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Afrimat has left the building as coal, hard cash calls


Afrimat has left the building as coal, hard cash calls

Building firm's move into industrial minerals, iron ore and coal speaks to its savvy and a crumbling building sector

Giulietta Talevi

That one of the most successful companies listed in the construction materials segment may sooner rather than later have to move to the mining segment of the bourse is as much testament to the destruction of the building sector, as evidence of savvy deal making on the part of Afrimat.
Having begun life as a quarrying business – which is arguably opencast mining – Afrimat has, since 2012, expanded into industrial minerals, iron ore, and now coal.
The company outbid a consortium led by private equity outfit Ata to snaffle Australian-listed but SA-focused Universal Coal.
While Afrimat’s 2016 purchase of the Diro mine in the Northern Cape was met with some scepticism, viewed today it looks like an inspired move.
Not only did Afrimat buy at the bottom of the cycle after iron ore prices had plunged, but it moved its main focus away from the construction sector, which is being rent asunder by government inaction, a moribund private sector and, recently, criminal gangs muscling for a cut of local projects.
Coal, it would thus seem, is where the smart money is headed.That’s an intriguing proposition given that almost everywhere but SA, funds are flowing in the opposite direction – towards clean, green energy.Perhaps the market’s muted reaction so far is also because Afrimat will need to tap shareholders to pay for the deal.But, given how the company’s share price has held up while others around it have sunk, that’s probably not too big an ask.

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