KUMBA IRON ORE LIMITED - Reviewed interim results for the six months ended 30 June 2018 and interim cash dividend declaration

Release Date: 24/07/2018 07:07
Code(s): KIO
 
Wrap Text
Reviewed interim results for the six months ended 30 June 2018 and interim cash dividend declaration

KUMBA IRON ORE LIMITED
2005/015852/06
Incorporated in the Republic of South Africa
JSE code: KIO
ISIN: ZAE000085346
('Kumba' or 'the Company' or 'the group')
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018 AND INTERIM CASH DIVIDEND DECLARATION

KEY FEATURES
Safety performance improved:                
- Remain fatality free                      
- High potential incidents reduced by 77%  

Productivity and efficiency increases:    
- Product quality at 64.5% Fe    
- Production up by 3% to 22.4 Mt    
- Realised cost savings of R415 million    
- Break-even price of US$46/tonne 

Well positioned to continue delivering sustainable shareholder returns:    
- Headline earnings of R3 billion                                        
- Strong balance sheet with net cash of R11.7 billion                      
- Interim cash dividend of R14.51 per share                                
 
Challenging operating environment:                 
- Iron Ore Export Channel derailments             
- Market volatility                          


Commentary
CONTINUED SAFETY, PRODUCTIVITY AND EFFICIENCY GAINS 
"Kumba's strategy of 'Transformation to full potential', called 'Tswelelopele', resulted in a solid operating
performance across the value chain and continued to deliver shareholder returns. Attributable free cash flow of 
R2.8 billion and a strong opening cash position translated into an interim cash dividend of R4.7 billion, 
despite the impact of a stronger rand and softer iron ore prices. 

Total tonnes mined increased by 12%, while production increased by 3% with 11% more ex-pit waste moved. Continued 
productivity and efficiency improvements on the back of the Operating Model have enabled the removal of more ex-pit 
waste while containing unit costs.

Rail challenges have resulted in lost opportunities to achieve higher export sales volumes. This, coupled with a
stronger Rand and lower iron ore export prices, resulted in revenue of R19.5 billion. Our operational improvements, 
coupled with strong cost discipline, led to cost savings of R415 million which contributed to headline earnings 
of R3 billion. We ended the period with a strong net cash position of R11.7 billion. 

The next six months will be focused on delivering further operational and financial gains through our strategy, 
which comprises three horizons. Under Horizon 1, our focus is on margin enhancement through cost saving initiatives 
and further productivity and efficiency improvements, and on the revenue side, maximising realised prices. 
Alongside this, work is being done under Horizon 2 to leverage our endowment and we see further life of mine 
extension opportunities through our resource development programme. We are primarily focused on Horizon 1 and 2 
where value can be unlocked in the short to medium term while we are opportunistic about long-term growth options 
under Horizon 3.

Based on the solid operating platform and strong balance sheet, the Board has approved a dividend policy which targets
a pay-out ratio range of 50 - 75% of headline earnings. The new policy reflects our commitment to shareholder returns
while balancing the capital requirements of sustaining and growing our business."

Themba Mkhwanazi
Chief executive

NEW DIVIDEND POLICY AND INTERIM CASH DIVIDEND DECLARED
Following the 2014 and 2015 iron ore market downturn, Kumba resumed dividend payments in 2017 by applying a 
discretionary dividend policy as we sought to embed operational improvements and ensure a flexible balance sheet 
was built which is resilient to market volatility while providing a base to address the growth and life extension 
imperative.

The continued success of our strategy in driving operational improvement, our ability to generate cash, and a clearer
path to life extension have given us the platform to revise our dividend policy to a more definitive target payout 
ratio demonstrating the prioritisation of sustainable shareholder returns through the cycle and disciplined capital 
allocation.

The new dividend policy will target a base dividend range of between 50% and 75% of headline earnings. While we will
prioritise shareholder returns in allocating capital, our aim is to maintain a flexible capital structure and 
continue to protect the balance sheet from market volatility, as well as to ensure an appropriate level of capital is 
allocated to life extension projects.

The Board has approved a total cash dividend of R14.51 per share which is made up as follows:
- R6.98 per share representing 75% of headline earnings in accordance with the new dividend policy; and
- R7.53 per share being a once-off top-up cash dividend to reset the balance sheet net cash position given the 
  accumulation of cash since the recovery in the iron ore market in 2016.

MARKET OVERVIEW
The Platts 62% IODEX CFR China index averaged $70/dmt during the first half of 2018 ('the period'), down 7% or $5/dmt 
relative to the first half of 2017 ('the comparative period').  A series of political events in Beijing and winter 
production cuts in North China until mid-March hampered construction activity. This resulted in an inventory overhang 
pushing steel prices lower by more than 10% through March. Since then, end user demand has staged an impressive 
recovery with property investment up 10%. Consequently, steel stocks have fallen by 50% post the Chinese New Year 
period - a new record. Steel mill margins are currently near record highs and 'flight to quality' remains the 
pre-dominant theme among Chinese mills as high-grade iron ore maximises steel productivity. The Platts65/Platts62 
differential has risen by 86% in the first half of the year to $27/dmtu at 30 June 2018 and averaged $18/dmtu 
for the period. 

