Johannesburg, South Africa — MININGREVIEW.COM – Higher sales volumes and stronger iron ore prices have enabled Kumba Iron Ore Limited – Africa’s top iron ore producer – to post an impressive first half operating performance, with substantial increases in revenue, profit, operating margins and headline earnings.
In announcing its interim results for the six months to 30 June 2008 here today, Kumba said it expected to boost full year production this year to around 38 million tonnes. “We expect to produce about 37 to 38 million tonnes this year,” CEO Chris Griffith told Reuters.
He added that he did not expect much impact from the power crisis, and pointed out that company was relying more on diesel-fired power. Kumba officials said they expected China to drive demand for iron ore in the next 3-5 years.
Today’s results statement showed a revenue increase of 67%. Despite continued pressure on operating expenses, operating margins increased to 58% in 2008 (63% from mining activities), from 54% (57% from mining activities) in 2007. Profit for the six months ended 30 June 2008 was R3.5 billion, while headline earnings rose 76% from R1.6 billion to R2.8 billion. Cash generated by operations for the period increased by 52% to R4.6 billion. Production of iron ore is up 9% from 15.6Mt to 17.1Mt
Looking ahead, Kumba remains positive on the prospects for iron ore, given continued strong Chinese demand for steel and upward pressure on iron ore prices, as supply and logistics constraints delay bringing on-stream new production in response to increased demand, the statement added. China’s imports of iron ore rose to over 200Mt in the first six months of 2008. This is expected to grow to 750Mtpa over the next five years.
Final settlement of iron ore prices for the 2008/2009 iron ore year between Kumba and its customers is anticipated in the third quarter of 2008.