Pretoria, South Africa — 24 July 2013 – Kumba Iron Ore Limited, the owner of Africa’s biggest iron-ore mine, says its profit rose in the first half of the year as output from its new site countered losses from strikes.
Net income climbed to US$ 790 million from US$766 million a year earlier, the company said in a statement quoted by Bloomberg News. Earnings excluding one-time items gained to R24.13 a share from R23.88. The contribution to Anglo American plc’s profit slid 8.8% to US$579 million, the London-based parent company said in a separate statement.
Production of the ore used in steel-making at the Sishen mine in Northern Cape province fell 10% to 16.1Mt. Sishen was brought to a standstill when 125 staff occupied the operation for two weeks in October, threatening to damage mining equipment valued at about R3.3 billion. At the same time, the Kolomela mine, which shipped its first ore in December 2011, raised output 62% to 5.26Mt, Kumba said.
“Steel fundamentals remain under pressure as the Chinese economy slows down,” Kumba added. “Iron-ore prices are expected to remain under pressure as supply exceeds demand in the second half of the year, though restocking by steel mills may support prices.” China is the largest producer and consumer of steel.
Operating expenses excluding royalties increased 14% to R11.4 billion, and the company’s mining of 40 to 50 Mt of waste at Sishen to make up for volumes lost in the strike, may add to second-half costs, it said.
“There might be some upside risk if we don’t meet our production targets,” chief financial officer Frederick Kotzee said by phone. Kumba retained a full-year output goal of about
37Mt at Sishen and about 9Mt at Kolomela.
Iron ore for immediate delivery at Tianjin port in China, a benchmark, fell 1.9% to US$137.02/t from a year ago, according to a price index compiled by The Steel Index Ltd.
The weaker rand should help Kumba control costs, Deutsche Bank AG said in an e-mailed note to clients. “Beyond 2013, an ability to ramp Kolomela further should be a source of cost reduction for the group average cost as well,” the bank added.
Capital spending will peak at US$500 to US$600 million this year, Kotzee said in a Johannesburg presentation, after US$230 billion in the first half. Kumba will pay an interim dividend of R20.10 a share, from R19.20 last year.
Source: Bloomberg News. For more information, click here.