While demand for iron ore has been buoyant, supply has increased. Iron ore port stocks rose by 9 Mt in the first 
half of 2018 to 156 Mt at 45 ports in China. The combined iron ore shipments from Australia and Brazil are up 3.8%
year-on-year to an annualised 1.2 billion tonnes in the first half of the year. Widening discounts for low grade 
ores and higher freight rates have raised the break-even price for higher cost suppliers.

The lump premium had a strong recovery, increasing from 7.9 US cents/dmtu at the start of the year to 
32 US cents/dmtu at 30 June 2018, taking the average for the period to 18 US cents/dmtu or an equivalent of US$12/dmt. 
Multiple sintering closures in Tangshan, Hebei and other northern provinces in China, and record demand for low alumina 
ores have been the key drivers of the recent rally in the lump premium in China.

OPERATIONAL PERFORMANCE                                                  
Production summary (unreviewed)                                          
                                       Six months ended                      
                                       June        June      % change    
'000 tonnes                            2018        2017                  
Total                                22,427      21,854             3    
Lump                                 15,133      14,483             4    
Fines                                 7,294       7,371            (1)   
Mine production                      22,427      21,854             3    
Sishen mine                          15,255      15,551            (2)   
Kolomela mine                         7,172       6,303            14    
                                                                         
OPERATIONAL REVIEW
The focus on safety remains a key priority for Kumba. Life saving rules called 'My Sacred Covenant' were launched 
and included compulsory training for all employees. At both mines, a 'Stop for safety day' was held to reinforce 
the importance of safe production. We remained fatality free during the period with improvements across key safety 
metrics. The total recordable case frequency rate1, a measure of the frequency of recordable injuries, improved to 
2.08 (1H17: 3.79), high potential incidents reduced to 3 (1H17: 13) and the lost-time injury frequency rate1 
decreased to 0.99 (1H17: 1.35). 

Total tonnes mined increased by 12% to 140.4 Mt while total production rose by 3% to 22.4 Mt with marginally 
lower production at Sishen of 15.3 Mt (1H17: 15.6 Mt). Continued strong performance at Kolomela led to production 
increasing by 14% to 7.2 Mt. Total sales volumes remained flat in relation to the first half of 2017 at 21.2 Mt.

1. Lost-time injury (LTI) frequency rate and total recordable case (TRC) frequency rate are now calculated based on 
1,000,000 man hours. LTIFR calculated using LTI*1,000,000/total hours and TRCFR calculated using TRC*1,000,000/total hours. 
Comparative numbers for 1H17 were restated accordingly. 

Sishen mine
Total tonnes mined at Sishen increased by 12.2 Mt to 105.1 Mt (1H17: 92.9 Mt) of which waste mined was 86.6 Mt,
representing a 13% increase as a result of the improvement in primary equipment efficiencies. 

Production decreased by 2% to 15.3 Mt (1H17: 15.6 Mt) due to a strategic decision to increase product quality and 
the value of product railed to mitigate the impact of the rail constraints caused by derailments. With market 
demand increasing for higher quality products, we improved the average quality of our products to 64.5% Fe and the 
lump:fine ratio to 67:33 (1H17: 63:37), which contributed to lower production volumes. 

Through the implementation of the Operating Model, Sishen not only stabilised its operations, but continued to 
improve efficiencies in line with our strategy. Compared to the first half of 2017, total fleet productivity was 
up 17%, supported by truck fleet productivity increasing by 38%. As a result of these improvements, Sishen was 
able to park 11 trucks and achieve a 7% improvement in truck utilisation without negatively affecting production. 
Additionally, primary shovel tempos improved by 19%. 

Some of the key initiatives at Sishen include:
- Increasing double sided loading
- Larger blasts to reduce delays associated with frequent blasting
- Increasing the floor stock in front of the shovels.

Technology has become a key enabler of safe production and improved performance. As an example, 36 of the haul 
trucks have been fitted with autobraking collision avoidance technology. Kumba is the first mining company to 
successfully prove the autobraking technology. We also introduced an operator training programme which uses drone 
technology to film the best shovel operators, in order to transfer knowledge to other operators. 

Kolomela mine
Total tonnes mined increased by 10% to 35.3 Mt, (1H17: 32.2 Mt). Waste mined was 26.4 Mt (1H17: 25.4 Mt), an 
increase of 4%, as planned. The mine produced 7.2 Mt of ore (1H17: 6.3 Mt), a 14% increase, from 32% more ex-pit 
ore mined.

Kolomela's increased production was due to continued improvement of the Direct Shipping Ore (DSO) plant tempos and
increased throughput due to the ramp-up of the Dense Media Separation modular plant, as well as the successful
implementation of the Operating Model at the plant. 

The Operating Model and advanced process control technology have resulted in Kolomela mine consistently improving 
its DSO plant throughput and efficiency over the past few years, and the plant is now regarded as an industry 
benchmark. Despite the high base, the productivity of the DSO plant improved by a further 2% in comparison to the 
first half of 2017. Further to the plant performance, Kolomela mine has also improved its earthmoving equipment 
efficiencies with primary shovel tempos increasing by 9% and truck productivity increasing by 6% during 
the period.  

Logistics
Transnet rail performance has been sub-optimal. Since the second half of 2017, there have been six derailments 
on the Iron Ore Export Channel of which four occurred during the 2018 period. As a result of this, iron ore railed 
to port remained similar to the comparative period at 20.8 Mt. The derailed wagons have been replaced and performance 
is being monitored closely to secure delivery of our contractual capacity. Initiatives have been implemented to 
mitigate the impact of derailments, which include reducing loading times and improving our turnaround times at 
the mines. 

