Kumba production and sales report for the third quarter ended 30 September 2021
Kumba production and sales report for the third quarter ended 30 September 2021 Kumba Iron Ore Limited A member of the Anglo American plc group (Incorporated in the Republic of South Africa) (Registration number 2005/015852/06) Share code: KIO ISIN: ZAE000085346 ("Kumba" or "the Company") Kumba production and sales report for the third quarter ended 30 September 2021 Kumba's Chief Executive, Themba Mkhwanazi, said: "Kumba delivered a solid operational performance, due to improved mining stability and good plant availability. Safety and health are always our top priority as we continued to drive a strong safety culture while staying focused on achieving increased rates of vaccination amongst our workforce and their families. Production increased to 10.8 Mt, while equipment breakdown at Saldanha Port and weather disruptions affecting ship movements at the port led to lower sales of 10.1 Mt. Due to rail and port logistics performing below planned levels, our full year production and sales are expected t o be at the low end of guidance at 40.5 Mt and 39.5 Mt, respectively. On the market front, steel production cuts in China have weighed on iron ore prices in recent months. However, increased sales to markets outside of China have supported an average year to date realised price of US$181 per wet metric tonne (wmt) for the third quarter, 17.5% above the benchmark price. Overall, we are seeing ongoing market recognition for the premium quality properties of our iron ore products, including for their carbon emission reduction properties in the steelmaking process." Overview - Maintained strong safety performance and improved pace of workforce vaccination. - Total production increased by 11% to 10.8 Mt (Q3 2020: 9.7 Mt), reflecting strong operational performance and excess plant capacity. - Total sales were 9% lower at 10.1 Mt (Q3 2020: 11.1 Mt), due to equipment breakdown and weather-related disruptions at Saldanha Port. - Finished stock of 6.9 Mt (30 June 2021: 6.1 Mt), with high levels of on-mine stock as a result of rail performing below planned levels. - Average year to date realised FOB export iron ore price of US$181 per wmt (US$184 per dry metric tonne (dmt)), 17.5% above the average benchmark price of US$154 per wmt (US$157 per dmt), reflecting the benefit of our diversified market strategy. Sales summary Quarter ended % change Quarter ended % change Q3 Q3 vs Q3 Q2 vs Q2 Million tonnes 2021 2020 2020 2021 2021 Total 10.1 11.1 (9) 9.2 9 - Export sales 10.1 11.1 (9) 9.2 9 - Domestic sales — — — — — Production summary Quarter ended % change Quarter ended % change Q3 Q3 vs Q3 Q2 vs Q2 Million tonnes 2021 2020 2020 2021 2021 Total 10.8 9.7 11 9.8 10 - Sishen Mine 7.5 6.6 14 6.9 10 - Kolomela Mine 3.3 3.1 6 2.9 11 1. Volumes, excluding waste stripping, are reported as wet metric tonnes. Product is shipped with approximately 1.6% moisture. The comparative has been restated as Kumba previously reported on a dry basis Safety and health Kumba continues to build on its fatality-free record of over five years through its relentless focus and commitment to safe and responsible production. Our new safety behaviour and culture programme launched in June 2021 is progressing well. We have seen an improvement in safety awareness and leadership, and a decrease in high-potential hazards and incidents. From a health perspective, we continue to work with the rest of Anglo American in South Africa to successfully reduce the number of positive Covid-19 cases through our on-site protocols and are collaborating with health authorities to ramp-up vaccination rates at our operations and among our host communities. Mining, production and unit costs Mining stability increased in the third quarter of the year (the "period") following improved pit conditions and equipment availability. While total waste mining of 56.8 Mt is 3% below the 58.8 Mt achieved in Q3 2020 ("the comparative period"), good progress has been made relative to the first two quarters of the year (Q1 2021: 40.3 Mt and Q2 2021: 54.3 Mt). Waste stripping was driven by a 6% increase at Sishen Mine to 40.7 Mt (Q2 2021: 38.6 Mt) and a 2% increase at Kolomela to 16.1 Mt (Q2 2021: 15.8 Mt). This is a result of improvements in shovel set up and haul truck payload demonstrating the effectiveness of the mining recovery plan. Iron ore production performance continued to improve reflecting increased plant availability and reliability supported by our "Stable and Capable" programme as part of our operating model and defect elimination initiatives. Total production increased by 11% to 10.8 Mt (Q3 2020: 9.5 Mt), with Sishen Mine production increasing by 14% to 7.5 Mt (Q3 2020: 6.6 Mt) and Kolomela by 6% to 3.3 Mt (Q3 2020: 3.1 Mt). Strong production combined with Transnet rail performing below expected levels, has resulted in materially higher levels of stock at the mines. We therefore expect to limit production in the months ahead and to finish the year at the low end of the production guidance range at 40.5 Mt. Since the first half of the year, rising diesel prices and slower than anticipated ramp-up in operational efficiencies and cost savings have led to an upward revision in Sishen's unit cost guidance from R410 – R420/t to R430 – R440/t. Kolomela's unit cost guidance has been maintained at R305 – R315/t and total C1 unit costs remain at US$40/t. Logistics, sales and the market environment Total sales improved by 9% in the period to10.1 Mt relative to volumes of 9.2 Mt in Q2 2021 despite equipment breakdown and weather-related disruptions. However, total sales decreased by 9% relative to the 11.1 Mt achieved in the comparative period. Transnet is currently carrying out a 5-week refurbishment programme at Saldanha Port. Given some interruptions experienced, there is a risk of overruns to that period. As a result, the sales guidance is also expected to be at the low end of the full year range at 39.5 Mt. Year to date, Kumba achieved an average lump:fine ratio of 69:31(YTD Q3 2020: 67:33) and Fe content of 64.1% (YTD Q3 2020: 64.3%). This translated into an average year to date realised