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Kumba production and exports down, earnings and dividend well up

Norman Mbazima

Norman Mbazima

Photo by Duane Daws

11th February 2014

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – JSE-listed Kumba Iron ore produced and exported less in the 12 months to December 31, but this did not stop South Africa’s iron-ore major from raising its dividend on the back of a marked increase in earnings.

Total production of iron-ore fell 2% to 42.4-million tons as a result of the production shortfalls at Sishen mine, which were mostly offset by the top-notch performance at the new Kolomela mine.

The company has been granted a mining right for the so-called rail properties at Sishen.

Full-year headline earnings rose 24% to R15.4-billion compared with R12.5-billion in 2012.

The 2% decrease in export volumes to 39.1-million tons was offset by the 2% stronger average export iron-ore prices achieved, together with a 17% decline in the average rand/dollar exchange rate, which resulted in a 20% revenue increase to R54.5-billion compared with R45.4-billion last year.

Attributable and headline earnings a share of the company, headed by CEO Norman Mbazima, were R48.09 and R48.08 and a final dividend of R19.94m a share was declared, taking the total 2013 dividend to R40.04 a share, compared with the R31.70 a share of last year.

While Kumba ended 2013 with no loss of life at its operations, the lost-time injury frequency rate for every 200 000 hours worked deteriorated markedly to 0.18 from 0.10 in 2012.

Although Sishen mine’s production was down 8% for the year, there was a 31% improvement in the last two quarters and Kolomela was up 27% to 10.8-million tons.

The year saw the company resolving its troubling legal and regulatory issues in entering into a new supply agreement with steelmaker ArcelorMittal South Africa, which regulates the sale and purchase of iron-ore between the parties, and the Constitutional Court allowed it to apply for the disputed 21.4% of the Sishen mining right.

This followed the Department of Mineral Resources and Imperial Crown Trading 289 appealing the Supreme Court of Appeal’s judgment in Kumba’s favour.

The grant of the mining right may, however, be made subject to conditions the Mineral Resources Minister considers appropriate and permissible under the Mineral and Petroleum Resources Development Act.

Based on this, Sishen Iron Ore Company, which continues to account for 100% of what is mined from the reserve at Sishen mine, has applied to be granted the full mining right.

Edited by Creamer Media Reporter

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