African Rainbow Minerals Chief Executive Mike Schmidt said on Thursday it is not convinced high nickel prices are sustainable as it considers the future of its Nkomati mine.

South Africa’s open pit Nkomati operation, which ARM jointly owns with Russia’s Nornickel, was put under care and maintenance in March 2021 due to low nickel prices.

As nickel prices hit record highs earlier this year, Schmidt had said ARM could consider resuming operations at Nkomati, a 16 000 tonne per year mine nearing the end of its life.

However, during Thursday’s results call Schmidt said mining Nkomati’s remaining low-grade underground ore would be expensive and required a supportive long-term pricing environment.

“The nickel price today is elevated, but if you look at the long-term outlook or consensus, it’s not there yet,” Schmidt said, adding ARM and Nornickel would continue to assess the situation before deciding whether to close or restart the mine.

ARM earlier reported a 13% drop in its full-year profit, hurt by lower iron ore and platinum group metal (PGM) prices and higher mining costs.

The company’s headline earnings per share (HEPS) – the most common profit measure in South Africa – fell to R57.87 for the year ended June 30, from R66.88 last year.

The diversified miner said its iron ore division was negatively impacted by lower average realised US dollar prices, diminished sales volumes and higher freight rates.

PGM prices also came off record highs seen during the first part .

The decline in iron ore and PGM earnings was partially offset by high coal and manganese prices, ARM said.

Costs rose across its operations, driven by increases in the price of diesel, freight, explosives and other goods.

ARM declared a final dividend of R20 per share, bringing the total to R32 per share for the year.