Patrice Motsepe Eyes Assmang Millions As Arm Haggles Over Dividend

South African billionaire Patrice Motsepe is at the centre of a key cash call as African Rainbow Minerals ARM, the diversified miner he chairs and helped build, negotiates how much money it can pull out of its flagship manganese and iron-ore joint venture, Assmang. ARM told shareholders it is still in discussions with fellow shareholder Assore South Africa over the size of an appropriate final dividend to be declared by Assmang for the year to June 30. The talks are being handled by Assmang directors appointed by both companies, but the outcome will feed directly into Motsepes ability to keep investors onside in a tougher commodity cycle. Assmang, jointly owned by ARM and Assore, runs a suite of manganese and iron-ore operations, including the long-running Beeshoek mine. Under its memorandum of incorporation, the Assmang board is meant to maximise dividend payments to shareholders on a twice-yearly basis, after weighing its own funding and capital needs. There is a meaningful pool of cash on the table. Assmangs cash and cash equivalents attributable to ARM were about R3.57 billion at the end of June, excluding any additional free cash flow generated since then. ARM itself reported net cash of R6.6 billion at the same date, also excluding the Assmang balance, effectively giving Motsepes group access to a sizeable reserve that could bolster dividends or fund future projects if released. The timing of the talks is delicate. ARMs headline earnings for the year to June 30 fell sharply, hit by weaker iron-ore and coal prices and a stronger rand. The company cut its own final dividend to R6 a share, down from R9 a year earlier, as it absorbed lower commodity prices and impairments at some operations. Assmang has also been under pressure on the operational side. The Beeshoek iron-ore mine is being placed on care and maintenance after ArcelorMittal South Africa stopped taking its ore, a decision that threatens hundreds of jobs and narrows the partnerships production base. That makes the question of how much cash to retain inside Assmang, and how much to send up to shareholders, more than just a technical capital allocation issue. For Motsepe, who became one of Africas richest men by buying and turning around marginal mining assets, the current moment is a reminder of how quickly the cycle can turn. ARM has spent years emphasising its strong balance sheet and conservative approach to debt. The latent cash in Assmang fits that narrative, but investors will want to see how much of it ultimately flows through to them. So far, ARM has given no firm timeline for when Assmangs board will settle on a dividend number, promising only to update the market when a decision is taken. Until then, a question mark hangs over one of ARMs most valuable assets and over how much of those Assmang millions Motsepe can afford to let go of, as he balances shareholder expectations against the need to protect the business in a more volatile price environment.