Kumba Iron Ore annual results for the twelve months ended 31 December 2021
22 February, 2022
KUMBA CONTINUES TO DELIVER VALUE FOR STAKEHOLDERS
Mpumi Zikalala, CEO of Kumba, said, ““Having joined the Kumba family at the start of the year, I am delighted to find a team that shares the same set of values and a commitment to operate the business responsibly and sustainably. Kumba’s strong safety record, solid operational and highly profitable business demonstrates this, giving us a strong base to build on.
HIGHLIGHTS
DISCIPLINED CAPITAL ALLOCATION
- Attributable free cash flow of R30.5 billion up by 47%
- ROCE of 147% up from 109%
- Final dividend of R30.50 per share, total dividends of R103.20 per share
STRONG SUSTAINABILITY PERFORMANCE
- Five years and seven months of fatality-free production
- Zero new cases of occupational diseases
- Over six years without any level 3 - 5 environmental incidents
- R88.9 billion of shared value created
- R36 million of Covid-19 community support
VALUE-FOCUSED GROWTH
- Average realised FOB export price of US$161/tonne* 18% above benchmark
- Cost savings of R0.9 billion, R4.1 billion saved since 2018
- Strong EBITDA margin of 63% up from 57%
- Closing net cash of R17.5 billion
“2021 has been an exceptional year of delivery across the business. Achieving more than five years of fatality-free production is a significant accomplishment, while more than 75% of our workforce have been vaccinated to date offering vital protection against Covid-19.
“On the back of strong prices, further enhanced by the premium that our high-quality products attract and thanks to the safe execution of our strategy, operational resilience and disciplined capital allocation, Kumba delivered a record EBITDA of R64.6 billion and attributable free cash flow of R30.5 billion.
“Our EBITDA margin increased to 63%, up from 57% in 2020, benefiting from favourable markets particularly in the first half, albeit with prices moderating in the second half. This allowed us to achieve a 42% higher average realised free on board (FOB) export price. We also delivered cost savings of R0.9 billion, bringing the total amount saved since initiating our savings programme in 2018, to R4.1 billion.
"Despite weather and logistical challenges, production increased by 9% to 40.9Mt. We also saw improved performance at the Saldanha Port with export sales increasing by 1% to 40.2 Mt.
“The final cash dividend of R30.50 per share is supported by Kumba’s strong financial performance and robust balance sheet. Combined with the interim cash dividend of R72.70 per share, the total cash dividend for the year increased by 69% to R103.20 per share, representing a payout ratio of 100% of headline earnings.
“Significant highlights of the year are the extension of Sishen’s life of mine by four years to 2039 through our ultra-high-dense-media separation (UHDMS) technology, reaching agreements and the relocation of the remaining homeowners of Dingleton to Siyathemba. The UHDMS technology will improve the positioning of our product portfolio for a low-carbon future. It will enable us to further enhance the quality of our product and we will be producing this from ore that would have previously been considered waste material.
“Having a healthier environment is key to ensuring that Kumba and our communities thrive. This year, we achieved over six years without a major environmental incident. While our carbon emissions increased year-on-year to 0.99 Mt C02e, 2020 was significantly impacted by Covid-19 restrictions, and we have reduced our carbon footprint relative to 2019. We continue to target a 30% reduction by 2030 and we are also progressing our plans to develop a 60MW to 80MW solar PV plant at Sishen.
“Our commitment to improving people’s lives extends beyond our mines. By creating R88.9 billion of enduring value for all our stakeholders, including R21.2 billion of taxes and mineral royalty, we are providing much-needed support to the South African economy. At a regional level, we procured R4.1 billion of goods and services locally, with a focus on women and youth-owned businesses. This, in conjunction with our community vaccination and Covid-19. WeCare programme, continues to help protect the lives and livelihoods of our workforce, their families and our host communities.
“Kumba has delivered an excellent performance and I am privileged and excited to be taking on the stewardship of this remarkable business. I would like to extend my thanks and appreciation to Themba Mkhwanazi who, after five years at the helm, has left Kumba in excellent shape. In the near term, we will continue to build on the Tswelelopele strategy of margin enhancement and life extension, focusing on maximising our potential through operational excellence, cost efficiencies and realising the full value of our premium products in the market.
"Kumba’s world-class assets and the attractive physical characteristics of our products position us well to assist our customers with delivering more efficient and lower emission steel production. Through investment in UHDMS technology, we are increasing the overall grade of our products and broadening our customer base beyond China. We are committed to creating purpose-led value for our stakeholders, and I am privileged to be taking on the stewardship of this business."
Download the Annual Results for the year ended 31 December 2021