Industry intelligence
Themba Mkhwanazi, CEO of Kumba Iron Ore.
Tswelelopele, Kumba's strategy of
'Transformation to full potential', has resulted
in a solid operating performance across the
value chain.
Attributable free cash flow of R2.8-billion
and a strong opening cash position translated
into an interim cash dividend of R4.7-billion,
despite the impact of a stronger rand and
softer iron ore prices.
Themba Mkhwanazi, Kumba CEO,
explained that total tonnes mined
increased by 12%, while production
increased by 3%, with 11% more ex-pit
waste moved. Furthermore, continued
productivity and efficiency improvements
on the back of the operating model have
enabled the removal of more ex-pit waste
while containing unit costs.
“Rail challenges have resulted in lost
opportunities to achieve higher export sales
volumes. This, coupled with a stronger rand
and lower iron ore export prices, resulted
in revenue of R19.5-billion,” Mkhwanazi
said. He added that Kumba’s operational
improvements, together with strong cost
discipline, led to cost savings of R415-million,
which contributed to headline earnings of
R3-billion. “We ended the period with a
strong net cash position of R11.7-billion.”
In the next six months, the iron ore
producer will be focusing on delivering
further operational and financial gains
Kumba sees production increase
through a strategy made up of three
horizons. “Under Horizon 1, our focus is
on margin enhancement through cost-
saving initiatives and further productivity
and efficiency improvements, and on the
revenue side, maximising realised prices,”
Mkhwanazi explained.
Horizon 2 involves leveraging endowment,
and work under this horizon is indicating
opportunities to extend the life of mine
extensions through Kumba’s resource
development programme. “We are primarily
focused on Horizon 1 and 2 where value can
be unlocked in the short to medium term,
while we are opportunistic about long-term
growth options under Horizon 3.”
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