Kumba Iron Ore eyes growth despite market challenges
Image: Supplied
Kumba Iron Ore said on Tuesday that it remained poised for growth, fortified by robust demand for steel and high-quality iron ore products, despite a landscape marked by global economic uncertainty and shifting market dynamics.
This optimism was articulated by Kumba's CEO Mpumi Zikalala following the company's announcement of an impressive interim cash dividend of R5.3 billion.
Kumba declared an interim dividend of R16.60 per share for the period ending 30 June 2025 despite revenues declining by 4% to R34.5bn after basic headline earnings per share slightly fell to R22.26.
Half-year earnings before interest, depreciation and amortisation (Ebitda) amounted to R16bn.
The dip in revenues has been attributed to a 6% reduction in the average realised Free On Board (FOB) iron ore export price to $91 per wet metric ton compared to the same period last year as well as a stronger exchange rate.
However, the Anglo American-owned firm earned a premium of $7 per wet metric ton during the period compared to $1 in 2024. Shares in Kumba Iron Ore surged 4.9% to R310.16 in afternoon trade on the JSE on Tuesday.
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Advertisement
Next
Stay
Close ✕
Ad loading
This has placed Kumba Iron Ore's realised price 8% above the benchmark FOB export price of $84 per wet metric ton, with Zikalala saying that demand prospects still favoured premium producers.
'The world needs steel to build, grow and develop, and iron ore is a key ingredient in steelmaking. Kumba's high-quality lump iron ore products are unique and play a critical role in the manufacturing of carbon light steel products,' said Zikalala.
Global markets for steel outside of China, particularly in Europe, were nonetheless under pressure due to increased availability of the Chinese steel in the traded market.
This has forced Kumba Iron Ore to reduce sales to these markets to 42% of total sales as China's share of export sales ramped up to 58%.
Although revenues for the half year period to June 2025 were 4% softer, Kumba is banking on improved operational performance, increased sales and consistent production to attain its full-year production guidance of 35 to 37 million tons.
This comes as Kumba has made 'progress on our strategy of unlocking value from our core assets' on the back of cost and capital' discipline.
As revenues dipped, Kumba has placed greater focus on lowering costs and it said it was on track to achieve its C1 unit cost target of $39 per wet metric ton. Over the half-year, the company accrued cost savings of R661 million.
Kumba's unit cost guidance for Sishen is at R510 – 540 per dry metric ton while Kolomela's is at between R430 and 460 dry metric ton.
On the logistics front, Zikalala said despite an unscheduled shut to repair a stacker-reclaimer, overall equipment availability at Saldanha Bay Port had improved compared to the same period in 2024.
Sales for the quarter to end June firmed up by 8% compared to the first quarter, bringing up Kumba's total sales for the half-year period by 3% to 18.7 million tons.
Shipping costs decreased by 18% though to R3.5bn due to lower freight rates of $15 per wet metric ton.
Total finished stock was subsequently broadly flat at 7.4 million tons while mine stock levels reduced by 500 000 tons 6.4 million tons. Stock at the Saldanha Bay port increased to 1 million tons compared to 500 000 tons as at the end of December.
'The recovery of the logistics network is critical to the health of the value chain. We are also encouraged by the pace of logistics reform through Private Sector Partnership,' said Zikalala.
Analysts are of the view that 'Kumba is a good pick' due to its debt-free status, high grade iron ore deposits complemented by large amounts of lumps. Moreover, 'lump ore is interesting for steel plants to avoid sintering,' while 'railway issues will be solved' amid expectations of a recovery in iron ore prices.
