Wrap Text
Kumba production and sales report for the third quarter ended 30 September 2023
Kumba Iron Ore Limited
A member of the Anglo American plc group
(Incorporated in the Republic of South Africa)
(Registration number 2005/015852/06)
Share code: KIO
ISIN: ZAE000085346
("Kumba" or "the Company")
Kumba production and sales report for the third quarter ended 30 September 2023
Kumba's Chief Executive, Mpumi Zikalala, said: "The Kumba team delivered a third consecutive quarter of stable operational performance, supported by a
relentless focus on safety. Our total recordable injury frequency rate (TRIFR) improved to 1.10 while continuing to strengthen our safety culture across our
operations.
"Although total production was 2% lower compared to the prior period of Q3 2022, we have seen a 4% increase in production since Q2 2023, due to some
improvement in Transnet's rail performance, reflecting measures taken to reduce cable theft in Q3 2023. On the sales front, multiple Transnet equipment
failures and adverse weather conditions at Saldanha Bay Port in September impacted ship loading. As a consequence, sales decreased by 12% relative to Q3
2022 and by 6% compared to Q2 2023.
"Subject to logistics constraints, we have maintained our full year 2023 guidance. Both the rail and port have reopened on schedule following the Transnet
annual maintenance shut. Improved levels of finished stock at Saldanha Bay Port ensured that we had sufficient stock for shipments and were able to ramp-up
efficiently when the port reopened.
"Iron ore prices strengthened marginally in Q3 2023 following signs of China's economy stabilising, underpinned by government stimulus. Low levels of iron ore
inventory, reduced domestic iron ore supply and steel scrap usage in China provided further price support. In addition, low levels of lump ore stock at Chinese
ports and sintering cuts in September contributed to our premium product achieving a Q3 2023 year-to-date (YTD) average realised price of US$110 per wet
metric tonne (wmt), 10% above the average benchmark price of US$100/wmt.
"Ongoing rail and port challenges have increased our focus on cost optimisation and initiatives to match production and optimise logistics capacity. We will
continue to prioritise safe and stable operations and work with Transnet and various forums, including the Ore User's Forum (OUF) and National Logistics
Crisis Committee, towards a sustainable logistics network to allow us to deliver long-term value to all of our stakeholders."
Overview
• Focused on strengthening our safety culture with our TRIFR improving to 1.10 against our 1.15 three-year average.
• Total production of 9.7Mt reflects an increase of 4% compared to Q2 2023 and a 2% decrease relative to Q3 2022, in line with Transnet's logistics
performance.
• Iron ore sales of 8.9Mt decreased by 6% and 12% relative to Q2 2023 and Q3 2022, respectively, due to Transnet equipment failure and adverse weather
conditions at Saldanha Bay Port.
• Finished stock increased to 9.0Mt (Q3 2022: 4.6Mt and Q2 2023: 7.9Mt), with stock levels improving to 1.8Mt at Saldanha Bay Port.
• Average YTD realised FOB export iron ore price of US$110/wmt (US$112/dry metric tonne (dmt)), 10% above the average benchmark price of US$100/wmt
(US$102/dmt).
% % %
Q3 2023 Q3 2023 YTD 2023
Q3 Q2 Q1 Q4 Q3 vs vs YTD YTD vs
'000 tonnes 2023 2023 2023 2022 2022 Q3 2022 Q2 2023 2023 2022 YTD 2022
Iron ore waste 59,602 60,302 50,914 55,021 53,771 11 (1) 170,818 149,288 14
Iron ore production 9,736 9,320 9,425 9,961 9,977 (2) 4 28,481 27,737 3
Iron ore sales 8,873 9,456 9,487 6,885 10,038 (12) (6) 27,816 29,735 (6)
Kumba waste 59,602 60,302 50,914 55,021 53,771 11 (1) 170,818 149,288 14
Sishen 45,842 45,504 35,064 39,769 41,379 11 1 126,410 117,013 8
Kolomela 13,760 14,798 15,850 15,252 12,392 11 (7) 44,408 32,275 38
Kumba production 9,736 9,320 9,425 9,961 9,977 (2) 4 28,481 27,737 3
Lump 6,288 6,086 6,146 6,523 6,530 (4) 3 18,520 18,147 2
Fines 3,448 3,234 3,279 3,438 3,447 — 7 9,961 9,590 4
Kumba production by
9,736 9,320 9,425 9,961 9,977 (2) 4 28,481 27,737 3
mine
Sishen 6,680 6,442 6,341 7,010 7,085 (6) 4 19,463 20,007 (3)
Kolomela 3,056 2,878 3,084 2,951 2,892 6 6 9,018 7,730 17
Safety and health
Safety is our first value and through our leadership initiative of "Friendly, safety, care practice", we are promoting psychological safety and encouraging the
reporting of unsafe work practices. Kumba's TRIFR improved to 1.10 YTD against our three-year average rate of 1.15. While we are making progress, we remain
focused on strengthening our safety culture through continuous review and refinement of our safety standards, procedures, and practices across our operations.
