Wrap Text
Kumba production and sales report for the third quarter ended 30 September 2024
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 2024
Kumba's Chief Executive, Mpumi Zikalala, said: "'Kumba's focus on operational excellence continued to deliver a safe and solid operational performance.
Our year-to-date 2024 (YTD 2024) total recordable injury frequency rate (TRIFR) improved to 0.86 from 1.10 in the comparative 2023 period. This
demonstrates our relentless focus and commitment to eliminating fatalities and achieving zero harm for all our people.
"Production increased by 3% compared to the second quarter of this year (Q2 2024) and we are on track to deliver our full year 2024 guidance of 35 -
37 million tonnes (Mt). Our cost optimisation programme is progressing well, and we continue to target a C1 unit cost of US$38 per tonne for the full
year 2024.
"Sales increased by 2% relative to the comparative 2023 period. However, in comparison to Q2 2024, sales decreased by 6% as ship loading was impacted
by adverse weather conditions in July 2024 at the Saldanha Bay port. Given this, sales are expected to end the year closer to the lower end of our full
year 2024 sales guidance of 36 – 38 Mt, subject to Transnet's logistics performance which will include the annual maintenance shutdown in October
2024.
"Low steel demand, robust iron ore supply and elevated inventories at ports in China have continued to place pressure on the iron ore market. However,
the iron ore market rallied in the last week of September 2024, amid economic stimulus measures announced by the Chinese government and calls for
counter-cyclical fiscal policies to stabilise the Chinese property market. This resulted in a year-to-date average benchmark free-on-board (FOB) iron ore
price of US$90 per wet metric tonnes (wmt). Against this context, Kumba achieved an average realised FOB export price of US$94/wmt, US$4/wmt
above the average benchmark price, reflecting the premium quality of Kumba's iron ore products.
"In the longer term, as steel production shifts to Direct Reduced Iron steelmaking which has significantly lower emissions co mpared to the traditional
blast furnace route, demand for direct charge materials such as Kumba's high-quality iron ore lump, will grow rapidly. The resumption of our ultra-
high-dense-medium-separation technology project recently announced on the 29th of August 2024, should treble the proportion of premium iron ore
produced at our world-class Sishen mine, ensuring that Kumba continues to play a key role in the green steel value chain".
Overview
• Continued improvements in safety performance with a YTD 2024 TRIFR of 0.86 (YTD 2023: 1.10).
• Total production decreased by 3% to 9.4 Mt (Q3 2023: 9.7 Mt), in line with Transnet's logistics performance which decreased by 8%.
• Total sales increased by 2% to 9.0 Mt (Q3 2023: 8.9 Mt), reflecting improved port equipment performance. However, adverse weather conditions
resulted in sales decreasing by 6% compared to Q2 2024.
• Finished stock was 8.6 Mt (Q3 2023: 9.0 Mt and Q2 2024: 8.2 Mt) at the end of the period, with 7.5 Mt on-mine and 1.1 Mt at port.
• Average YTD realised FOB export iron ore price of US$94/wmt (YTD 2023: US$110/wmt), US$4/wmt above the average benchmark price of
US$90/wmt (YTD 2023: US$100/wmt).
% % %
Q3 2024 Q3 2024 YTD 2024
Q3 Q2 Q1 Q4 Q3 vs vs YTD YTD vs
000 tonnes 2024 2024 2024 2023 2023 Q3 2023 Q2 2024 2024 2023 YTD 2023
Iron ore waste 39,414 44,663 43,794 46,021 59,602 (34) (12) 127,871 170,817 (25)
Iron ore production 9,446 9,184 9,275 7,234 9,736 (3) 3 27,905 28,481 (2)
Iron ore sales 9,027 9,556 8,533 9,343 8,873 2 (6) 27,116 27,816 (3)
Kumba waste 39,414 44,663 43,794 46,021 59,602 (34) (12) 127,871 170,817 (25)
Sishen 34,073 39,265 35,502 37,391 45,842 (26) (13) 108,840 126,409 (14)
Kolomela 5,341 5,398 8,292 8,630 13,760 (61) (1) 19,031 44,408 (57)
Kumba production by
mine 9,446 9,184 9,275 7,234 9,736 (3) 3 27,905 28,481 (2)
Sishen 6,767 6,644 6,563 5,958 6,680 1 2 19,974 19,463 3
Kolomela 2,679 2,540 2,712 1,276 3,056 (12) 5 7,931 9,018 (12)
Kumba sales 9,027 9,556 8,533 9,343 8,873 2 (6) 27,116 27,816 (3)
Lump 6,191 5,925 5,620 6,220 5,878 5 4 17,736 18,477 (4)
Fines 2,836 3,631 2,913 3,123 2,995 (5) (22) 9,380 9,339 —
Safety performance
Kumba's YTD 2024 TRIFR improved to 0.86 (YTD 2023: 1.10). Kumba's relentless focus on zero harm included the implementation of regular routine
interventions ("Stop for safety reset" in August 2024 and September 2024) to improve safety awareness and critical controls, as well as embedding a
baseline of employee and service partner behaviour and actions required to ensure safe working practices through our initiative ("My daily safety
rhythms and routines").
Mining, production, and unit costs
At the start of the year, the value chain was reconfigured to align to Transnet's constrained logistics performance and to improve the company's cost
competitiveness. To reflect this, the company's total waste stripping and production guidance for the full year2024 was set at between 155 - 170 Mt and
35 - 37 Mt, respectively.