Severe weather disruptions at Saldanha port have resulted in a number of vessels being delayed into July, impacting
shipments for the period which remained at similar levels of 19.5 Mt relative to the comparative period.

Sales summary (unreviewed)                                                
                                     Six months ended                                 
'000 tonnes                       June 2018   June 2017      % change    
Total                                21,173      21,234             -    
Export sales                         19,506      19,477             -    
Domestic sales                        1,667       1,757            (5)   
                                                                            
Sales
The challenges with the logistics performance resulted in 2.4 Mt of lost export sales opportunity in the period. 
As a result, total and export sales remained flat at 21.2 Mt and 19.5 Mt, respectively, relative to the comparative 
period, with domestic sales decreasing to 1.7 Mt (1H17: 1.8 Mt). Finished product inventory held at the mines 
and ports increased to 6.2 Mt (1H17: 4.4 Mt) with a higher proportion of this at the mines.

CFR sales accounted for 65% of export sales volumes (1H17: 65%). Kumba further diversified its customer portfolio 
and China's share of export sales reduced to 57% (1H17: 60%) of the export sales portfolio, while the share of 
the EU/MENA/Americas region increased to 21% (1H17:20%). Product quality improved to 64.5% Fe and the total sales 
lump:fine ratio to 67:33 (1H17: 63:37), allowing Kumba to benefit from the relatively stronger lump premium market.

FINANCIAL RESULTS
Kumba produced a resilient financial performance despite challenging logistics and export market conditions. 
Proactive steps taken to reduce costs, improve operational efficiencies and increase iron ore quality to 
maximise quality premia partly offset the full effects of the stronger Rand/US$ exchange rate and lower 
average realised iron ore prices. In light of these headwinds, a strong and flexible balance sheet remains 
an imperative as this enables the prioritisation of shareholder returns through our new dividend payout 
policy of 50 - 75% of headline earnings while we continue to invest for growth. 

Revenue
Total revenue decreased by 9% to R19.5 billion (1H17: R21.5 billion), largely driven by the following factors:
- Rand strengthening of 7% on average against the US dollar (1H18: R12.30/US$1 compared to 1H17: R13.21/US$1); 
  and
- Average realised iron ore export price decreasing 3% to US$69/tonne (1H17: US$71/tonne).

Kumba's average realised FOB prices decreased by US$2/tonne compared to 1H17, following a decrease in iron ore 
prices of $5/tonne and higher freight rates of $2/tonne, which was partly offset by the average lump premium 
increasing by US$5/tonne, given our relatively more competitive lump:fine ratio. Furthermore, our average product 
quality increased from 64.1% Fe in 1H17 to 64.5% Fe in 1H18 which together with our marketing efforts helped to 
increase the premium received for our high quality lump product. 

Firmer freight rates translated into a 9% increase in shipping revenue to R1.9 billion (1H17: R1.7 billion).

Operating expenses
Operating expenses increased by 4% to R14.4 billion (1H17: R13.8 billion), following the 12% increase in mining
volumes to 140.4 Mt, along with the 3% increase in production volumes to 22.4 Mt. Cost savings of R415 million 
as a result of optimisation and efficiency improvements helped to contain the increase in operating expenses.

Unit cash costs at Sishen mine increased by 8% to R309 per tonne (FY17: R287 per tonne) primarily as a result of
higher mining volumes and above-inflation increases in fuel costs, partly offset by productivity and efficiency 
improvements, as well as savings in overhead costs. Kolomela mine incurred unit cash costs of R232 per tonne 
(FY17: R237 per tonne), a 2% decrease, as cost savings from optimisation and improved efficiencies outweighed the 
impact of higher mining volumes and fuel prices.

Selling and distribution costs increased by 13% to R3 billion (1H17: R2.7 billion) on the back of contractual 
tariff increases and higher demurrage. Shipping costs were R107 million higher due to the Platts freight rate 
on the Saldanha - Qingdao route increasing to US$12.47/tonne, a 23% increase from US$10.12/tonne in 1H17.

Break-even price
Kumba achieved an average cash break-even price of US$46/tonne (62%Fe CFR China), an increase of US$6/tonne 
from the average for the 2017 financial year. The increase in controllable costs was contained to US$1/tonne 
as costs related to higher mining volumes and logistics, were partially offset by cost savings, productivity 
gains and operating efficiency improvements. Non-controllable costs rose by US$5/tonne due to the stronger 
Rand (US$4/tonne) and higher freight rates (US$1/tonne). 

Earnings before interest, tax, depreciation and amortisation (EBITDA)
EBITDA of R7 billion (1H17: R9.1 billion) reflects a decrease of 24%. Underlying drivers included controllable 
factors which delivered a 14% gain through higher sales premiums and cost savings. This helped offset the impact 
from non-controllable factors such as the strengthening of the Rand by 7%, the 3% reduction in average 
realised iron ore export price, and higher inflation-related costs. In addition, a net freight loss was 
incurred on shipping operations from long-term fixed price chartering contracts. As a result of the above, 
the EBITDA margin decreased to 36% (1H17: 43%). 