In Q4 2023, we will launch our latest safety awareness campaign to ensure we continue to put safety first during the festive season.
Mining, production, and unit costs
Total waste stripping increased by 11% to 59.6Mt relative to Q3 2022, driven by an 11% increase to 45.8Mt at Sishen and an 11% increase to 13.8Mt at Kolomela.
Sishen's performance reflects the benefit of improved buffer stock and shovel reliability, while Kolomela's improvement compares to Q3 2022 which was
impacted by a slower than expected ramp-up in mining activity, post the safety reset in Q2 2022. We continue to focus on improving haul truck availability and
reliability at both of our operations through enhanced planning and scheduling of work and maintenance, spares management and the training of operators.
At Kumba's interim results on 25 July 2023, the re-phasing of a portion of the waste stripping at Kapstevel South to optimise Kolomela's mine plan and the
revision of Kolomela's full year 2023 waste stripping guidance to 45 – 55Mt was announced. In line with this, waste stripping decreased by 1% compared to Q2
2023, driven by a 7% decrease at Kolomela.
Total production decreased by 2% to 9.7Mt relative to Q3 2022 on the back of Sishen's production decreasing by 6% to 6.7Mt, partly offset by a 6% increase in
production to 3.1Mt at Kolomela. Production at Sishen was impacted by on-mine space constraints due to Transnet rail challenges. Kolomela's performance
reflects improved plant feedstock, following improved mining performance compared to Q3 2022.
Given improved rail performance in Q3 2023, total production rose by 4%, with Sishen's production increasing by 4% and Kolomela's production by 6%.
Logistics, sales, and the market environment
Ore railed to port was lower year-on-year, decreasing by 2% to 9.9Mt (Q3 2022: 10.1Mt). However, compared to Q2 2023, which was impacted by cable theft
and derailments, rail performance improved by 10% (Q2 2023: 9.0Mt). Security measures deployed in collaboration with members of the OUF have proven to
be effective to date and no further incidents were experienced during Q3 2023.
Finished stock levels at Saldanha Bay Port increased to 1.8Mt (Q2 2023: 0.6Mt), while stock at the mines remained at 7.2Mt, bringing total finished stock levels
to 9.0Mt (Q3 2022: 4.6Mt; Q2 2023: 7.9Mt).
Notwithstanding Transnet's rail performance improving in Q3 2023, its port terminal at Saldanha Bay experienced multiple equipment breakdowns (including
stacker reclaimers, ship loaders and blocked chutes). This, coupled with adverse weather conditions impacted ship loading and resulted in sales decreasing by
12.0% to 8.9Mt compared to Q3 2022, and by 6% relative to Q2 2023.
While we have retained our full year 2023 sales guidance, subject to logistics performance, Kumba has in conjunction with our OUF peers, worked closely with
Transnet to prepare for its annual logistics maintenance shutdown. The port reopened on schedule on 15 October and we were able to ramp-up efficiently with
improved levels of finished stock at Saldanha Bay Port ensuring that we had sufficient stock for shipments.
Iron ore prices strengthened during Q3 2023 despite a 7% increase in global iron ore supply and thin steel mill margins. Steel production in China increased by
3% YTD, driven by a strong increase in exports. Lower domestic iron ore production, less steel scrap usage and low iron ore inventories at Chinese ports provided
further price support. Government stimulus and signs of the Chinese economy stabilising (purchasing managers index above 50 indicating an expansion in
activity and an increase in new property prices) also helped support the iron ore market.
On average YTD, Kumba achieved a lump:fine ratio of 66:34 (YTD Q3 2022: 66:34) and iron ("Fe") content of 63.5% (YTD Q3 2022: 63.9%), with Fe content
improving to 64.1% in Q3 2023. This translated into an average YTD realised FOB export iron ore price of US$110/wmt (YTD Q3 2023: US$112/dmt; YTD Q3
2022 US$117/dmt), 10% above the average YTD benchmark price of US$100/wmt (YTD Q3 2023: US$102/dmt; YTD Q3 2022 US$106/dmt).
