Kumba Iron Ore Limited production and sales report for the quarter ended 31 March 2021
22 April, 2021
Kumba’s Chief Executive, Themba Mkhwanazi, said: “Kumba delivered a strong safety and operational performance, as we continued to support our workforce and local communities through the second wave of Covid-19 in South Africa.
Following a solid start to the year, we have maintained our production and sales guidance of 40.5 – 41.5Mt (equivalent to 40 - 41 million dry metric tonnes). Production in the first quarter was ahead of the comparative 2020 and 2019 periods, with sales in line with expectations. We continued to maximise realised value for our products and achieved an average FOB export price above benchmark levels on the back of demand for our premium quality products in a buoyant iron ore market.”
Overview:
- Fatality free production, strong safety and health track record maintained.
- Total production up 10% to 10.6Mt, driven by improved performance at both mines.
- Total sales decreased by 4% to 10.3Mt due to lower domestic offtake and rail constraints.
- Finished stock increased to 5.3Mt from 4.8Mt at 31 December 2020.
- Achieved a strong average realised FOB export iron ore price of US$180 per wet metric tonne (wmt), equivalent to US$183 per dry metric tonne (dmt), compared to the average benchmark price of US$150/wmt or US$153/dmt
Production summary | |||||
---|---|---|---|---|---|
' 000 tonnes | Q1 2021 | Q1 2020 | % change vs Q1 2020 |
Q4 2020 | % change vs Q4 2020 |
Total | 10,555 | 9,605 | 10 | 9,717 | 9 |
Sishen mine | 7,071 | 6,688 | 6 | 6,583 | 7 |
Kolomela mine | 3,484 | 2,917 | 19 | 3,134 | 11 |
Sales summary | |||||
---|---|---|---|---|---|
' 000 tonnes | Q1 2021 | Q1 2020 | % change vs Q1 2020 |
Q4 2020 | % change vs Q4 2020 |
Total | 10,293 | 10,715 | (4) | 10,307 | - |
Export sales | 10,186 | 10,358 | (2) | 10,307 | (1) |
Domestic sales | 107 | 357 | (70) | - | 100 |
(1) Volumes, excluding waste stripping, are reported as wet metric tonnes. Product is shipped with approximately 1.6% moisture. The comparative has been restated as Kumba previously reported on a dry basis
Safety and health
The safety, health and well-being of our workforce is a top priority and a core value for Kumba. At the end of the first quarter of the year (‘the period’), we marked four years and ten months of fatality free production. We recognise that, to sustain our safety performance, we need to continually strengthen our safety culture. To achieve this, we implemented our Sustainable risk reduction programme, utilising our operating model and the Leadership capability development framework to ensure increased focus and improved safety performance.
Safeguarding our workforce and our community against the Covid-19 pandemic remains high on our agenda. Ahead of the peak holiday periods, we increase our protocols through our “Stay safe. Return safe” awareness campaign and intensify screening and testing of employees and contractors returning to work. The Covid-19 vaccination programme is the next crucial step in protecting our workforce and all fellow South Africans. We are working together with Anglo American, to support government’s roll-out of the national vaccine programme.
Mining and Production
Mining activities were primarily hampered by weather-related safety stoppages and equipment reliability challenges, resulting in total waste stripping decreasing by 20% to 40.3Mt (Q1 2020: 50.1Mt). Sishen’s waste stripping reduced by 22% to 29.1Mt (Q1 2020: 37.1Mt) and this was partly offset by a 16% increase at Kolomela to 15.1Mt (Q1 2020: 13Mt). We are focused on recovering our waste performance, supported by post rainfall recovery plans and enhanced equipment availability.
Production volumes increased by 10% to 10.6Mt (Q1 2020: 9.6Mt), demonstrating improved plant availability following the good progress made on scheduled plant maintenance. Kolomela reflected a strong performance with production up 19% to 3.5Mt (Q1 2020: 2.9Mt). Sishen’s production also improved, increasing by 6% to 7.1Mt (Q1 2020: 6.7Mt).
Logistics, sales and marketing
Rail performance deteriorated significantly during the period due to a series of operational challenges and train delays, caused by severe weather conditions and a locust outbreak. As a result, closing finished stock increased to 5.3Mt (31 December 2020: 4.8Mt) for the period with 4.9Mt held at the mines.
Logistics are a component of our value chain and, as a consequence of the decrease in iron ore railed to port and sub-optimal levels of finished stock at Saldanha Port, export sales reduced by 2% to 10.2Mt (Q1 2020: 10.4Mt). Together with domestic sales of 0.1Mt (Q1 2020: 0.3Mt), total sales ended the period 4% lower at 10.3Mt (Q1 2020: 10.7Mt).
Kumba achieved an average lump:fine ratio of 69:31 and product quality of 64.2% Fe. This translated into an average realised FOB export iron ore price of US$180/wmt (equivalent to US$183/dmt), outperforming the average benchmark Platts 62 index FOB price of US$150/wmt (equivalent to US$153/dmt).
2021 guidance update
Kumba has maintained its full year guidance (announced at its annual results presentation on 23 February 2021), subject to potential rail and weather-related disruptions, including low levels of stock at port. We continue to work closely with Transnet to mitigate these risks. Our guidance for 2021 is as follows:
- Total sales of 40.5 – 41.5Mt
- Total production of 40.5 – 41.5Mt
- Sishen: ~28.5Mt
- Kolomela: ~13Mt - Waste:
- Sishen: 150 - 170Mt
- Kolomela: 55 - 65Mt
Production and sales volumes referred to for the quarter ended 31 March 2021 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.
The information on which this announcement is based has not been reviewed and reported on by the Company’s external auditors.
Centurion
22 April 2021
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)