Africa’s largest iron ore miner Kumba Iron Ore approved a R7bn mining project despite a buffeting from the Covid-19 pandemic on its operations and interim financial results.
Kumba, which is a subsidiary of global resources group Anglo American, reported after-tax profit of R11bn for the six months to end-June compared to R13.2bn in the same period a year earlier.
Revenue dipped to R31.6bn from R34.5bn.
Kumba declared an interim dividend of R19.60 a share compared to R30.79 before. The dividend came in at the top end of the company’s policy of returning 50%-75% of headline earnings, which were R26.19 a share.
“Operational performance during the period reflects the lockdown and subsequent reopening of our operations with a reduced proportion of our workforce in April before ramping up to pre-Covid-19 run-rates in June,” said CEO Themba Mkhwanazi.
There is a bottleneck in exports related to exports, mainly at the ports where there one fifth of staff were not at work. This was expected to normalise in September, Mkhwanazi said. Kumba has a stockpile of 6.2-million tonnes to sell.
Transnet’s logistical capacity on its railway line linking the Northern Cape mines to the Saldanha port was at 80% of normal traffic during June.
Kumba’s production fell by 11% to 17.9-million tonnes from 20.1-million tonnes, with the biggest decline coming in the second quarter when SA entered a strict lockdown to curtail and prepare for Covid-19.
Sales volumes dropped by 13% to 18.6-million tonnes.
Kumba forecast total sales for the year of 38-million to 40-million tonnes and production of up to 39-million tonnes.
The new Kapstevel South project will deliver a direct-shipping ore, which means it needs little processing before it can be sold, said Mkhwanazi. The project will be funded out of cash.
Kumba was in a net cash position of R15.7bn at the end of June compared to R18.4bn a year earlier.
“The project will sustain Kolomela’s production of about 13-million tonnes for the life of mine of 13 years,” Mkhwanazi said, adding 6,000 jobs would remain intact.
The R7bn spend would largely go towards stripping waste rock to expose the ore over the next three years, with new mining equipment, buildings and stations to look after the earth-moving machines, he said.
The project, which will deliver ore from 2024, is a life-extension investment rather than adding additional ore to Kumba, he said. The company’s strategy is to extend the lives of its mines to 2040. -Businesslive