FOB export iron ore price of US$181/wmt (equivalent to US$184/dmt), outperforming the average benchmark Platts 62 index FOB price of US$154/wmt (equivalent to US$157/dmt). Guidance FY2021 FY2021 Revised FY2021 (dmt) (dmt) (wmt) Total sales (Mt) 39 - 40 ~39 ~39.5 Total production (Mt) 40 - 41 ~40 ~40.5 Sishen ~28 ~27.5 ~28 Kolomela ~13 ~12.5 ~12.5 Waste stripping (Mt) Sishen 150 - 160 Kolomela 55 - 65 FY2021 Revised FY2021 Revised (dmt) On-mine unit cost (R/t) Sishen 410 - 420 430 - 440 Kolomela 305 - 315 2. Volumes, excluding waste stripping, are reported as wet metric tonnes. Product is shipped with approximately 1.6% moisture. The comparative has been restated as Kumba previously reported on a dry basis Production and sales volumes referred to for the period are 100% of Sishen Iron Ore Company Proprietary Limited ("SIOC"), and attributable to shareholders of Kumba as well as to the non-controlling interests in SIOC. This announcement contains forward-looking statements which are based on the Company's current beliefs and expectations about future events. The operational and financial information provided in this announcement are estimates and have not been reviewed and reported on by the Company’s external auditors. Centurion 21 October 2021 Sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited) For further information, please contact: Company Secretary Fazila Patel email@example.com Tel: +27 12 683 7060 Mobile: +27 83 297 2293 Investors Media Penny Himlok Sinah Phochana firstname.lastname@example.org email@example.com Tel: +27 12 622 8324 Tel: +27 12 683 7019 Mobile: +27 82 781 1888 Mobile: +27 76 066 0655 Notes to editors: Kumba Iron Ore Limited, a member of the Anglo American plc group, is a leading value-adding supplier of high quality iron ore to the global steel industry. Kumba produces iron ore in South Africa at Sishen and Kolomela mines in the Northern Cape Province. Kumba exports iron ore to customers in a range of geographical locations around the globe including China, Japan, Korea and a number of countries in Europe and the Middle East. www.angloamericankumba.com Anglo American is a leading global mining company and our products are the essential ingredients in almost every aspect of modern life. Our portfolio of world- class competitive operations, with a broad range of future development options, provides many of the future-enabling metals and minerals for a cleaner, greener, more sustainable world and that meet the fast growing every day demands of billions of consumers. With our people at the heart of our business, we use innovative practices and the latest technologies to discover new resources and to mine, process, move and market our products to our customers – safely and sustainably. As a responsible producer of diamonds (through De Beers), copper, platinum group metals, premium quality iron ore and metallurgical coal for steelmaking, and nickel – with crop nutrients in development – we are committed to being carbon neutral across our operations by 2040. More broadly, our Sustainable Mining Plan commits us to a series of stretching goals to ensure we work towards a healthy environment, creating thriving communities and building trust as a corporate leader. We work together with our business partners and diverse stakeholders to unlock enduring value from precious natural resources for the benefit of the communities and countries in which we operate, for society as a whole, and for our shareholders. Anglo American is re-imagining mining to improve people’s lives. www.angloamerican.com Forward-looking statements: This announcement includes forward-looking statements. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding Anglo American's financial position, business, acquisition and divestment strategy, dividend policy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American's products, production forecasts and Ore Reserves and Mineral Resource estimates) and environmental, social and corporate governance goals and aspirations, are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. 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Important factors that could cause Anglo American's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, mineral resource exploration and development capabilities, recovery rates and other operational capa bilities, safety, health or environmental incidents, the effects of global pandemics and outbreaks of infectious diseases, the outcome of litigation or regulatory proceedings, the availability of mining and processing equipment, the ability to produce and transport products profitably, the availability of transportation infrastructure, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by courts, regulators and governmental authorities such as in relation to permitting or forcing closure of mines and ceasing of operations or maintenance of Anglo American's assets and changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American's most recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this announcement. Anglo American expressly disclaims any obligation or under taking (except as required by applicable law, the City Code on Takeovers and Mergers, the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Conduct Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SIX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Anglo American's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Nothing in this announcement should be interpreted to mean that future earnings per share of Anglo American will necessarily match or exceed its historical published earnings per share. Certain statistical and other information about Anglo American included in this announcement is sourced from publicly available third-party sources. As such, it has not been independently verified and presents the views of those third parties, though these may not necessarily correspond to the views held by Anglo American and Anglo American expressly disclaims any responsibility for, or liability in respect of, such information. Date: 21-10-2021 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. 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