making South Africa a better place for all our people. Thank you so much. We're honored that you came to join us. Thank you once more.