BUSINESS REPORT
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Maverick
5 hours ago
- Daily Maverick
Government launches R440bn private transmission gamble to end load shedding
Electricity Minister Kgosientsho Ramokgopa and the National Treasury have unveiled an ambitious plan to build 14,500km of transmission lines and 133,000 megavolt-amperes of transformer capacity by 2034 at an estimated cost of R440bn. At the JSE on Thursday, Electricity Minister Kgosientsho Ramokgopa launched the Request for Pre-Qualifications (RFP) of a high-stakes transmission programme aimed squarely at ending load shedding. South Africa's energy problem is no longer just about generation. The real choke point lies in transmission capacity, with tens of gigawatts of renewable energy trapped behind constrained networks. The Transmission Development Plan (TDP) is meant to address this, adding 14,500km of lines and 133,000 megavolt-amperes of transformer capacity by 2034. Without this build-out, energy challenges will remain no matter how much is generated. Industry bodies such as the South African Photovoltaic Industry Association agree. Its CEO, Dr Rethabile Melamu, said: 'The future of South Africa's energy system relies not just on how much we build, but on how efficiently we connect it to the grid.' What's in a Credit Guarantee Vehicle? At the heart of the plan is a Credit Guarantee Vehicle (CGV) that de-risks private investment without creating new state guarantees. In simple terms, it provides payment and termination guarantees to private funders if a large infrastructure project stalls. This makes investing in the grid more secure. The CGV targets an initial $500-million (around R9-billion) raise, with the National Treasury providing 20% first-loss capital (about $100-million, roughly R2-billion via a World Bank loan), scalable to $500-million if needed. It will operate as a private non-life insurer under the Prudential Authority, aiming for an AAA rating, and launch is planned for July 2026. Premiums will be recovered through the electricity tariff. The initial focus will be on energy transmission, with potential expansion to logistics and water. Speaking at the RFP launch, Deputy Finance Minister David Masondo said the introduction of independent transmission projects was a key objective of Operation Vulindlela Phase II, and would play an important role in the broader reform of South Africa's energy system. 'This reform includes the introduction of a competitive electricity market, which will allow multiple generators and traders to compete to provide electricity to consumers at the lowest cost and with the greatest efficiency,' he said. 'The reform of our energy system is advancing rapidly, and our commitment in this regard remains unwavering. We will not allow any vested interests to delay or obstruct this reform process, including Eskom itself.' South Africa urgently needs to resolve its transmission crisis. Load shedding has disrupted daily life and exacted a heavy toll on jobs, investment and GDP. A Cresco Energy Market Transitions report released by Standard Bank Corporate and Investment Banking in June warned that grid connections and transmission delays, rather than tariffs, were now the main roadblock to an energy secure future. This is confirmed by the fact that several renewable projects from Bid Window 7 are stuck waiting for grid access, threatening investor confidence and project timelines as companies better understand their round-the-clock power needs. But beware the tale of Karpowership On 31 July, after a three-year legal battle, the Gauteng Division of the High Court in Pretoria set aside the generation licences that the energy regulator, Nersa, had awarded to Karpowership. The Organisation for Undoing Tax Abuse (Outa) hailed the decision as a public-interest victory. 'The Karpowership deals are now absolutely dead. It will never be loaded onto your electricity bill,' said Outa's executive director, advocate Stefanie Fick. The murky water of the proposed deal combined with its cost is illustrative of the potential risk of emergency procurement and the importance of the ITP keeping within the lines of a transparent, programmatic approach. What this means for you If executed on time, the ITP could help end load shedding, unlock private capital and boost local manufacturing of towers, cables and transformers. Challenges remain with the possibility of landowner disputes, union resistance, regulatory delays and equipment lead times. Any slip risks leaving renewable energy stranded. The ITP's success will depend on whether a credible procurement process can translate into steel towers, substations and new lines fast enough to avoid a relapse into blackouts. If this gamble pays off, it could see South Africa taking a major step forward to closing the load shedding chapter. DM
IOL News
12 hours ago
- IOL News
Mondi reports 11% decline in headline earnings, shares fall sharply