In line with this guidance and Kumba's optimised mine plan, waste stripping decreased by 34% to 39.4 Mt (Q3 2023: 59.6 Mt), driven by a 26%
decrease to 34.1 Mt at Sishen and a 61% decrease to 5.3 Mt at Kolomela. Total production decreased by 3% to 9.4 Mt (Q3 2023: 9.7 Mt), with a 12%
decrease at Kolomela to 2.7 Mt, partly offset by a 1% increase in Sishen's production to 6.8 Mt. Relative to the second quarter of this year, production
increased by 3% demonstrating operational stability and capability in the drive for efficiency benefits of an integrated mining complex.
Consistent progress is also being made in terms of the cost optimisation programme. The savings from the right-sizing of the mining fleet, improved
operational efficiencies and supply chain management, as well as the optimised use of consumables and a more streamlined organisational structure,
ensure that the company is on track to achieve the unit cost guidance of between R520 – 550/tonne for Sishen and R410 – 440/tonne for Kolomela, as
well as the C1 unit cost target of $38/tonne.
Logistics, sales, and the market environment
Ore railed to port decreased by 8% to 9.1 Mt (Q3 2023: 9.9 Mt) due to the cumulative impact of derailments, rail breakages and speed restrictions.
Compared to Q2 2024, which was impacted by the 5-day mini-shut in April, ore railed to port increased by 5%. Total finished stock was 8.6 Mt (Q3 2023:
9.0 Mt and Q2 2024: 8.2 Mt) at the end of the period, with 7.5 Mt on-mine and 1.1 Mt at port. Mine stockpiles are expected to remain elevated to cater
for the tie-in of the ultra-high-dense-medium-separation technology at Sishen.
Despite logistics constraints, sales improved by 2% to 9.0 Mt (Q3 2023: 8.9 Mt). This follows consistent efforts by the Ore User's Forum (OUF) to work
closely with Transnet to reduce the impact of equipment breakdown at the Saldanha Bay port terminal. However, in comparison to Q2 2024, Q3 2024
sales decreased by 6% due to 11 days of adverse weather conditions in July impacting ship loading.
Given this, sales volumes are expected to end the year closer to the lower end of the full year 2024 sales guidance of 36 – 38 Mt, subject to logistics
performance and further potential downside risk following the reopening of Saldanha Bay port. Kumba and its OUF peers continued to collaborate
with Transnet, including providing support in the planning and implementation of the 10-day annual logistics maintenance shutdown which
commenced on 8 October. Following successful completion of the annual maintenance, the Sishen-Saldanha Bay port line reopened as scheduled on 18
October 2024 with a significant number of speed restrictions lifted. On 23 October 2024, Saldanha Bay port also reopened as planned and the ramp-up
in port activities is being closely monitored.
Economic recovery in China has been uneven with growth in manufacturing and export-focused industries partly offset by a shrinking construction
sector. This combined with robust iron ore supply from major producers and elevated inventories at ports in China resulted in the benchmark iron ore
price falling by 38% to US$89.35 per dry metric tonnes on the 23rd of September 2024 before rallying 21% up to the end of September, following
economic stimulus measures announced by the Chinese government to support consumers and the property sector. The implementation of these
stimulus measures coupled with seasonal factors are expected to be constructive for the iron ore market in the months ahead.
On average YTD, Kumba's Lump:Fine ratio was 65:35 (YTD 2023: 66:34) and iron content at 64.1% (YTD 2023: 63.5%). An average YTD realised FOB
export iron ore price was achieved of US$94/wmt (YTD 2023: US$110/wmt), US$4/wmt above the average YTD benchmark price of US$90/wmt (YTD
2023: US$100/wmt).
Full year 2024 guidance
Kumba's full year 2024 sales guidance is unchanged, subject to Transnet's logistics constraints (including the ramp-up of the rail and port activities
following the annual maintenance shutdown) and is as follows:
Guidance FY2024
Total sales (Mt) (wmt) 36 - 38
Total production (Mt) (wmt) 35 - 37
Sishen ~26
Kolomela ~10
Waste stripping (Mt) (dmt) 155 - 170
Sishen 135 - 145
Kolomela 20 - 25
On-mine unit cost (R/t) (dmt)
Sishen 520 - 550
Kolomela 410 - 440
C1 unit cost ($/t) (wmt) ~38
Volumes excluding waste stripping, and on-mine unit costs, are reported as wmt. Product is shipped with ~1.6% moisture and the 2024 C1 unit cost
guidance is calculated at a foreign exchange rate of ~R19/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 contained in this announcement have not been reviewed and reported on by the Company's external auditors and
is the responsibility of the board of directors of Kumba.
Johannesburg
24 October 2024
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 focused on the responsible production of copper, premium iron ore and crop nutrients – future-
enabling products that are essential for decarbonising the global economy, improving living standards, and food security. Our portfolio of world-class
operations and outstanding resource endowments offers value-accretive growth potential across all three businesses, positioning us to deliver into
structurally attractive major demand growth trends.
Our integrated approach to sustainability and innovation drives our decision-making across the value chain, from how we discover new resources to
how we mine, process, move and market our products to our customers – safely, efficiently and responsibly. Our Sustainable Mining Plan commits us to
a series of stretching goals over different time horizons to ensure we contribute to a healthy environment, create thriving communities and build trust
as a corporate leader. We work together with our business partners and diverse stakeholders to unlock enduring value from precious natural
resources for our shareholders, for the benefit of the communities and countries in which we operate, and for society as a whole. Anglo American is re-
imagining mining to improve people's lives.
Anglo American is currently implementing a number of major structural changes to unlock the inherent value in its portfolio and thereby accelerate
delivery of its strategic priorities of Operational excellence, Portfolio simplification, and Growth. This portfolio transformation will focus Anglo
American on its world-class resource asset base in copper, premium iron ore and crop nutrients, once the sale of our steelmaking coal and nickel
businesses, the demerger of our PGMs business (Anglo American Platinum), and the separation of our iconic diamond business (De Beers) have been
completed..
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: 24-10-2024 08:00:00
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