KUMBA Iron Ore did not expect to be affected by a dispute between China’s state-owned iron ore buyer and mining giants BHP and Rio Tinto, saying on Thursday it would conclude contract talks this year.
In September, China implemented curbs on iron ore imports through China Minerals Resources Group (CMRG). Established two years ago, CMRG is said to be driving for better prices, and has told Chinese steelmakers not to buy certain products. It is a development that bank Goldman Sachs believes could reshape the iron ore market in the longer term.
“CMRG was only established a couple of years ago, but is by now responsible for probably 70 to 75% of Chinese iron ore imports. So the balance of power between buyers and sellers is shifting a little,” said Timo Smit, head of marketing for Kumba.
“That said, I don’t really see any fundamental change, because China remains extremely dependent on imported iron ore,” he added.
“We continue to see China as an extremely important market for our products, and our Chinese steel mill customers as long-term partners. I expect to conclude those discussions positively sometime this year.”
China’s share of Kumba’s export sales increased to 56% in its 2025 financial year compared to 54% in 2024. The company targeting sales of between 45% to 55% to regions outside of China in the medium- to long-term.
Smit was commenting in a presentation to media of Kumba’s full year results in which the company posted an 18% increase in headline earnings of R45.97 per share. Kumba cited average realised prices, higher sales, and penalty income from Transnet reported by Miningmx last year.
Kumba, controlled by Anglo American, declared a final dividend of R15.43/share, taking the total dividend to R32.03/share – a 70% payout ratio.
At $95 per wet metric ton, Kumba achieved an average realised price some 12% above the benchmark FOB export price of $85/t in its 2025 financial year. Its product is predominantly sold as ‘lumpy’ product which is low in impurities while also being high in iron ore content which steelmakers desire.
However, premiums for lumpy iron ore closed at a record low last year. “There is pressure on the lump premium for sure, but the lump premium has started to recover a little,” said Smit. “From a low of about three cents per dry metric unit, it is now at six cents per dry metric unit,” he said.
“I don’t think it has anything to do with the BHP dispute, to be quite honest. It’s normal market dynamics — the choice that mills make between lump and pellets, and the influence that the pellet premium has on that balance. That’s what’s at play here.”
As per its fourth quarter report earlier this month, Kumba reported a 1% increase in iron ore production year-on-year of 36.1 million tons. Exports increased marginally by 2% to 37Mt at the upper end of the guidance.
The group has guided to production of between 31 to 33Mt and sales of 35 to 37Mt as the company releases finished stock built up while it works on the “tie-in” of its ultra high dense media separation (UHDMS) technology. UHDMS, an R11.2bn project, is expected to increase iron ore recoveries for Kumba.
