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Kumba production and sales report for the fourth quarter, and trading statement, for the year ended 31 December 2022
Kumba Iron Ore Limited
A member of the Anglo American plc group
(Incorporated in the Republic of South Africa)
(Registration number 2005/015852/06)
Share code: KIO
ISIN: ZAE000085346
("Kumba" or "the Company")
Kumba production and sales report for the fourth quarter, and trading statement, for the year ended 31 December 2022
olid performance demonstrating ongoing operational stability, while Kolomela’s performance is improving, ensuring that both of our operations are well set
up for 2023.
"However, Transnet’s logistics remain a concern with poor performance continuing subsequent to the two-week wage strike in October 2022 and the annual
maintenance shutdown in November 2022. This limited production to 10.0 Mt, representing an increase of 3% in Q4 2022, while sales decreased by 35% to
6.9 Mt, largely due to Transnet's performance.
"For the full 2022 year, production of 37.7 Mt and sales of 36.6 Mt were in line with revised guidance (c.37 Mt and 36-37 Mt, respectively). Currency weakness
contributed positively to C1 costs of US$40 per tonne ending the year better than guidance (c.US$44 per tonne).
"Kumba's premium product quality and geographically diverse customer base contributed to an average realised price of US$113 per wet metric tonne (wmt)
for the year, 13% above the benchmark price of US$100/wmt. Kumba’s value-based strategy positions us positively in current volatile markets and ensures
that we have a firm foundation to build on for a sustainable future."
Overview of 2022
- We achieved more than six years of fatality-free production and continued to focus on improving safety performance.
- Production increased by 3% to 10.0 Mt in Q4 2022 (Q4 2021: 9.7 Mt). However, for the full 2022 year, production decreased by 8% to 37.7 Mt (2021: 40.9
Mt) due to operational headwinds at Kolomela as well as rail constraints, including industrial action at Transnet, resulting in high levels of finished product
stock at the mines, where stockpile levels have reached capacity.
- Sales decreased by 35% to 6.9 Mt in Q4 2022 (Q4 2021: 10.7Mt) and by 9% to 36.6 Mt for 2022 (2021: 40.3 Mt), due to the sub -optimal logistics
performance which has resulted in low levels of finished stock at Saldanha Port.
- Finished stock as at 31 December 2022 increased to 7.8 Mt from 6.1 Mt, with the majority of the stock situated at the mines.
- Delivered an average realised free-on-board (FOB) export iron ore price of US$113/wmt (US$115/dry metric tonne (dmt)),13% above the benchmark price
of US$100/wmt (US$102/dmt).
% change % change % change
Q4 Q3 Q2 Q1 Q4 vs vs YTD YTD vs
Million tonnes 2022 2022 2022 2022 2021 Q4 2021 Q3 2022 2022 2021 2021
Total waste mining 55.0 53.8 48.8 46.7 54.1 2 2 204.3 209.4 (2)
Total production 10.0 10.0 9.5 8.3 9.7 3 — 37.7 40.9 (8)
Total sales 6.9 10.0 10.2 9.5 10.7 (35) (31) 36.6 40.3 (9)
Total waste mining 55.0 53.8 48.8 46.7 54.1 2 2 204.3 209.4 (2)
Sishen 39.8 41.4 40.0 35.7 37.8 5 (4) 156.8 146.1 7
Kolomela 15.3 12.4 8.8 11.1 16.4 (7) 23 47.5 63.3 (25)
Total production 10.0 10.0 9.5 8.3 9.7 3 — 37.7 40.9 (8)
Lump 6.5 6.5 6.2 5.4 6.4 2 — 24.7 27.6 (10)
Fines 3.5 3.5 3.2 2.9 3.3 7 — 13.0 13.3 (2)
Total production by
mine 10.0 10.0 9.5 8.3 9.7 3 — 37.7 40.9 (8)
Sishen 7.0 7.1 7.1 5.8 6.5 7 (1) 27.0 28.0 (4)
Kolomela 3.0 2.9 2.4 2.5 3.2 (7) 2 10.7 12.8 (17)
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
The health, safety and wellbeing of our employees and contractors are our top priority and a core value for Kumba. Our fatality-free record of more than six
years is underpinned by our culture of "Zero Harm" focused on eliminating fatal incidents, minimising risk and promoting resp onsible safety behaviour. During
the year, we implemented a safety reset initiative across all our sites to improve safety leadership and ensure that our work is well planned, designed and
executed to create a safer and more productive working environment.
