Kumba updates full year 2022 guidance and outlook for 2023 to 2025
09 December, 2022
Kumba is providing an update to the investment community on the Company’s full year 2022 guidance, the outlook on production for 2023 to 2025 and C1 unit costs for 2023.
Mpumi Zikalala, Chief Executive of Kumba said: “Kumba has sustained its six year fatality free record and continues to prioritise the safety and health of our people, our contractors, and the communities in which we operate.
“Following a tough first half operationally, production and sales were disrupted in October 2022 by the two-week wage strike at Transnet with the subsequent delay and extended shutdown for the annual logistics maintenance programme adding further constraints. While the iron ore export channel has reopened, ongoing operational challenges have resulted in lower throughput than expected.
“Rail constraints throughout the year have led to a significant build-up of iron ore stockpiles at our mines and this has necessitated a decrease in production given the lack of available storage space. As a result, we have updated our production guidance for the full year 2022 to c.37 million tonnes (Mt), while our sales guidance has been maintained at 36-37Mt.
“Despite the decrease in production, our on-mine and C1 unit costs guidance have been maintained for the full year 2022. The unit cost guidance for Sishen is R500 - 530 per tonne and for Kolomela it is R505 - 525 per tonne. The C1 unit cost remains unchanged at US$44 per tonne.
“Looking ahead, we have revised our production guidance in line with expected rail performance over the next three years. For 2023, we expect production of 35-37Mt (from 39-41Mt) with the C1 unit cost remaining flat at US$44 per tonne, reflecting the benefit of anticipated lower diesel prices and currency depreciation. Our focus in 2023 is to reduce the high levels of iron ore stocks and rebalance the value chain to ensure stable and resilient operational performance as well as improved finished stock levels at Saldanha Port to facilitate our sales guidance of 37-39Mt.
“Rail capacity is expected to step up following the full execution of this year’s major annual maintenance programme and the benefit of an extra set of trains, as well as the removal of speed restrictions and the implementation of weather-related mitigations. This, combined with ongoing improvements in rail performance supports our production outlook of 37-39Mt (from 41-43Mt) in 2024 and 39-41Mt in 2025.
Full year 2021 guidance | 2022 | 2022 Revised | 2023 | 2024 | 2025 |
---|---|---|---|---|---|
Export sales (Mt) | 36-37 | No change | 37-39 | ||
Total production (Mt) | 38-40 | c.37 | 35-37 | 37-39 | 39-41 |
Sishen | c.27.5 | c.27 | c.26 | c.27 | c.28 |
Kolomela | c.10.5 | c.10 | c.10 | c.11 | c.12 |
Waste stripping (Mt) | 180-210 | No change | |||
Sishen | 140-160 | No change | |||
Kolomela | 40-50 | No change | |||
On mine unit cost (R/t) | |||||
Sishen | 500-530 | No change | |||
Kolomela | 505-525 | No change | |||
C1 unit costs (US$/t)1 | 44 | No change | 44 | ||
Capital expenditure (Rm) | 10 000 – 11 000 | No change |
1. Based on foreign exchange rate of R15.83/US$ for 2022 and R17/US$ for 2023
2. Production, sales volumes and C1 unit costs are reported as wet metric tonnes, with a moisture content of approximately 1.6%.
3. Volumes referred to for the period are 100% of Sishen Iron Ore Company Proprietary Limited (“SIOC”), and attributable to Kumba’s shareholders and the non-controlling interests in SIOC.
Update on projects
“In terms of our projects, we are making good progress at our Kapstevel South pit following the safety reset earlier in the year at Kolomela. First ore is expected to be delivered in Q1 2024 (previously H2 2023).
“At Sishen, the ultra-high-dense-media-separation (UHDMS) project involves the conversion of the existing Sishen dense media separation plant to a UHDMS plant. As we have progressed the level of detailed design work, we have identified additional complexities associated with working in an operating plant. We are undertaking a full review of the project plan and anticipate that the tie-in and commissioning of the project will not take place in 2023. The review includes work to obtain clarity on the full extent of the impact on the overall project schedule. Once the review has been completed, an update will be provided.
“Overall, we are confident that the UHDMS technology represents a significant value creation opportunity for Kumba and will play an essential role in the transition to a low carbon future. The value drivers for the technology continue to be the lowering of the cut-off grade, increasing product quality and extending the life of mine”.
This announcement contains forward-looking statements which are based on the Company’s current beliefs and expectations about future events. The operational and financial information provided in this announcement are estimates and subject to logistics and weather disruptions and have not been reviewed and reported on by the Company’s external auditors.
Kumba’s production and sales report for the fourth quarter and year ended 31 December 2022, will be released on the Stock Exchange News Service (“SENS”) on 2 February 2023.
Kumba investor call
Mpumi Zikalala, CEO; Bothwell Mazarura, CFO and Timo Smit, Executive Head of Marketing, will host an analyst and investor call at 12:30 (CAT). The conference call pre-registration details are provided below:
Conference call pre-registration:
https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=3175496&linkSecurityString=6eb9b8880
Anglo American plc investor update
The Anglo American plc investor update presentation is available on the Anglo American website at: https://www.angloamerican.com/investors/investor-presentations
Centurion
9 December 2022
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)