RAIN and a stronger rand weighed on Kumba Iron Ore in the six months ended June, the Johannesburg-listed miner said in a trading update today.
Headline earnings would come in between R4.1bn and R4.4bn for the period – a year-on-year decline of between 39% and 43%, equal to between R12.68 and R13.61 per share.
Kumba reported the “heaviest rainfall in many decades” at its Sishen and Kolomela open pit mines in the Northern Cape, which resulted in a 3% decline in production. Kolomela had already planned for lower production in the period.
The rand gained 11% against the dollar, which, combined with marginally lower average iron ore export prices, hit revenue.
Iron ore prices have been volatile this year. The resumption of hostilities in the Middle East, all but halting freight through the Strait of Hormuz, weighed on prices. However, supply from BHP is due to be disrupted by labour action at its Port Hedland operations. In addition, China Mineral Resources is in dispute with Fortescue Ltd, another Australian miner.
Fitch, a ratings agency, raised its iron ore price forecast for the year by $5 per ton to $100/t. Macquarie has forecast $103/t for the year. Kumba recorded an average realised free-on-board export iron ore price of $95 per wet metric ton in 2025.
Kumba said sales volumes were 1% lower in the six months owing to the first of two planned 10-day Transnet logistics maintenance shutdowns in May 2026. Kumba also said that the comparative numbers in 2025 benefited from a R942m payment from state-owned ports and logistics company Transnet as a settlement for logistics underperformance and non-delivery.
Earnings before interest, tax, depreciation and amortisation would be 30% to 35% lower, coming in at R10.4bn to R11.2bn. Stripping out the exceptional items, basic earnings for the half year would come in at R4bn to R4.3bn – a decrease of 40% to 44% year on year.
Apart from the iron ore market, focus for Kumba’s half year is likely to fall on progress with its UHDMS commissioning, an R8bn project which promises to extract better yields, reduce waste mining and provide Kumba with more market flexibility.
There will also be questions about how Transnet’s infrastructure manager, TRIM, aimed at opening up the rail network to independent rail operators, will work. While TRIM has been welcomed by the private sector, amid signs of improved performance at Transnet, there are questions about the bankability of its contracts with independent operators.