Mondi plant in Richards Bay, KwaZulu-Natal. Andrew King, CEO of JSE and London-listed Mondi said the group had delivered a solid financial performance in the six months to June 30, 2025. Image: Simphiwe Mbokazi Independent Newspapers Global paper and packaging producer Mondi's share price slumped over 8% on the JSE Thursday after it reported that headline earnings per share fell by 11%, to 37.2-euro cents, in the six months to 30 June. The share was trading 8.12% lower at R254.71 on the JSE, bringing the decline in the price over 12 months to over 29%. The interim dividend was held at 23.30-euro cents. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of €564 million, including €18m forestry fair value gain, was much in line with the first half of 2024's €565m, which included €49m forestry fair value gain. 'We delivered a solid performance. Volume growth, price increases and good cost control effectively mitigated currency headwinds and inflationary pressures,' CEO Andrew King said in the results announcement. The performance in the two packaging businesses was supported by higher average selling prices. Corrugated Packaging's EBITDA of €203m was 42% ahead of the comparable period. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ Flexible Packaging EBITDA of €302m increased by 9% ahead. Uncoated Fine Paper delivered €81m of EBITDA, including a forestry fair value gain of €18 million, well below €166m in the first half of 2024, including a forestry fair value gain of €49m. The underperformance was primarily driven by challenges in the UFP division and foreign exchange headwinds in the Flexibles segment. Production and sales were ramping up for all major capacity expansion projects. The acquisition of the Western European packaging assets of Schumacher Packaging was completed on 31 March 2024, with integration and synergy benefits on track. Looking ahead, King said trading conditions in the second half were likely to continue to be blunted by geopolitical and macroeconomic uncertainties. 'We remain focused on delivery of our productivity, cost and cash flow optimisation initiatives, while ensuring we are well positioned for long-term value creation…,' said King. Visit:
IOL News
2 days ago
- IOL News
Kumba Iron Ore eyes growth despite market challenges
Although revenues for the half year period to June 2025 were 4% softer, Kumba is banking on improved operational performance, increased sales and consistent production to attain its full-year production guidance of 35 to 37 million tons. Image: Supplied Kumba Iron Ore said on Tuesday that it remained poised for growth, fortified by robust demand for steel and high-quality iron ore products, despite a landscape marked by global economic uncertainty and shifting market dynamics. This optimism was articulated by Kumba's CEO Mpumi Zikalala following the company's announcement of an impressive interim cash dividend of R5.3 billion. Kumba declared an interim dividend of R16.60 per share for the period ending 30 June 2025 despite revenues declining by 4% to R34.5bn after basic headline earnings per share slightly fell to R22.26. Half-year earnings before interest, depreciation and amortisation (Ebitda) amounted to R16bn. The dip in revenues has been attributed to a 6% reduction in the average realised Free On Board (FOB) iron ore export price to $91 per wet metric ton compared to the same period last year as well as a stronger exchange rate. However, the Anglo American-owned firm earned a premium of $7 per wet metric ton during the period compared to $1 in 2024. Shares in Kumba Iron Ore surged 4.9% to R310.16 in afternoon trade on the JSE on Tuesday. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading This has placed Kumba Iron Ore's realised price 8% above the benchmark FOB export price of $84 per wet metric ton, with Zikalala saying that demand prospects still favoured premium producers. 'The world needs steel to build, grow and develop, and iron ore is a key ingredient in steelmaking. Kumba's high-quality lump iron ore products are unique and play a critical role in the manufacturing of carbon light steel products,' said Zikalala. Global markets for steel outside of China, particularly in Europe, were nonetheless under pressure due to increased availability of the Chinese steel in the traded market. This has forced Kumba Iron Ore to reduce sales to these markets to 42% of total sales as China's share of export sales ramped up to 58%. Although revenues for the half year period to June 2025 were 4% softer, Kumba is banking on improved operational performance, increased sales and consistent production to attain its full-year production guidance of 35 to 37 million tons. This comes as Kumba has made 'progress on our strategy of unlocking value from our core assets' on the back of cost and capital' discipline. As revenues dipped, Kumba has placed greater focus on lowering costs and it said it was on track to achieve its C1 unit cost target of $39 per wet metric ton. Over the half-year, the company accrued cost savings of R661 million. Kumba's unit cost guidance for Sishen is at R510 – 540 per dry metric ton while Kolomela's is at between R430 and 460 dry metric ton. On the logistics front, Zikalala said despite an unscheduled shut to repair a stacker-reclaimer, overall equipment availability at Saldanha Bay Port had improved compared to the same period in 2024. Sales for the quarter to end June firmed up by 8% compared to the first quarter, bringing up Kumba's total sales for the half-year period by 3% to 18.7 million tons. Shipping costs decreased by 18% though to R3.5bn due to lower freight rates of $15 per wet metric ton. Total finished stock was subsequently broadly flat at 7.4 million tons while mine stock levels reduced by 500 000 tons 6.4 million tons. Stock at the Saldanha Bay port increased to 1 million tons compared to 500 000 tons as at the end of December. 'The recovery of the logistics network is critical to the health of the value chain. We are also encouraged by the pace of logistics reform through Private Sector Partnership,' said Zikalala. Analysts are of the view that 'Kumba is a good pick' due to its debt-free status, high grade iron ore deposits complemented by large amounts of lumps. Moreover, 'lump ore is interesting for steel plants to avoid sintering,' while 'railway issues will be solved' amid expectations of a recovery in iron ore prices. BUSINESS REPORT
