Export sales for Kumba Iron Ore flattened out in the quarter to the end of March, hampered by below expected rail performance by Transnet, the JSE-listed firm said on Tuesday, pinning its production outlook for the remainder of the year on the performance of the freight rail operator.
Export sales of 9.5 million tonnes for the quarter period under review remained unchanged compared to the previous year’s corresponding quarter. However, compared to the December 2022 quarter, which was hammered by “the industrial strike action and annual maintenance shutdown” by Transnet, Kumba Iron Ore’s export sales are 38% higher.
Rail performance for the quarter to end March 2023, “was below planned levels required to draw-down stock held at the mines” with closing finished stock increasing to 8 million tonnes compared to 7.8 million tonnes by the end of the December 2022 quarter. As at the end of the March quarter period, Kumba had stockpiled as much as 7 million tonnes of the metal at its mines.
The Kolomela mine in South Africa had strong recoveries during the quarter, boosting Kumba’s volumes which were 14% higher at 9.4 million tonnes. Moreover, the average realised free on board (FOB) export iron ore price of $121 (R2188) per wet metric tonne compared well to the average benchmark price of $110 per wet metric tonne.
“Operationally, Kumba delivered a solid production performance largely driven by a strong recovery from our Kolomela mine. Subject to Transnet logistics performance, guidance for the full year 2023 is unchanged,” said Kumba Iron Ore CEO Mpumi Zikalala.
Stronger economic activity in China on the back of “pro-growth policy decisions” coupled with improved demand from the Asian powerhouse is expected to “offset the slowdown” in other markets.
“The demand outlook for our high-quality iron ore product continues to be positive given the steel intensity of the global energy transition. We continue to collaborate with several of our steel-producing customers on the advancement of low carbon steel-making processes,” added Zikalala.
Kumba has partnered with Salzgitter, Nippon Steel and Thyssenkrupp Steel and its parent company, Anglo American, recently announced the signing of a memorandum of understanding with H2 Green Steel, a Swedish hydrogen and steel producer, to study and trial the use of premium quality iron ore products, including that from Kumba, as feedstock for its iron production processes.
In terms of production, waste stripping at Kolomela increased by 43% to 15.9 million tonnes during the review period, attributable to “improved rain readiness capability and equipment” reliability. At Sishen, waste stripping decreased by 2% to 35.0Mt (Q1 2022: 35.7Mt). Total waste stripping increased by 9% to 50.9Mt (Q1 2022: 46.7Mt), driven by a strong recovery at Kolomela.
Improved feedstock availability at Kolomela underpinned a 25% increase in production at the mine to 3.1Mt (Q1 2022: 2.5Mt). However, Kolomela's feedstock quality was impacted by the waste mining challenges experienced in 2022. These had “depleted buffer stockpiles”, leaving the average iron ore product quality for the quarter period at 63.1%. The Sishen mine raised production by 9% to 6.3 million tonnes.
Kumba recorded a fatality in February, with Zikalala saying the company had been “devastated by the loss of life” at the workplace.
He said: “Nico Molwagae, a drilling assistant employed by a service partner, was fatally injured at our Kolomela mine exploration site on 13 February 2023. Greater supervisory oversight, improved equipment design, as well as further initiatives to strengthen our safety culture have been implemented.”
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