Cash flow
The lower EBITDA resulted in cash flow generated from operations decreasing to R6.9 billion (1H17: R11.7 billion). 
The group ended the period with a net cash position of R11.7 billion (1H17: R13.5 billion; 2H17: R13.9 billion) 
after allowing for capital expenditure of R1.4 billion for the period and the final 2017 cash dividend payment 
of R6.3 billion. Capital expenditure incurred related to stay-in-business (SIB) activities of R0.4 billion, 
deferred stripping capitalisation of R0.9 billion and expansion activities of R0.2 billion which included 
capital expenditure on Dingleton. 

ORE RESERVES AND MINERAL RESOURCES
There have been no material changes to the ore reserves and mineral resources as disclosed in the 2017 Kumba
Integrated Report.

REGULATORY UPDATE
Sishen consolidated mining right granted
The application to extend the mining right of Sishen through the inclusion of the adjacent Prospecting Rights 
was granted on 25 June 2017 and the grant was notarially executed on 29 June 2018. The grant allows Sishen 
mine to expand its current mining operations within the adjacent Dingleton area. 

The Mining Charter 2018
The publication of the draft 2018 Mining Charter by the Minister of Mineral Resources on 15 June 2018 has been noted.
All parties have until the end of August to respond to the draft, following the decision by the Minister of Mineral
Resources to extend the public consultation period. Kumba will participate in the process through its majority 
shareholder, Anglo American, who is preparing a submission in respect of the draft 2018 Mining Charter.

Kumba shares the acknowledgment made by the Minerals Council that the draft 2018 Mining Charter is an improvement on
the draft 2017 Mining Charter. However, we have concerns surrounding several significant issues in the draft Mining
Charter that we believe may affect the sustainability of the mining industry in South Africa, should they not be
reconsidered. 

Kumba has consistently affirmed its support for the Government's national transformation objectives in relation 
to the mining industry and acknowledges its role in promoting transformation in South Africa. To this end, we have 
a longstanding track record of driving and supporting transformation in the mining industry and beyond, while 
contributing significantly to South Africa's economic growth and development. 

Kumba believes that much more work needs to be done, in consultation with all stakeholders, to create a Mining 
Charter that promotes both investment for the long term and transformation. We look forward to the ongoing 
discussions with the Minister, the Department of Mineral Resources  (DMR) and other industry stakeholders to work 
towards these objectives.

The transfer of Thabazimbi to ArcelorMittal SA
As previously reported, Sishen Iron Ore Company Proprietary Limited (SIOC) and ArcelorMittal SA entered into an
agreement for the transfer of the Thabazimbi mine, together with the mining rights, to ArcelorMittal SA. The 
agreement is expected to come into effect by 28 September 2018, subject to the fulfilment of certain conditions. 
In the event that the conditions for transfer are not satisfied by 28 September 2018, the agreement will lapse 
and SIOC will proceed with the closure of the mine. 

On 10 July 2018, one of the key conditions precedent to the transfer was met as SIOC received the grant letter from
the DMR in respect of Section 11 of the MPRDA approving the transfer of the Thabazimbi
mining rights to ArcelorMittal SA. The employees, assets and liabilities of Thabazimbi mine will transfer to ArcelorMittal
SA at a nominal purchase consideration in addition to the assumed liabilities of which ArcelorMittal SA's contractual
liability are 97%. The Thabazimbi mine assets and related liabilities that will transfer have been presented separately
in the statement of financial position as assets and liabilities of the disposal group held for sale at 30 June 2018 
(refer to note 10 in the condensed consolidated financial statements). Current operating expenses represent closure 
activities.

EVENTS AFTER THE REPORTING PERIOD
At a Special General Meeting on 10 July 2018, shareholders approved a new employee share ownership plan, called Karolo,
for qualifying employees of SIOC. The qualifying employees will be allocated units that are equal to Kumba shares, 
at no cost. This scheme replaces the Envision scheme which unwound in November 2016.

There were no further significant events that occurred from 30 June 2018 to the date of this report, not otherwise
dealt with in this report.

CHANGES IN DIRECTORATE
The following changes to the Board were announced during the first six months of the year:
- Allen Morgan stepped down as an independent non-executive director with effect from 11 May 2018.
- Terence Goodlace was appointed as lead independent non-executive director. Mr Goodlace stepped down as the 
  chairman of the Risk and Opportunities Committee and remains a member of the committee.
- Dolly Mokgatle was appointed as the chairman of the Risk and Opportunities Committee. Mrs Mokgatle stepped 
  down as the chairman of the Social, Ethics and Transformation Committee but remained a member of the committee.
- Buyelwa Sonjica was appointed as the chairman of the Social, Ethics and Transformation Committee.
- Ntombi Langa-Royds was appointed as chairman of the Human Resources and Remuneration Committee, following 
  Mr Morgan's retirement from the Board and as the chairman of the committee.

CHANGE IN MANAGEMENT
The Board announced the appointment of:
- Darrin Strange as Chief operating officer with effect from 1 May 2018.
- Sam Martin as Executive Head: Strategy and business development with effect from 16 July 2018.

OUTLOOK
We will continue to drive our operations to reach their full potential through our 'Tswelelopele' strategy. Kumba is 
a world-class operation, we have a resilient business, committed employees and a winning strategy to deliver superior
value through the cycle. Through our strategy, we are driving value over volume and targeting R800 million of cost savings
for the year. We have progressed our resource development plan and will continue to work on increasing the life of mine.
Most importantly, we are striving to remain fatality free and continue to create value for shareholders.

