The company said that it expected its basic earnings for the six months to be between R9.7billion and R10.2bn against R2.9bn reported in the comparative period.
Kumba, an Anglo American subsidiary, said the expected strong financial results were on the back of high iron ore prices and a weak exchange rate.
“The increase in earnings for the period is largely attributable to the higher average realised free onboard export iron ore prices and a weaker rand/dollar exchange rate relative to the comparative period,” Kumba said.
Kumba did not do well in the previous financial year as headline earnings and dividend per share were flat at R30 a share due to derailments that affected its exports.
Global supply shocks have pushed the iron ore price up significantly in 2019, after a Brazilian tailings dam disaster significantly cut the iron ore production of the world’s biggest producer, Vale.
The price of the commodity mostly used to produce steel reached a five-year high of $126 (R1761) per ton earlier this month. This puts the price of iron ore up 70percent so far this year.
In a report issued last week, analysts from Deutsche Bank said iron ore prices would not break sustainably below the $100 a ton level until the first half of 2010, and then remain around $80 until 2021.
The surge in profits comes despite Kumba suffering a drop in production of the key steel making commodity in the period. Kumba said iron-ore production fell 9percent to 10.5million tons in the period due to unscheduled plant maintenance.
“Given the unscheduled plant maintenance in the first half of the year, production guidance for 2019 is revised to 42 to 43mt (millions tons), from 43 to 44mt.
The full year sales guidance is unchanged at 43 to 44mt, as sales volumes will be supplemented from finished stock which is at a healthy level of 4.5mt (June 30, 2018: 6.2mt),” the company said.
Nearly 70percent of the South African iron ore operations are conducted by Kumba - one of the world’s top suppliers of seaborne iron ore. Kumba operates three mines, Kolomela and Sishen in the Northern Cape Province and Thabazimbi in the Limpopo Province.
Kumba’s share price closed 1.78percent higher at R483.27 on the JSE yesterday.