KUMBA Iron Ore will report a significant uplift in full year basic earnings of as much as 52% but the performance is despite difficulties posed by government-owned freight and logistics firm Transnet which has struggled to cope with disruption on its network and at its ports.
The Anglo American-controlled firm said in a trading update that basic earnings for the 12 months ended December would come in at between R31.2bn and R34.6bn, a year-on-year increase of between 37% and 52% respectively.
Kumba said earnings were driven by the iron ore price. The company mines a premium product which attracted an average realised freight on board price of $161/t wet metric ton (or $164/dry metric ton), 18% higher than the average Platts index.
It was handy marketing to have achieved considering mining and sales volumes barely moved compared to last year in which Covid-19 disruptions hamstrung the firm’s Kolomela and Sishen Iron Ore mines while supply chains were also strangled.
As of the fourth quarter, finished stock of iron ore sitting at Saldanha port in the Western Cape totalled 6.1 million tons (Mt). This compares to stock of 4.8Mt in the fourth quarter of the previous financial year.
However, Kumba was able to post a decent sales performance after warning in October that sales might be constrained at 39Mt compared to guidance of 39Mt to 40Mt. In fact, full year sales totalled 40.3Mt.
This was flat year-on-year but included 40.2Mt in exports while supply to domestic markets took the hit, falling 70%.
Kumba CEO Mpumi Zikalala said there had been signs of improvement in Transnet’s performance. “This increase (in stockpile) includes additional shipments due to vessels brought forward, as well as improved equipment reliability and throughput at the Saldanha Port, following increased engagements between industry and Transnet to address infrastructure maintenance and capacity,” she said.
Transnet’s problems relate primarily to theft of overhead copper cables which it said was perpetrated by armed gangs numbering up to 25 people. Transnet has also reported fires at terminals in Richards Bay and Durban. Absenteeism related to Covid-19, social unrest in July and a cyber-attack have also destabilised Transnet this year.