Due to the logistical challenges experienced in the first six months of the year, our full year total sales guidance
has been revised to 42 - 44 Mt from 44 - 45 Mt. Consequently, full year guidance for production was revised down to 
43 - 44 Mt more closely aligned to rail supply levels as part of our integrated sales and operations planning drive 
and focus on optimal efficiency. Sishen's production guidance has been revised to 29 - 30 Mt while waste guidance 
remains unchanged at 170 - 180 Mt. Kolomela will continue to produce 14 Mt of product and 55 - 57 Mt of waste as 
previously guided.
 
As a result of lower production at Sishen, the full year unit cash cost of Sishen was revised to R300 - R310 per tonne.
Kolomela's unit cash cost guidance remains unchanged at R240 - R250 per tonne.

Our current capital expenditure outlook for 2018 (including deferred stripping) is R3.7 - R3.9 billion. This was
revised slightly lower from the previous outlook of R3.9 - R4.1 billion, mainly due to revised SIB project scheduling.

The presentation of the Company's results for the six months ended 30 June 2018 will be available on the Company's 
website www.angloamericankumba.com at 07:00 CAT and the webcast will be available from 11:00 CAT on 24 July 2018.    


SALIENT FEATURES AND OPERATING STATISTICS
for the period ended
                                                              Unreviewed       Unreviewed        Unaudited    
                                                                6 months         6 months        12 months    
                                                                 30 June          30 June      31 December    
                                                                    2018             2017             2017    
Share statistics ('000)                                                                                       
Total shares in issue                                            322,086          322,086          322,086    
Weighted average number of shares                                319,640          319,219          319,303    
Diluted weighted average number of shares                        321,991          321,274          321,481    
Treasury shares                                                    2,334            2,882            2,627    
Market information                                                                                            
Closing share price (Rand)                                           295              171              379    
Market capitalisation (Rand million)                              94,938           55,144          122,112    
Market capitalisation (US$ million)                                6,917            4,216            9,923    
Net asset value attributable to owners of Kumba             
(Rand per share)                                                  103.22           100.51           107.95    
Capital expenditure (Rand million)1                                                                           
Incurred                                                           1,429            1,071            3,074    
Contracted                                                           868              451              597    
Authorised but not contracted                                      2,517            2,377            1,634    
Operating commitments1                                                                                        
Operating lease commitments                                          696               75              794    
Shipping services                                                  5,923            6,850            5,260    
Economic information                                                                                          
Average Rand/US Dollar exchange rate (ZAR/US$)                      12.30            13.21            13.30    
Closing Rand/US Dollar exchange rate (ZAR/US$)                     13.73            13.08            12.31    
Sishen mine FOR unit cost                                                                                     
Unit cost (Rand per tonne)                                        402.95           391.63           375.42    
Cash cost (Rand per tonne)                                        309.45           311.40           287.33    
Unit cost (US$ per tonne)                                          32.77            29.65            28.23    
Cash cost (US$ per tonne)                                          25.17            23.57            21.60    
Kolomela mine FOR unit cost                                                                                   
Unit cost (Rand per tonne)                                        342.55           346.28           336.67    
Cash cost (Rand per tonne)                                        232.36           252.30           236.67    
Unit cost (US$ per tonne)                                          27.86            26.21            25.31    
Cash cost (US$ per tonne)                                          18.90            19.10            17.79    
1 The capital expenditure and operating commitments amounts have been reviewed (the amount for the 
  31 December 2017 year was audited).                                                       

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at
                                                                Reviewed         Reviewed          Audited     
                                                                 30 June          30 June      31 December     
Rand million                                      Notes             2018             2017             2017    
Assets                                                                                                        
Property, plant and equipment                         3           36,375           31,651           36,833    
Biological assets                                                      3                3                3    
Investments held by environmental trust                              632              580              627    
Long-term prepayments and other receivables                          208              126              211    
Deferred tax assets                                                    -                -               72    
Inventories                                           4            3,206            3,533            2,841    
Non-current assets                                                40,424           35,893           40,587    
Inventories                                           4            4,661            3,449            4,061    
Trade and other receivables                                        2,099            2,579            2,709    
Cash and cash equivalents                             5           11,664           13,486           13,874    
Current assets                                                    18,424           19,514           20,644    
Assets of disposal group classified                                                         
as held for sale                                     10            1,235            1,118            1,235    
Total assets                                                      60,083           56,525           62,466    
Equity                                                                                                        
Shareholders' equity                                              33,245           32,374           34,769    
Non-controlling interests                                         10,287           10,081           10,777    
Total equity                                                      43,532           42,455           45,546    
Liabilities                                                                                                   
Provisions                                                         2,028            2,051            1,860    
Deferred tax liabilities                                           8,843            7,362            8,860    
Non-current liabilities                                           10,871            9,413           10,720    
Provisions                                                            85               19              147    
Trade and other payables                                           4,470            3,298            4,945    
Current tax liabilities                                               77              353               59    
Current liabilities                                                4,632            3,670            5,151    
Liabilities of disposal group classified                                                    
as held for sale                                     10            1,048              987            1,049    
Total liabilities                                                 16,551           14,070           16,920    
Total equity and liabilities                                      60,083           56,525           62,466    

CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS 
for the period ended                                
                                                                Reviewed         Reviewed          Audited    
                                                                6 months         6 months        12 months    
                                                                 30 June          30 June      31 December     
Rand million                                      Notes             2018             2017             2017    
Revenue                                                           19,474           21,500           46,379    
Operating expenses                                               (14,342)         (13,761)         (24,989)   
Operating profit                                      7            5,132            7,739           21,390    
Finance income                                                       269              321              637    
Finance costs                                                        (80)            (206)            (339)   
Profit before taxation                                             5,321            7,854           21,688    
Taxation                                                          (1,420)          (1,784)          (5,481)   
Profit for the year from continuing operations                     3,901            6,070           16,207    
Discontinued operation                                                                                        
Loss from discontinued operation                     10              (48)             (72)             (74)   
Profit for the year                                                3,853            5,998           16,133    
Attributable to:                                                                                              
Owners of Kumba                                                    2,943            4,586           12,335    
Non-controlling interests                                            910            1,412            3,798    
                                                                   3,853            5,998           16,133    
Basic earnings/(loss) per share                                                             
attributable to the ordinary equity                                                         
holders of Kumba (Rand per share)                                                           
From continuing operations                                          9.36            14.59            38.86    
From discontinued operation                                        (0.15)           (0.22)           (0.23)   
Total basic earnings per share                                      9.21            14.37            38.63    
Diluted earnings/(loss) per share                                                           
attributable to the ordinary equity                                                         
holders of Kumba (Rand per share)                                                           
From continuing operations                                          9.29            14.49            38.60    
From discontinued operation                                        (0.15)           (0.22)           (0.23)   
Total diluted earnings per share                                    9.14            14.27            38.37    
                                                             
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
for the period ended
                                                                Reviewed         Reviewed          Audited    
                                                                6 months         6 months        12 months    
                                                                 30 June          30 June      31 December     
Rand million                                                        2018             2017             2017    
Profit for the period                                              3,853            5,998           16,133    
Other comprehensive profit/(loss) for the year                       429              (70)            (454)   
Exchange differences on translation of foreign operations1           429              (70)            (454)   
                                                                                                              
Total comprehensive income for the year                            4,282            5,928           15,679    
Attributable to:                                                                                              
Owners of Kumba                                                    3,271            4,533           11,989    
Non-controlling interests                                          1,011            1,395            3,690    
                                                                   4,282            5,928           15,679    
1 There is no tax attributable to items included in other comprehensive income and all items will be 
  subsequently reclassified to profit or loss.                                                    

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended                                  
                                                                Reviewed         Reviewed          Audited    
                                                                6 months         6 months        12 months    
                                                                 30 June          30 June      31 December     
Rand million                                                        2018             2017             2017    
Total equity at the beginning of the year                         45,546           36,536           36,536    
Changes in share capital and premium                                                                          
  Treasury shares issued to employees under                                                  
  employee share incentive schemes                                    57               82              121    
  Purchase of treasury shares                                        (14)             (61)             (61)   
Changes in reserves                                                                                           
  Equity-settled share-based payment                                  51               52              135    
  Vesting of shares under employee share                                                     
  incentive schemes                                                  (57)             (82)            (121)   
  Total comprehensive income for the year                          3,271            4,533           11,989    
  Dividends paid                                                  (4,831)               -           (5,144)   
Changes in non-controlling interests                                                                           
  Total comprehensive income for the year                          1,011            1,395            3,690    
  Dividends paid                                                  (1,502)               -           (1,599)   
Total equity at the end of the year                               43,532           42,455           45,546    
Comprising                                                                                                    
Share capital and premium (net of treasury shares)                   (11)             (93)             (54)   
Equity-settled share-based payment reserve                           163              138              186    
Foreign currency translation reserve                               1,244            1,208              916    
Retained earnings                                                 31,849           31,121           33,721    
Shareholders' equity                                              33,245           32,374           34,769    
  Non-controlling interests                                       10,287           10,081           10,777    
Total equity                                                      43,532           42,455           45,546    
Dividend (Rand per share)                                                                                     
Interim1                                                           14.51            15.97            15.97    
Final                                                                n/a              n/a            15.00    
1 The interim dividend was declared after 30 June 2018 and has not been recognised as a liability in this 
  interim financial report. It will be recognised in shareholders' equity for the year ending 31 December 2018.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the period ended
                                                                Reviewed         Reviewed          Audited    
                                                                6 months         6 months        12 months    
                                                                 30 June          30 June      31 December     
Rand million                                                        2018             2017             2017    
Cash generated from operations                                     6,874           11,726           22,432    
Net finance income                                                   237              130              461    
Taxation paid                                                     (1,340)          (3,334)          (5,883)   
Cash flows from operating activities                               5,771            8,522           17,010    
Additions to property, plant and equipment                        (1,429)          (1,071)          (3,074)   
Proceeds from the disposal of property,                                                     
plant and equipment                                                    1               21               27    
Cash flows utilised in investing activities                       (1,428)          (1,050)          (3,047)   
Purchase of treasury shares                                          (14)             (61)             (61)   
Dividends paid to owners of Kumba                                 (4,831)               -           (5,144)   
Dividends paid to non-controlling shareholders                    (1,502)               -           (1,599)   
Net interest-bearing borrowings repaid                                 -           (4,500)          (4,500)   
Cash flows utilised in financing activities                       (6,347)          (4,561)         (11,304)   
Net (decrease)/increase in cash and cash equivalents              (2,004)           2,911            2,656    
Cash and cash equivalents at beginning of year                    13,874           10,665           10,665    
Foreign currency exchange (losses)/gains                                                    
on cash and cash equivalents                                        (206)             (90)             550    
Cash and cash equivalents at end of year                          11,664           13,486           13,874    

