Kumba Iron Ore Limited production and sales report for the quarter ended 30 June 2016
20 July, 2016
Kumba Iron Ore Limited (“Kumba”) today released its production and sales report for the quarter ended 30 June 2016. Throughout this report, production and sales volumes referred to are 100% of Sishen Iron Ore Company Proprietary Limited (“SIOC”), and attributable to shareholders of Kumba as well as the non-controlling interests in SIOC.
Overview:
- Production decreased by 15% to 8.9 Mt consistent with revised Sishen mine plan.
- Total sales of 9.7 Mt (0.8 Mt higher than production), a 26% decrease as stock levels reduced further.
| ’000 tonnes | Quarter | % change | Quarter | % change | |
|---|---|---|---|---|---|
| Q2 2016 | Q2 2015 | Q2 2016 vs Q2 2015 |
Q1 2016 | Q2 2016 vs Q1 2016 |
|
| Total | 8,864 | 10,385 | (15) | 8,925 | (1) |
| - Sishen mine | 5,700 | 7,177 | (21) | 5,842 | (2) |
| DMS plant | 3,581 | 4,420 | (19) | 3,550 | 1 |
| Jig plant | 2,119 | 2,757 | (23) | 2,292 | (8) |
| - Kolomela mine | 3,164 | 2,880 | 10 | 2,713 | 17 |
| - Thabazimbi mine | - | 328 | (100) | 370 | (100) |
| ’000 tonnes | Quarter | % change | Quarter | % change | |
|---|---|---|---|---|---|
| Q2 2016 | Q2 2015 | Q2 2016 vs Q2 2015 |
Q1 2016 | Q2 2016 vs Q1 2016 |
|
| Total | 9,666 | 13,081 | (26) | 10,544 | (8) |
| - Export sales | 8,730 | 11,733 | (26) | 9,376 | (7) |
| - Domestic sales | 936 | 1,348 | (31) | 1,168 | (20) |
| Sishen mine | 699 | 906 | (23) | 717 | (3) |
| Thabazimbi mine | 237 | 442 | (46) | 451 | (47) |
In order to position the company to withstand the significant decrease in iron ore prices, Kumba revised the Sishen mine plan and reconfigured the pit to a lower cost shell.
Sishen’s operations were impacted by the implementation of the revised mine plan, which effectively halved mining volumes, and resulted in a ~31% reduction in the number of permanent employees and contractors. As a result, production for the quarter decreased by 21% to 5.7 Mt (2015: 7.2 Mt) and waste mined by 47% to 31 Mt.
Run rates were affected by the significant restructuring process, which began in the first quarter, and which has now been substantially completed. Run rates were also affected by higher than normal levels of rainfall and safety incidences including a fatal incident in May which resulted in the issuing of a Section 54 notice.
The successful restructuring increased mine flexibility and run rates on key operating parameters showed a marked improvement during June 2016. Total tonnes handled and ex-pit ore increased by 28% and 38% respectively from May 2016 to June 2016, in support of the guided production level of 27 Mt for the full year.
Kolomela produced 3.2 Mt for the quarter, a 10% increase (2015: 2.9 Mt). Waste mining decreased to 12.5 Mt from 13.2 Mt in 2015, in line with the optimisation of the mine. Plant efficiencies and throughput continue to improve in line with the mine’s full year production target of 12 Mt, as guided for 2016.
Processing activities at Thabazimbi ended on 31 March 2016, following the ceasing of mining activities on 30 September 2015. Mine closure processes are going according to plan.
Total sales decreased by 26% to 9.7 Mt (2015: 13.0 Mt) and more than total production of 8.9 Mt, as stocks were further reduced to a level of 2.3 Mt (2015: 3.9 Mt).
Logistics volumes for the quarter were impacted by low stock levels through the logistics chain as a result of lower production. At the mines, finished product stock reduced to 1.1 Mt and port stockpiles to 1.2 Mt, while total finished product stock decreased to 2.3 Mt by 30 June 2016 (2015: 3.9 Mt).