Full year 2023 guidance
Kumba's full year 2023 guidance is unchanged, subject to logistics constraints and is as follows:
Guidance FY2023
(wmt)
Total sales (Mt) 36 - 38
Total production (Mt) 35 - 37
Sishen ~26
Kolomela ~10
Waste stripping (Mt) 195 - 225
Sishen 150 - 170
Kolomela 45 - 55
On-mine unit cost (R/t)
Sishen 540 - 570
Kolomela 510 - 540
C1 unit cost ($/t) ~43
Volumes excluding waste stripping, and on-mine unit costs, are reported as wmt. Product is shipped with ~1.6% moisture and the 2023 cost guidance is
calculated at a foreign exchange rate of ~R18/US$. Production and sales volumes referred to for the period are 100% of Sishen Iron Ore Company Proprietary
Limited ("SIOC"), and attributable to shareholders of Kumba as well as to the non-controlling interests in SIOC.
This announcement contains forward-looking statements which are based on the Company's current beliefs and expectations about future events. The
operational and financial information provided in this announcement are estimates and forecasts and have not been reviewed an d reported on by the
Company's external auditors.
Johannesburg
24 October 2023
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
For further information, please contact:
Company Secretary
Fazila Patel
fazila.patel@angloamerican.com
Tel: +27 12 683 7060
Mobile: +27 83 297 2293
Investors Media
Penny Himlok Sinah Phochana
penny.himlok@angloamerican.com sinah.phochana@angloamerican.com
Tel: +27 12 622 8324 Tel: +27 12 683 7019
Mobile: +27 82 781 1888 Mobile: +27 76 066 0655
Notes to editors:
Kumba Iron Ore Limited, a member of the Anglo American plc group, is a leading value-adding supplier of high quality iron ore to the global steel industry.
Kumba produces iron ore in South Africa at Sishen and Kolomela mines in the Northern Cape Province. Kumba exports iron ore to customers around the globe
including in China, Japan, South Korea and a number of countries in Europe and the Middle East.
www.angloamericankumba.com
Anglo American is a leading global mining company and our products are the essential ingredients in almost every aspect of modern life. Our portfolio of
world-class competitive operations, with a broad range of future development options, provides many of the future-enabling metals and minerals for a
cleaner, greener, more sustainable world and that meet the fast growing every day demands of billions of consumers. With our people at the heart of our
business, we use innovative practices and the latest technologies to discover new resources and to mine, process, move and market our products to our
customers – safely and sustainably.
As a responsible producer of copper, nickel, platinum group metals, diamonds (through De Beers), and premium quality iron ore and steelmaking coal – with
crop nutrients in development – we are committed to being carbon neutral across our operations by 2040. More broadly, our Sustainable Mining Plan
commits us to a series of stretching goals to ensure we work towards a healthy environment, creating thriving communities and building trust as a corporate
leader. We work together with our business partners and diverse stakeholders to unlock enduring value from precious natural resources for the benefit of the
communities and countries in which we operate, for society as a whole, and for our shareholders. Anglo American is re-imagining mining to improve people's
lives.
www.angloamerican.com
Forward-looking statements
This announcement includes forward-looking statements. All statements other than statements of historical facts included in this announcement, including,
without limitation, those regarding Kumba's financial position, business, acquisition and divestment strategy, dividend policy, plans and objectives of
management for future operations (including development plans and objectives relating to Kumba's products, production forecasts and Ore Reserves and
Mineral Resource estimates), are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance or achievements of Kumba, or industry results , to be materially different
from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding Kumba's present and future business strategies and the environment in
which Kumba will operate in the future. Important factors that could cause Kumba's actual results, performance or achievements to differ materially from
those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market
prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the effects of global pandemics and
outbreaks of infectious diseases, the availability of mining and processing equipment, the ability to produce and transport products profitably, the availability
of transport infrastructure, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects
of inflation, political uncertainty and economic conditions, the actions of competitors, activities by governmental authorities such as permitting and changes
in taxation or safety, health, environmental or other types of regulation, conflicts over land and resource ownership rights and such other risk factors
identified in Kumba's most recent Integrated Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue
reliance should not be placed on forward-looking statements.
These forward-looking statements speak only as of the date of this announcement. Kumba expressly disclaims any obligation or undertaking (except as
required by applicable law, the Takeover Regulation Panel, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the
Financial Sector Conduct Authority and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement
contained herein to reflect any change in Kumba's expectations with regard thereto or any change in events, conditions or circumstances on which any such
statement is based. Nothing in this announcement should be interpreted to mean that future earnings per share of Kumba will necessarily match or exceed its
historical published earnings per share.
Certain statistical and other information about Kumba included in this announcement is sourced from publicly available third-party sources. As such, it has not
been independently verified and presents the views of those third parties, though these may not necessarily correspond to the views held by Kumba and
Kumba expressly disclaims any responsibility for, or liability in respect of, such third-party information.
Date: 24-10-2023 08:00:00
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