Johannesburg — MINING holding company Assore 's headline earnings for the year to June more than halved to R1,49bn from R3,27bn because of a major decline in earnings from its principal investment, Assmang, and lower sales of its group products.

Chairman Desmond Sacco said the recession had negatively affected prices for the group's minerals, making trading conditions difficult.

During the first half of the year, earnings were especially poor at a reported R338m, while they recovered impressively during the second half to R1,14bn because of improved demand for all group commodities, especially iron ore, due to interest from the east.

The group said a strong rand had further negatively affected earnings including at Assmang, in which Assore has a 50% stake.

The strong rand countered the effect of high sales volumes by bringing down prices. Assmang's turnover for the year to June fell from R15,3bn in the comparative financial period to R12,9bn.

Assore has announced that it will enter into a second black economic empowerment transaction, as a result of which 26,07% of its shares will be controlled by empowerment candidates.

Mineral markets have recovered post-recession, with Germany and France in Europe and India in Asia posting impressive gross domestic product growth figures.

However, other European countries' debt-related instability and some economic slowdown in China have placed ore and alloy prices for manganese and chrome under pressure, Mr Sacco said. Iron ore prices may be robust but a new pricing convention in the industry, which saw structural changes from April 1, superseded previous negotiations between miners and customers.

"These circumstances, in combination with the group's exposure to fluctuations in exchange rates, make it difficult to estimate developments on group earnings with reasonable assurance or accuracy," Mr Sacco said.

The group spent about R2bn on ongoing infrastructural development at Assmang's Khumani iron-ore mine.

The group hoped this would increase the mine's capacity to 16-million tons a year from July 2012.

Iron ore produced by Assmang during the year to June increased 32% from 7409000 tons to 9799000 tons.

The share price fell further than 2% during trading yesterday.