Archive - 2011

Overview:

• 23% decrease in production to 8.8Mt (million metric tonnes) mainly due to mining constraints caused by wet pit conditions, resulting from excessive rainfall at all operations.
• Total sales of 10.4Mt decreased by only 5% as the reduction in saleable production during the quarter was supplemented by sales from finished product stockpiles.
• Export sales volumes of 8.6Mt decreased by 8% mainly as a result of shipments being impacted by lower production volumes.
• Total domestic sales volumes of 1.3Mt increased by 10% as demand from ArcelorMittal South Africa Limited (AMSA) increased.

Kumba's operating performance during Q1 2011 was impacted by excessive rainfall at Sishen Kolomela and Thabazimbi Mines. This resulted in wet pit conditions that hampered mining activities and plant throughput. With twice the annual rainfall recorded during the first two months of 2011 production at Sishen Mine of 8.5Mt declined by 2.5Mt when compared with Q1 2010. Sishen Mine's DMS and Jig plants' production were down 1.9Mt and 0.5Mt respectively due to the inability of the mining equipment to safely access the mining areas and wet feedstock material that caused blockages in the plants. Production at Thabazimbi Mine reached 246Kt (kilotonnes) a decrease of 237Kt mainly as a result of the impact of the unusually heavy rainfall and the flooded Crocodile River that hampered access to the main pit. Production is planned to decrease in 2011 at Thabazimbi Mine as it nears the end of its life and AMSA's supply is supplemented from finished product stockpiles.

Volumes railed on the Sishen-Saldanha Iron Ore Export Channel which included finished product stock at Sishen Mine increased by 3% to 9.7Mt. The lower production from Sishen Mine during the quarter coupled with the increase in volumes railed resulted in a net 1.7Mt decrease in the stock level at Sishen Mine to 2.7Mt. With 1.7Mt of stock at the port of Saldanha and 1.2Mt at the Qingdao port in China Kumba has reduced its stockpile levels from 7.1Mt at the end of Q1 2010 to 5.8Mt at the end of Q1 2011.

Export sales volumes from Sishen Mine reached 8.6Mt a decrease of 0.8Mt mainly as a result of shipments being impacted by lower production volumes. South African domestic sales volumes from Sishen and Thabazimbi Mines reached 1.8Mt an increase of 0.2Mt as demand from AMSA recovered further.

The 9Mt per annum Kolomela project remains on budget and on schedule to deliver first production towards the end of the first half of 2012 ramping up to full capacity in 2013.

Kumba reiterates that production is expected to remain stable in 2011 when compared with 2010 levels. Despite the decline in operational performance during Q1 2011 management has implemented focused plans to recover the shortfall in production by the end of 2011.