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Kumba’s return to black shareholding rises to whopping R21.7bn

Kumba Iron Ore CFO Frikkie Kotzee tells Mining Weekly Online’s Martin Creamer that the company’s capital expenditure is expected to exceed R6-billion in 2014. Video: Nicholas Boyd. Video Editing: Shane Williams.

12th February 2014

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – South Africa’s iron-ore major, Kumba Iron Ore, has hoisted returns to its broad-based black economically empowered (BBBEE) shareholding still further, taking the total returned since the company listed on the Johannesburg Stock Exchange to a whopping R21.7-billion.

The Anglo American group company is South Africa’s foremost BBBEE model by far, having also turned its 6 209 worker shareholders into pretax half-millionaires in 2011 with its Envision employee share ownership plan (Esop), which matures again in November 2016.

“We continue to make a significant and meaningful contribution towards South Africa’s broad-based empowerment initiative by paying substantial cash dividends to our empowerment shareholders,” Kumba CFO Frikkie Kotzee said (see also attached video clip).

Kumba churned out cash of R31.4-billion in 2013, and paid out R13.7-billion of it to shareholders in dividends and R8.3-billion to the South African government in taxes and mineral royalties.

The company’s financial gearing of market capitalisation to debt is an ultra low 2%.

Revenue in the 12 months to December 31 rose to  R54.5-billion, driven by a 17% weaker South African rand, and operating profit rose 20% to R28.4-billion, off an operating margin of 52%.

Last year it spent capital of R6.5-billion and this year it will spend capital of between R6-billion and R6.2-billion.

Subsidiary Sishen Iron Ore Company (SIOC), in its final dividend for 2013, returned a further R2.7-billion to its BBBEE shareholders, taking the amount for the year to R4.5-billion, bringing the total since listing to R21.7-billion, which is more than South Africa paid on its ten stadiums that hosted the 2010 World Cup.

The 3% shareholding held by the SIOC Community Development Trust (SIOC-cdt) is valued at R6-billion and yielded another R261-million in the latest round of dividend payouts for community development projects.

The black-controlled JSE-listed company Exxaro received another R1.7-billion for its 20% interest in SIOC and the Esop another R268-million in the final 2013 SIOC dividend declaration, from which employees will benefit from another cash distribution.

The 2013 dividend yield form the company that continues to generate large volumes of free cash flow is a high 9%.

“The people who put the Mineral and Petroleum Resources Development Act together could never have imagined how successful this empowerment would turn out to be,” Kumba CEO Norman Mbazima commented to Mining Weekly Online.

In 2013, the company spent more than R500-million on its communities, R254-million of it directly and another R333-million through dividends to the SIOC-cdt.

Most social expenditure has been in the areas of health, education and also some infrastructure building.

Kumba has built 3 410 houses for its employees, 413 of them in 2013.

Edited by Creamer Media Reporter

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