Mining and production
Our focus on the stability and capability of operational processes continued to drive improvements in performance. Waste stripping increased by 2% to 55 Mt
in Q4 2022 (Q4 2021: 54.1 Mt), due to a 5% increase at Sishen to 39.8 Mt (Q4 2021: 37.8 Mt), partly offset by a 7% decrease at Kolomela to15.3 Mt (Q4 2021:
16.4 Mt). Compared to the previous two quarters of the year, Kolomela has progressively improved with waste mining increasing by 41% in Q3 2022 (Q2 2022:
8.8 Mt) and by 23% in Q4 2022, (Q3 2022: 12.4Mt).
Total production increased by 3% to 10.0 Mt in Q4 2022 (Q4 2021: 9.7). Sishen's production increased by 7% to 7.0 Mt (Q4 2021: 6.5 Mt) underpinned by
improved feedstock stability, while Kolomela's production decreased by 7% to 3.0 Mt (Q4 2021: 3.2 Mt). This was largely as a result of industrial action at
Transnet combined with poor rail performance following the annual maintenance shutdown, which led to further build-up of stock at the mines, necessitating
a curtailment in production.
For the mining sector, including Kumba, the industry's ability to continue contributing significantly to the fiscus, sustained employment, and delivering far-
reaching socio-economic benefits are inextricably linked to Transnet improving its operational performance. Recognising the integrated nature of the mining
industry as part of the logistics system, the Transnet Board and Minerals Council Office Bearers announced on 19 December 2022 that they have agreed to
establish joint collaborative structures and work together to ensure that all possible actions are taken to stabilise, recover and improve the throughput of
South Africa’s rail and ports systems to enable inclusive growth and maximise the movement of commodities in the national interest. Kumba is actively
involved in this collaboration with our focus on the improvement of the performance of the Iron Ore Export Channel.
In addition, load curtailment by Eskom has increased and while we have minimised the impact on production by rescheduling our work according to load
curtailment requirements, managing our operations around the availability of power supply represents an increasing risk for our operations.
Unit costs and the C1 cost for 2022 were better than guidance. Sishen and Kolomela’s unit costs were R480 per tonne and R490 per tonne respectively
(guidance: Sishen R500-R530 per tonne; Kolomela R505-R525 per tonne) and C1 unit costs were US$40 per tonne (guidance: US$44 per tonne). The
improvement in C1 costs was underpinned by rand weakness.
Logistics, sales and the market environment
Ore railed in Q4 2022 decreased by 27% to 6.8 Mt (Q4 2021: 9.4 Mt), further reducing already low levels of finished stock at Saldanha Port. Combined with the
impact of the Transnet industrial action at the port, shipping throughput was significantly reduced. As a result, sales for the Q4 2022 period decreased by 35%
to 6.9 Mt (Q4 2021: 10.7 Mt).
Closing finished iron ore stock for the 2022 year ended at 7.8 Mt (Q4 2021: 6.1 Mt), with the majority of the stock situated at the mines given the rail to port
performance challenges.
For the full year 2022, Kumba achieved an average lump:fine ratio of 67:33 (2021: 69:31) and product quality of 63.8% Fe (202 1: 64.1%), translating into an
average realised FOB export iron ore price of US$113/wmt (equivalent to US$115/dmt), which is 13% above the average Platts 62 index FOB price of
US$100/wmt (equivalent to US$102/dmt).
Production and sales volumes referred to are 100% of Sishen Iron Ore Company Proprietary Limited (SIOC), and attributable to Kumba's shareholders and the
non-controlling interests in SIOC.
Trading statement for the year ended 31 December 2022
Kumba is currently finalising its financial results for the year ended 31 December 2022. Further information will be provided in the Company's financial results
for the 2022 year, which will be released on the Johannesburg Stock Exchange News Service (SENS) on 21 February 2023.
In accordance with paragraph 3.4(b) of the JSE Limited Listings Requirements, shareholders are advised that headline earnings for the year ended 31
December 2022 (the period) are likely to be between R18,706 million and R20,696 million. Headline earnings per share (HEPS) for the period are likely to be
between R58.29 and R64.49, a decrease of between 38% and 44% from the previous year ended 31 December 2021 (comparative period). Reported headline
earnings and HEPS for the comparative period (released on SENS on 23 February 2022) were R33,260 million and R103.65, respectively.