HEADLINE EARNINGS
for the period ended
                                                                Reviewed         Reviewed          Audited    
                                                                6 months         6 months        12 months    
                                                                 30 June          30 June      31 December     
Rand million                                                        2018             2017             2017    
Reconciliation of headline earnings                                                                           
Profit attributable to owners of Kumba                             2,943            4,586           12,335    
Impairment reversal                                                    -                -           (4,789)   
Net loss on disposal and scrapping of property,        
plant and equipment                                                   62               32               63    
                                                                   3,005            4,618            7,609    
Taxation effect of adjustments                                       (17)              (9)           1,309    
Non-controlling interests in adjustments                             (11)              (6)             810    
Headline earnings                                                  2,977            4,603            9,728    
Headline earnings (Rand per share)                                                                            
Basic                                                               9.31            14.42            30.47    
Diluted                                                             9.25            14.33            30.26    
The calculation of basic and diluted earnings and      
headline earnings per share is based on the weighted   
average number of ordinary shares in issue as follows: 
Weighted average number of ordinary shares                   319,639,752      319,218,877      319,302,962    
Diluted weighted average number of ordinary shares           321,991,281      321,274,112      321,481,081    

The dilution adjustment of 2,351,529 shares at 30 June 2018 (30 June 2017: 2,055,235 and 31 December 2017: 
2,178,119) is a result of the vesting of share options previously granted under the various employee 
share incentive schemes.

NORMALISED EARNINGS
for the period ended
                                                                Reviewed         Reviewed          Audited    
                                                                6 months         6 months        12 months    
                                                                 30 June          30 June      31 December     
Rand million                                                        2018             2017             2017    
Reconciliation of normalised earnings                                                                         
Headline earnings attributable to owners of Kumba                  2,977            4,603            9,728    
Net utilisation of deferred tax asset                                 72                -               14    
                                                                   3,049            4,603            9,742    
Non-controlling interests in adjustments                             (17)               -               (3)   
Normalised earnings                                                3,032            4,603            9,739    
Normalised earnings (Rand per share)                                                                          
Basic                                                               9.49            14.42            30.50    
Diluted                                                             9.42            14.33            30.29    
The calculation of basic and diluted normalised                                              
earnings per share is based on the weighted average                                          
number of ordinary shares in issue as follows:                                               
Weighted average number of ordinary shares                   319,639,752      319,218,877      319,302,962    
Diluted weighted average number of ordinary shares           321,991,281      321,274,112      321,481,081    

This measure of earnings is specific to Kumba and is not required in terms of International Financial 
Reporting Standards or the JSE Listings Requirements. Normalised earnings represents earnings from the 
recurring activities of the group.                                                        

Normalised earnings is determined by adjusting the headline earnings attributable to the owners of Kumba 
for non-recurring expense or income items incurred during the year. The recognition and utilisation of the 
deferred tax asset is a non-recurring item and has therefore been adjusted in determining normalised
earnings.                                                        

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the six months ended 30 June 2018
1.  CORPORATE INFORMATION
    Kumba is a limited liability company incorporated and domiciled in South Africa. The main business of Kumba, 
    its subsidiaries, joint ventures and associates is the exploration, extraction, beneficiation, marketing, 
    sale and shipping of iron ore. The group is listed on the JSE Limited (JSE).

    The condensed consolidated interim financial statements of Kumba and its subsidiaries for the six months 
    ended 30 June 2018 were authorised for issue in accordance with a resolution of the directors on 20 July 2018.

2.  BASIS OF PREPARATION
    The condensed consolidated interim financial statements have been prepared under the supervision of 
    BA Mazarura CA(SA), Chief financial officer, in accordance with IAS 34 Interim Financial Reporting and the 
    South African Companies Act No 71 of 2008, the SAICA Financial Reporting Guides as issued by the Accounting 
    Practices Committee, the Financial Pronouncements as issued by Financial Reporting Standards Council and in 
    compliance with the JSE Listings Requirements for interim reports.

    The condensed consolidated interim financial statements have been prepared in accordance with the historical 
    cost convention except for certain financial instruments, discontinued operations and disposal group held for 
    sale, share-based payments, and biological assets which are stated at fair value, and are presented in Rand, 
    which is Kumba's functional and presentation currency. All financial information presented in Rand has been 
    rounded off to the nearest million.

    2.1. Going concern
         In determining the appropriate basis of preparation of the condensed consolidated interim financial 
         statements, the directors are required to consider whether the group can continue in operational 
         existence for the foreseeable future. The financial performance of the group is dependent upon the 
         wider economic environment in which the group operates. Factors exist which are outside the control 
         of management which can have a significant impact on the business, specifically the volatility in 
         the Rand/US$ exchange rate and the iron ore price.

         These condensed consolidated interim financial statements are prepared on a going concern basis. The Board 
         is satisfied that the group is sufficiently liquid and solvent to be able to support the current operations 
         for the next 12 months.

