JOHANNESBURG - Kumba Iron Ore, South Africa’s biggest iron-ore producer, has hiked the total salary of its directors and prescribed officers to R108million in the year to December 2017, following zero fatalities and an improved financial performance buoyed by firmer prices.
Kumba, an Anglo American subsidiary, paid its four executive directors R47.1m, including share options and bonuses, up from R26.2m in 2016.
Chief executive Themba Mkhwanazi received a total salary of R21m, including R7.1m guaranteed pay and a long-term incentive plan award earned while he was chief executive at Anglo Coal. His total salary was R5.3m in 2016.
Former chief financial officer Frikkie Kotzee earned R7.07m, including R1.3m guaranteed pay, last year, compared with R9.52m in 2016.
Bothwell Mazarura, who joined the company as chief executive in September last year, earned R2.2m.
Former chief executive Norman Mbazima earned a R16.6m long-term incentive plan award last year, compared with R11.3m total salary in 2016.
The company last year signed a three-year wage deal with the National Union of Mineworkers (NUM), its majority union, which gave workers an annual pay rise ranging between 7percent and 10percent.
“The pleasing turnaround of the business, delivered over a remarkably short time frame, required some tough decisions that had to be taken regarding the restructuring of our business following the collapse of iron-ore prices in 2014/15,” Mkhwanazi said.
“Although the process has been painful, the company is now much stronger, enabling us to deliver significant growth in value for our key stakeholders.”
Last year, Kumba announced its decision to restructure the Sishen Mine to a lower cost pit configuration as the sharp drop in iron-ore prices and increased capital costs weighed heavily on its balance sheet. The restructuring affected 2633 employees and 1300 contractors.
Kumba’s operations include its flagship Sishen Mine, one of the largest open-pit operations, which produces 69percent of its iron-ore production.
Kumba recorded zero fatalities in 2017. Fatalities in South African mining spiked to 88 last year, compared with 73 in 2016.
Kumba was the best-performing share on the JSE in 2017. It strengthened 138percent to R379 a share at the end of the 2017 financial year from R159 at the end of 2016.
Its market capitalisation grew to R122billion at the end of 2017 from R51bn at the end of 2016, reflecting the market’s confidence in Kumba.
It also reinstated a dividend for the first time since 2015 and paid a larger-than-expected R30.97 a share for the year.
Production for the year was up 8percent year-on-year to 45million tons. Total waste mined increased 16percent to 217.3m tons.
Seleho Tsatsi, an investment analyst at Anchor Capital, said Kumba had close to R14bn in cash on its books at the end of 2017.
“They’ve aggressively paid down debt. The iron-ore price is down about 10percent year-to-date, and its share price has been under pressure lately as a result. However, unlike in 2015, they are debt-free.” Tsatsi said. “Their strong balance sheet makes it easier for Kumba to whether fluctuations in the iron-ore price this time around.”
Kumba shares declined 4.24percent on the JSE yesterday to close at R280.