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Lower iron ore output digs into Kumba’s profit

Dineo Faku

KUMBA Iron Ore, the world’s biggest producer of the metal, said yesterday that it was too early to tell what effect the fire at ArcelorMittal South Africa’s Vanderbijlpark plant would have on its operations.

“Amsa (ArcelorMittal South Africa) and Kumba will discuss it in due course when Amsa knows the fuller impact,” Norman Mbazima, the chief executive of Kumba, said yesterday at its results presentation.

Mbazima said Kumba was confident of its position in the Lithos litigation.

Lithos is claiming $421 million (R3.7 billion) from Kumba for damages in relation to the Falémé project in Senegal.

Kumba is defending the merits of the claim and views the basis of the claim as fundamentally flawed. The trial date is expected to be in the first quarter of this year.

The company said the ramp up of Kolomela mine in the Northern Cape was on track to produce at design capacity of 9 million tons this year, which was expected to improve the group’s supply of iron ore.

Iron ore output at Kumba’s Sishen mine declined in the fourth quarter, primarily because of a labour strike. Production at Sishen slid by 13 percent to 33.7 million tons.

Kumba posted a 28 percent drop in profit amid increasing costs and a depressed output last year. The Anglo American subsidiary reported that net income dropped R12.2bn, from R17bn a year earlier.

Earnings per share, excluding one-time items, slid to R37.97 from R53.13, after the company last month projected a range of R36.30 to R38.80.

Kumba’s share price yesterday fell 0.69 percent to close at R606.79. – Additional reporting by Bloomberg

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