Press releases - 2025

Production and sales report for the fourth quarter and year ended 31 December 2024

Kumba Chief Executive, Mpumi Zikalala, said: “Kumba continued to focus on operational excellence and strengthening its safety performance, while working with government and Transnet to improve logistics performance. Consistent with our reconfigured business plan, we delivered production in line with Transnet's logistics capacity.

“Ore railed to Saldanha Bay Port decreased by 8% compared to Q3 2024, due to the planned 15-day annual maintenance shutdown and unfortunate train derailments following the re-opening of the Ore Export Channel (OEC). To maintain a balanced and efficient value chain, finished stock at the mines was drawn down and production reduced by 17% compared to Q3 2024, while sales increased by 1% to 9.1 Mt.

"Kumba as part of the Ore User's Forum (OUF) worked closely with Transnet to prepare for the annual maintenance shutdown in October 2024 and good progress was made in upgrading 90km of rail infrastructure which allowed speed restrictions to be lifted on approximately 50km of the OEC. In parallel, work by the OUF and Transnet is underway to convert the outcomes of the independent technical assessment into a multi-year ore corridor restoration programme of focused projects to restore the OEC to full capacity. 

"For the full year 2024, despite rail performance deteriorating by 2%, Kumba's production and sales were within guidance of 35-37 Mt and 36-38 Mt, respectively. Production of 35.7 Mt was consistent with performance in 2023 and closely matched the ore railed by Transnet of 35.6Mt. Due to the challenging rail performance during the year, sales ended the year at 36.3 Mt.

"Lower iron ore prices continued to reflect subdued steel demand, coupled with an increase in iron ore supply, with strong steel exports and economic stimulus support in China providing a partial offset. Lump premium remained relatively stable as lump iron ore utilisation rates improved on the back of decreasing metallurgical steelmaking coal prices. Kumba achieved an average realised price of US$92 per wet metric tonne (wmt) for the year, 3% above the benchmark price of US$89/wmt.

"On the project front, the execution of the ultra-high-dense-medium-separation technology (UHDMS) project has re-commenced and is progressing according to plan. In line with our disciplined capital allocation approach, the balance of the UHDMS project will be implemented over a five-year period ending in 2029. The project is aligned to our premium product strategy and supports the optimal use of available rail capacity.

"The outlook for Kumba's production for the period 2025 to 2027 has been updated, subject to Transnet's logistics performance. We remain committed to the process of working in partnership with Government and Transnet to restore the OEC and while there are signs of progress, the logistics issues will take some time to resolve. As a result, in 2025 production is expected to be between 35 - 37Mt. In 2026, due to the main shut down of the dense media separation plant and tie-in of the UHDMS plant, production has been revised to 31 - 33 Mt, with the balance of the saleable product expected to be supplemented by finished stock at Sishen. Thereafter, in 2027, production is expected to increase to 35 - 37 Mt.

"As a member of the OUF, Kumba has been a strong advocate for Private Sector Participation (PSP) to potentially improve the performance of the OEC through concession models. We also continue to play an active role in the National Logistics Crisis Committee to collaborate on sustainable logistics solutions.

"The Network Statement released by Transnet at the end of 2024, which sets out the rules of engagement and the access charges, is a significant step forward in terms of the liberalisation of the South African railway industry. Kumba is engaging with Transnet on how the Network Statement will be implemented in relation to the current contractual agreements for both Sishen and Kolomela."

Overview of Q4 2024 and the full year 2024

• Total recordable injury frequency rate (TRIFR) improved to 0.76, the lowest ever rate recorded at Kumba, while Sishen achieved more than eight years of fatality-free production.
• Production increased by 8% to 7.8 Mt in Q4 2024 (Q4 2023: 7.2 Mt), with the full year performance consistent at 35.7 Mt, aligned to OEC throughput.
• Sales decreased by 2% to 9.1 Mt in Q4 2024 (Q4 2023: 9.3 Mt) and by 2% to 36.3 Mt for the full year 2024 (2023: 37.2 Mt), due to OEC constraints leading to low levels of finished stock at the Saldanha Bay port, following Transnet's annual shutdown and train derailments during the Q4 2024 period.
• Closing finished stock ended Q4 2024 at 7.5 Mt (Q3 2024: 8.6 Mt; Q4 2023: 7.1 Mt), with 6.9 Mt at the mines and 0.5 Mt at Saldanha Bay Port.
• Kumba achieved an average realised free-on-board (FOB) export iron ore price of US$92/wmt, this 3% above the benchmark price of US$89/wmt.

^{1.Volumes, excluding waste stripping, are reported as wet metric tonnes. Product is shipped with a moisture content of approximately 1.6%.}

Safety and health

At Kumba, the safety, health and wellbeing of our people and our service partners people remains our highest priority. We strengthened our safety performance in Q4 2024 by focusing on increased leadership time in the field, employee engagements and initiatives aimed at building a resilient safety culture. Our Call-to-action initiatives, such as the "Stop for Safety" programme, seeks to improve safety vigilance and empower our teams to proactively prevent unsafe behaviour and report safety hazards.

