Kumba: Plunge in iron ore to lead to cuts

KUMBA Iron Ore will cut capital expenditure, jobs and other costs after the steel-making ingredient’s drop to a more than five-year low. Kumba, which owns Sishen mine – Africa’s largest iron-ore operation, would reduce stay-in-business capital expenditure 20 percent and a further 10 percent in 2015 and 2016, the Pretoria-based unit of Anglo American said yesterday. The company may also cut head-office jobs by 40 percent. “In the current low-price environment, which is expected to persist, Kumba is reviewing all aspects of its business,” the company said as part of parent Anglo’s investor presentation in London yesterday. Iron ore fell to the lowest in more than five years last month as the Chinese economy slowed and the world’s biggest producers BHP Billiton and Rio Tinto Group increased supply. The steelmaking ingredient dropped 1.1 percent to $69.10 a ton at 1.50pm in Johannesburg, bringing this year’s decline to 49 percent. Sishen planned to increase production to 35 million tons in 2014, followed by 36 million tons in 2015 and 37 million tons from 2016, Kumba said. The stock fell 3.11 percent to R242.74 in Johannesburg yesterday, the weakest since November 2009. – Bloomberg