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Kumba posts stellar annual performance on higher iron ore prices

Mpumi Zikalala, chief executive, Kumba Iron Ore. Photo: Supplied

Mpumi Zikalala, chief executive, Kumba Iron Ore. Photo: Supplied

Published Feb 23, 2022

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MINING giant Kumba Iron Ore yesterday reported a stellar performance as it delivered record earnings of R64 billion for the year ended December 31 on the back of higher iron ore prices and cost-cutting measures.

Kumba, majority owned by Anglo American, yesterday declared a R30.50 per share final dividend bringing the total dividend for its 2021 financial year to R103.20 per share representing 100 percent of its headline earnings − 46 percent higher year-on-year.

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Its headline earnings per share was R103.65 for the year ended December 31, from R71.07 in 2020.

Kumba’s new chief executive, Mpumi Zikalala, said yesterday that 2021 was an exceptional year of delivery across the business. Zikalala is the former De Beers Consolidated Mines CEO and was appointed Kumba CEO in October.

“Despite the weather and logistical challenges, production increased by 9 percent to 40.9 million tonnes (Mt) with improved performance at the Saldanha port lifting export sales by 1 percent to 40.2Mt,” she said.

“Strong prices combined with our high-quality products and operational resilience resulted in record earnings before interest, tax, depreciation and amortisation (Ebitda) of R64.6 billion,” Zikalala said.

Pretoria-headquartered Kumba said the strong financial performance was largely driven by the robust pricing for iron ore, which recorded its second-highest average level of $160 (R2 429) per ton for the year − reaching $220 per ton at one point before crashing to $80 per ton later in the year.

Kumba achieved an average export price of free on board (FOB) of $161 per ton, 18 percent above the benchmark.

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Last year iron ore stocks came to 6.1Mt mostly located on mine owing to the year-end closure of the Transnet controlled Sishen-to-Saldanha port rail line.

Transnet problems included fires at terminals in Durban and Richards Bay. The parastatal was also plagued with copper cable theft.

“Significant highlights of the year are the extension of Sishen’s life of mine by four years to 2039 through our ultra-high-dense media-separation technology, reaching agreements with, and the relocation of the remaining homeowners of, Dingleton to Siyathemba,” the company said.

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The R3.6bn ultra-high dense media separation project, which was approved by the Kumba board last week, would improve positioning of its product portfolio for a low-carbon future.

Its mining performance had improved into the second half. “Total tonnes mined increased by 2.0 percent to 261.4Mt compared to 2020: 256.3Mt and total waste stripping by 2 percent to 209.4 Mt, in 2020: 204.8Mt,” it said.

Kumba had achieved more than five years of fatality-free production and over 75 percent of its workforce has been vaccinated to date against Covid-19.

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BUSINESS REPORT ONLINE

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