Tawanda Karombo
JSE-listed commodity exporter Kumba Iron Ore has reported a significant uptick in sales volumes, with a 6% increase recorded during the quarter ending 31 March 2025.
This boost comes on the heels of enhanced rail performance by Transnet, marking a promising recovery for the South African bulk commodity sector, which has been grappling with operational inefficiencies over the past few years.
Kumba Iron Ore’s CEO, Mpumi Zikalala, on Thursday said that Transnet’s capacity has improved in the first quarter of the year.
“The 5% uplift in Transnet’s rail performance, which supported a 6% increase in sales volumes, is encouraging,” said Zikalala.
Kumba’s production for the quarter period dropped by 3% to 9 million tons despite Kolomela’s production increasing by 12% to 3.0 million tons. Sales volumes for the period also amounted to 9 million tons.
“Following this positive start to the year, we are maintaining our production and sales guidance of 35 – 37 million wet metric tons and our unit cost guidance of $39 per ton,” said the company.
This comes as Zikalala said Kumba was continuing to “work closely with Transnet and the Ore Users’ Forum (OUF) to prioritise the maintenance related to the independent technical” assessment.
“As part of the OUF, we are also working through the Department of Transport’s request for information, due for submission on 9 May 2025, which will be followed by the request for proposals later in the year,” Zikalala said.
Kumba Iron Ore is readying up for the potential extension by a few days of Transnet’s annual maintenance shutdown in the third quarter of the current year as part of the work related to the independent technical assessment.
Finished stock of 7.8 million tons for the end of March compared to 7.5 million tons in December 2024 included stockpiles of 6.2 million tons at the mines and 1.6 million tons at the Port of Saldanha Bay.
“Ore railed to port by Transnet increased by 5% to 9.8 million tons, up from 9.4 million tons in the comparative period, enabling a drawdown in our mine stockpiles which ensures a more balanced value chain,” said the company.
For the quarter period under review, Kumba realised an average free on board export iron ore price of $98 per wet metric tons, 11% above the average benchmark price of $88 per wet metric ton.
This comes against the backdrop of iron ore markets that were underpinned by higher steel exports in China. This partially offsett property weakness and lower steel output in traditional sales markets such as Europe, Japan, and South Korea.
“Iron ore supply was hampered by seasonal weather disruptions in the southern hemisphere. Lower coal prices and steel stocks in China supported steel mill margins and consequently demand for high quality iron ore products,” said Kumba.
In the year to December 2024, Kumba’s total revenues of R68.5 billion slumped by 21% as a result of a 21% decrease in the average realised full on board iron ore export price of $92 per wet metric ton.
This had impacted revenues by R17.6bn. It also attributed the plunge in revenues to a 2% decrease in total sales volumes to 36.3 million tons, contributing R2bn to the overall decrease in revenues.
The decrease in revenue for the previous year in Kumba was, however, partly offset by a 38% increase in shipping revenue to R8.2bn due to higher freight rates and CFR volumes increasing to 65% of total sales volumes.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in Kumba stood at R28.1bn for the full year, underpinning the company’s attributable free cash flow of R14.5bn.
Consequently, Kumba declared a final cash dividend of R19.90 per share, bringing the total cash dividend for the 2024 full year to R38.67 per share.
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