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Kumba to raise output

At work at Kumba’s
Sishen mine
 
Johannesburg, South Africa — MININGREVIEW.COM — 24 July 2009 – Mining giant Anglo American Plc’s Kumba Iron Ore Limited unit “’ the largest African producer of the steelmaking ingredient “’ is likely to raise its second half output this year, and says there are signs of a recovery in Japanese and European demand.

“We are cautiously optimistic that we will be able to move our volume higher in the second half,” said chief executive officer Chris Griffith in an interview with Bloomberg News. “We are seeing small signs of recovery and a pick-up in orders in Europe and Japan.”

Iron ore prices slumped after carmakers and builders cut orders for steel. Kumba’s annual price negotiations will probably be completed in the next three months with a 33% reduction expected for fine ore prices and a 44.5% drop for lump ore, Griffith said. Some steel mills in China “’ the largest iron ore market “’ had agreed to a provisional 33% cut, China’s U-metal Research Institute reported last week.

Kumba is the first Anglo unit to report earnings. First-half net income climbed 22% to R3.44 billion, or R10.81 a share, the company said in a statement today. Second-half profit will be adversely affected by lower iron ore prices and the rand’s gain against the dollar, Griffith added.

“It’s a good result,” said Andrew Joannou “’ a fund manager at Afena Capital, which does not hold Kumba shares on behalf of clients “’ said by telephone from Cape Town. “All the volume that they lost in Europe, they’ve redirected to China.”

Kumba gained R3, or 1.6%, to R195. in Johannesburg trading yesterday, valuing the company at R62 billion. The stock has gained 20% this year.

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