The decrease in earnings for the period is largely attributable to the lower average realised FOB export ore price and lower sales volumes, partly offset by a
weaker Rand/US$ exchange rate, relative to the comparative period. In addition, basic earnings for the period reflect an impairment on the asset value of
Kolomela mine as a result of revisions to the forecast production and cost profile in the latest life of asset plan. Basic earnings for the period are expected to
be between R14,702 million and R16,266 million. Basic earnings per share (EPS) for the period are expected to be between R45.82 and R50.69, a decrease of
between 51% and 56% from the comparative period. Reported basic earnings and EPS for the comparative period (released on SENS on 23 February 2022)
were R33,266 million and R103.67 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.
Centurion
2 February 2023
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
For further information, please contact:
Company Secretary
Fazila Patel
fazila.patel@angloamerican.com
Tel: +27 683 7063
Mobile: +27 83 297 2293
Investors Media
Penny Himlok Sinah Phochana
penny.himlok@angloamerican.com sinah.phochana@angloamerican.com
Tel: +27 12 622 8324 Tel: +27 12 683 7019
Mobile: +27 82 781 1888 Mobile: +27 76 066 0655
Notes to editors:
Kumba Iron Ore Limited, a member of the Anglo American plc group, is a leading value-adding supplier of high quality iron ore to the global steel industry.
Kumba produces iron ore in South Africa at Sishen and Kolomela mines in the Northern Cape Province. Kumba exports iron ore to customers around the globe
including in China, Japan, South Korea and a number of countries in Europe and the Middle East.
www.angloamericankumba.com
Anglo American is a leading global mining company and our products are the essential ingredients in almost every aspect of modern life. Our portfolio of
world-class competitive operations, with a broad range of future development options, provides many of the future-enabling metals and minerals for a
cleaner, greener, more sustainable world and that meet the fast growing every day demands of billions of consumers. With our people at the heart of our
business, we use innovative practices and the latest technologies to discover new resources and to mine, process, move and market our products to our
customers – safely and sustainably.
As a responsible producer of diamonds (through De Beers), copper, platinum group metals, premium quality iron ore and steelmaking coal, and nickel – with
crop nutrients in development – we are committed to being carbon neutral across our operations by 2040. More broadly, our Sustainable Mining Plan
commits us to a series of stretching goals to ensure we work towards a healthy environment, creating thriving communities and building trust as a corporate
leader. We work together with our business partners and diverse stakeholders to unlock enduring value from precious natural resources for the benefit of the
communities and countries in which we operate, for society as a whole, and for our shareholders. Anglo American is re-imagining mining to improve people’s
lives.
Forward-looking statements
This announcement includes forward-looking statements. All statements other than statements of historical facts included in this announcement, including,
without limitation, those regarding Kumba’s financial position, business, acquisition and divestment strategy, dividend policy, plans and objectives of
management for future operations (including development plans and objectives relating to Kumba’s products, production forecasts and Ore Reserves and
Mineral Resource estimates), are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance or achievements of Kumba, or industry results, to be materially different from
any future results, performance or achievements expressed or implied by such forward-looking statements.
Such forward-looking statements are based on numerous assumptions regarding Kumba’s present and future business strategies and the environment in
which Kumba will operate in the future. Important factors that could cause Kumba’s actual results, performance or achievements to differ materially from
those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market
prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the effects of global pandemics and
outbreaks of infectious diseases, the availability of mining and processing equipment, the ability to produce and transport products profitably, the availability
of transport infrastructure, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects
of inflation, political uncertainty and economic conditions, the actions of competitors, activities by governmental authorities such as permitting and changes in
taxation or safety, health, environmental or other types of regulation, conflicts over land and resource ownership rights and such other risk factors identified
in Kumba’s most recent Integrated Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should
not be placed on forward-looking statements.
These forward-looking statements speak only as of the date of this announcement. Kumba expressly disclaims any obligation or undertaking (except as
required by applicable law, the Takeover Regulation Panel, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the
Financial Sector Conduct Authority and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement
contained herein to reflect any change in Kumba’s expectations with regard thereto or any change in events, conditions or circumstances on which any such
statement is based. Nothing in this announcement should be interpreted to mean that future earnings per share of Kumba will necessarily match or exceed its
historical published earnings per share.
Certain statistical and other information about Kumba included in this announcement is sourced from publicly available third-party sources. As such, it has not
been independently verified and presents the views of those third parties, though these may not necessarily correspond to the views held by Kumba and
Kumba expressly disclaims any responsibility for, or liability in respect of, such third-party information.
Date: 02-02-2023 09:00:00
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