Kumba's commitment to safety contributed to our TRIFR improving to 0.76 for the full year and has underpinned Sishen's achievement of more than eight years of fatality-free production while Kolomela has progressed to 22 months of fatality-free production.

Mining and production

In line with Kumba's business reconfiguration to align production to logistical capacity and consistent with our optimised mine plan, waste mining was decreased by 40% to 27.8 Mt (Q4 2023: 46 Mt). This was driven by a 33% decrease in waste mining at Sishen to 25.1 Mt (Q4 2023: 37.4 Mt) and a 68% reduction at Kolomela to 2.7 Mt (Q4 2023: 8.6 Mt). Good progress continues to be made on operational efficiency and productivity improvements. For the full year 2024, planned waste mining decreased by 28% to 155.7 Mt (2023: 216.8 Mt).

Total production increased by 8% to 7.8 Mt in Q4 2024, primarily as a result of the decision in the prior Q4 2023 period to reduce production by 27% to 7.2 Mt to alleviate high mine stockpiles. In addition, in Q4 2024, the rail performance tempo improved due to speed restrictions being lifted on 50km of the OEC following an upgrade on 90km of rail infrastructure. Total production was driven by Sishen's production decreasing by 5% to 5.7 Mt (Q4 2023: 6.0 Mt), while Kolomela's production increased by 68% to 2.1 Mt (Q4 2023: 1.3 Mt). For the full year 2024, production of 35.7 Mt was consistent with that achieved in 2023 and includes a drawdown of finished stock to proactively manage mine stock levels.

Logistics, sales and the market environment

Compared to Q3 2024, ore railed to Saldanha Bay port decreased by 8% to 8.4 Mt due to the annual maintenance shut and a number of train derailments causing finished stock at the port to reduce from 1.1 Mt in Q3 2024 to 0.5 Mt in Q4 2024. This limited sales to 9.1 Mt, an increase of 1% compared to Q3 2024.

For the full year 2024, rail performance deteriorated by 2%, compared to 2023, leading to low levels of finished stock at Saldanha Bay Port. Consequently, sales decreased by 2% to 36.3 Mt.

Closing finished iron ore stock in December 2024 of 7.5 Mt (Q3 2024: 8.6 Mt; Q4 2023: 7.1 Mt), was comprised of 6.9 Mt situated at the mines (Q3 2024: 7.5 Mt; Q4 2023: 6.5 Mt) and 0.5 Mt at Saldanha Bay port (Q3 2024: 1.1 Mt; Q4 2023: 0.6 Mt). 

Kumba's average iron ore content improved to 64.1% Fe (2023: 63.7%) and the average lump:fines ratio was 66:34 (2023: 66:34). The average realised FOB export iron ore price of US$92/wmt (2023: US$113/wmt), was 3% higher than the 62% benchmark index FOB price of US$89/wmt (2023: US$104/wmt).

Production and sales volumes referred to are 100% of Sishen Iron Ore Company Proprietary Limited (SIOC), and attributable to Kumba's shareholders and the non-controlling interests in SIOC.

Trading statement for the year ended 31 December 2024

Kumba is currently finalising its financial results for the year ended 31 December 2024 (the period). Further information will be provided in the 2024 Annual results, which will be released on SENS on or about 18 February 2025.

In accordance with paragraph 3.4(b) of the JSE Limited Listings Requirements, shareholders are advised that headline earnings for the period are expected to be between R11,745 million and R12,995 million. Headline earnings per share (HEPS) for the period are expected to be between R36.60 and R40.50, a decrease of between 43% and 48% from the previous year ended 31 December 2023 (comparative period). The decrease in earnings for the period is largely attributable to the lower average realised FOB export ore price and a 2% decrease in sales volumes, relative to the comparative period. Reported headline earnings and HEPS for the comparative period (released on SENS on 20 February 2024) were R22,724 million and R70.80, respectively.

Basic earnings for the period include the reversal of an impairment on the asset value of the Kolomela cash generating unit in 2022. The impairment reversal is due to a revision in the forecast production volume profile of Kolomela as part of the Company's business reconfiguration plan to optimise value considering the current rail capacity. As a result, basic earnings for the period are expected to be between R13,817 million and R15,287 million. Basic earnings per share (EPS) for the period are expected to be between R43.06 and R47.64, a decrease of between 33% and 39% from the comparative period. Reported basic earnings and EPS for the comparative period (released on SENS on 20 February 2024) were R22,725 million and R70.80 respectively.

This announcement contains forward-looking statements which are based on the Company’s current beliefs and expectations about future events. The financial information contained in this announcement, has not been reviewed and reported on by the Company's external auditors.

Johannesburg
6 February 2025

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

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