View of the pit at
Kumba’s Sishen iron
ore mine in the
Northern Cape
Johannesburg, South Africa — 13 February 2013 – Kumba Iron Ore Limited “’ the owner of Africa’s biggest mine producing the steel making raw material “’ reports that full-year profit slumped 28% in 2012 as costs climbed, output decreased and prices declined.

Net income fell to US$1.4 billion from US$1.9 billion a year earlier, the platinum unit of Anglo American plc said here in a statement. The result compares with the US$1.39 billion median of eight analyst estimates compiled by Bloomberg News. Earnings per share excluding one-time items slid to 37.97 rand, from 53.13 rand, after the company a month ago projected a range of 36.30 to 38.80 rand.

Declining prices “had a negative effect on earnings” in addition to lower output, said CEO Norman Mbhazima on a call after the results. Average iron-ore export prices slid 23% to US$122/t, the company added.

Output at the Sishen mine dropped 13% to 33.7Mt in 2012, Kumba said. An extra 10 to 20Mt of mining waste will need to be extracted in 2013 because of lower output during the strike, raising per tonne costs of ore mined.

While the company is still looking for iron-ore projects in West Africa, it has to be “very careful that what we find is something that can give value to our shareholder,” Mbhazima said. “It’s a difficult market at the moment.”

World crude-steel output this year is expected to grow at “similar levels to 2012,” when it rose 2%, the Kumba statement declared.

Kumba had ore reserves of 1.1 billion tonnes at operations including Sishen, Kolomela and Thabazimbi as of 31 December 2012.

Source: Bloomberg News. For more information, click here.