Kumba Iron Ore yesterday said its sales volumes during the quarter to the end of March were impacted by challenging operating conditions at the Saldanha Bay Port, with production for the period dipping by 2% to 9.3 million tons, despite providing support to Transnet, including rail and port maintenance.
Freight rail and port bottlenecks have been afflicting South African exporters and importers and this has resulted in some operators scaling back operations.
Industry players such as Kumba Iron Ore have joined hands under to try to help find solutions to the operating challenges hobbling Transnet.
“Kumba, as part of the Ore User's Forum, continues to support Transnet's logistics restoration programme (and) this included equipment maintenance on the rail and at the port,” it said.
During the quarter period under review, total sales for Kumba decreased by 10% to 8.5 million tons due to the “port performance challenges” that had resulted in about 400 000 tons of shipments being rolled over into the second quarter.
This includes about 6.9 million tons currently stockpiled at the mines, with 1.2 million already at the Saldanha Bay Port.
“Export sales volumes were significantly impacted by challenging operating conditions at the Saldanha Bay Port, with equipment maintenance now being undertaken by Transnet to primarily address the stacker-reclaimer reliability issues,” Kumba CEO Mpumi Zikalala said.
He added that despite these bottlenecks, the iron ore market had “pulled back strongly in the first quarter” as the company continued with its business reconfiguration towards a lower production and cost profile.
Such a profile would ensure that Kumba Iron Ore is “more resilient in the face of a volatile market environment,” Zikalala said.
In February, Kumba said the reconfiguration exercise for its business was expected to impact 490 jobs, while a contractor/vendor review process was under way that could result in 160 service providers/contractors being impacted.
“The execution of the business configuration plan is on track. The Section 189 Commission for Conciliation, Mediation and Arbitration consultations (CCMA) with affected employees commenced in March 2024 and is expected to be concluded by the end of May 2024,” Zikalala said.
“We are engaging with service partner companies as part of this reconfiguration process.”
With steel demand remaining lacklustre after the Chinese New Year, worsened by the modest Chinese government stimulus announced in February as well as several steel production cuts across various provinces in China, Kumba achieved an average realised export price of $89 (R1 702) per wet metric ton during the period under review.
It said this reflected the negative timing effect of provisionally priced volumes in a decreasing price environment.
However, this had been partly offset by the lump and iron ore quality premium that the company attained.
Nonetheless, Kumba’s total production for the period dipped by 2% to 9.3 million tons.
Shares in the company traded 4.87% weaker on the JSE at R437.58 per share yesterday.
Meanwhile, copper production for Amplats’ parent company, Anglo American, for the March quarter firmed up by 11%, reflecting higher throughput at Quellaveco.
This was despite the impact of planned lower grades, as well as the benefit of higher grades and throughput at Collahuasi and El Soldado.
Anglo American’s steel-making coal production increased by 7% driven by the Aquila and Capcoal operations and partially offset by the Dawson open cut operation and ongoing challenges with the strata conditions at Moranbah, it said.
There was a marked reduction in rough diamond output by Anglo America’s De Beers subsidiary.
It reported that “rough diamond production decreased by 23%, primarily due to changes implemented to lower production in response to market inventory” levels.
For the full year, De Beers estimates that production will drop to between 26 and 29 million carats, with unit costs revised down to $90 per carat.
BUSINESS REPORT