    2.2. Accounting judgements, estimates and assumptions
         In preparing these condensed consolidated interim financial statements, the significant judgements made by 
         management in applying the group's accounting policies and the key sources of estimation uncertainty are 
         consistent with those applied to the consolidated financial statements for the year ended 31 December 2017, 
         except as disclosed below.

    2.3. Accounting policies
         The accounting policies and methods of computation applied in the preparation of these condensed 
         consolidated interim financial statements are in terms of International Financial Reporting Standards 
         and are consistent with those accounting policies applied in the preparation of the previous 
         consolidated annual financial statements.

         2.3.1. New standards effective for annual periods beginning on or after 1 January 2018
                The following standards, amendments to published standards and interpretations which become 
                effective for the year commencing on 1 January 2018 were adopted by the group:

                a. IFRS 9 Financial Instruments  
                   IFRS 9 replaces IAS 39 and sets out the updated requirements for the recognition and measurement 
                   of financial instruments. These requirements specifically deal with the classification and 
                   measurement of financial instruments, measurement of impairment losses based on an expected 
                   credit loss model and closer alignment between hedge accounting and risk management practices.

                   The adoption of this new standard had no material impact on the group's earnings for the period.

                b. IFRS 15 Revenue from contracts with customers 
                   IFRS 15 replaces all existing revenue requirements in IFRS and applies to all revenue arising 
                   from contracts with customers. The standard requires an entity to recognise revenue in such a 
                   manner as to depict the transfer of goods or services to customers at an amount representing 
                   the consideration to which the entity expects to be entitled in exchange for those goods 
                   or services. 

                   The group's revenue is primarily derived from commodity sales for which the point of recognition 
                   is dependent on the contract sales terms known as the International Commercial terms (Incoterms). 
                   Under Incoterms (i.e. cost, insurance and freight (CIF) and cost and freight (CFR)), the seller 
                   is required to contract, and pay, for the costs and freight necessary to bring the goods to a 
                   named port of destination. 
                        
                   Consequently, the freight service on export commodity contracts with CIF/CFR Incoterms represents 
                   a separate performance obligation as defined under IFRS 15 and as such, a portion of the revenue 
                   earned under these contracts, representing the obligation to perform the freight service, is 
                   deferred and recognised when this obligation has been fulfilled, along with the associated costs.

                   The impact of applying the standard in the period ended 30 June 2018 is:
                   - Net increase in profit of R6 million
                   - No material impact on opening retained earnings, therefore prior year figures were not restated
                   - Increase in current assets of R106 million
                   - Increase in current liabilities of R100 million

         2.3.2. New standards, amendments to existing standards and interpretations that are not effective and have 
                not been early adopted
                At the date of authorisation of these interim financial statements, the following standards, amendments 
                to existing standards and interpretations were in issue but not yet effective for the current year and 
                have not been early adopted.

                These standards, amendments and interpretations will be effective for annual periods beginning after 
                the dates listed below:
                IFRS 16 Leases effective for years commencing on or after 1 January 2019
                IFRS 16 Leases will become effective for the group from 1 January 2019, replacing IAS 17 Leases. The group 
                has completed its impact assessment and is continuing to work on the necessary changes to internal 
                systems and processes.

                The group has elected to adopt the modified retrospective transition approach and therefore the cumulative 
                effect of transition to IFRS 16 will be recognised in retained earnings and the comparative period will not 
                be restated. The principal impact of IFRS 16 will be to change the accounting treatment by lessees of 
                leases currently classified as operating leases. Lease agreements will give rise to the recognition by 
                the lessee of a right of use asset and a related liability for future lease payments. 

                The most significant expected impact of transitioning to IFRS 16 based upon our current contractual 
                arrangements is estimated to be recognising a lease liability of approximately R400 million to 
                R500 million and a right of use asset of approximately R300 million to R400 million, with the 
                balance representing an adjustment to retained earnings. The right of use asset will principally relate to 
                rental of properties and mining equipment.

                Depreciation of the right of use asset and the finance charge representing the unwinding of the discount 
                on the lease liability will be recorded in the statement of profit and loss. The impact of the standard 
                on EBITDA and profit before tax following adoption is not expected to be significant although the 
                presentation of the cost of leases in the statement of profit and loss will change.

                Management will continue to assess the implications of IFRS 16 on any new contracts or modifications 
                to existing contracts, which may cause the financial impact to differ from the estimates provided above.

    2.4. Change in estimates
         The measurement of the environmental rehabilitation and decommissioning provisions are a key area where 
         management's judgement is required. The closure provisions are measured at the present value of the expected 
         future cash flows required to perform the rehabilitation and decommissioning. This calculation requires the 
         use of certain estimates and assumptions when determining the amount and timing of the future cash flows and 
         the discount rate. The closure provisions are updated at each reporting period date, for changes in these 
         estimates.

         The life of mine plan (LoMP) on which accounting estimates are based only includes proved and probable ore 
         reserves as disclosed in Kumba's 2017 annual ore reserves and mineral resources statement. The most 
         significant changes in the provision for 2018 arises from the change in the LoMP as well as the timing 
         of the expected cash flows for both Sishen and Kolomela mines. 

         The effect of the change in estimate of the rehabilitation and decommissioning provisions, which was applied 
         prospectively from 1 January 2018, is detailed below:                                                   
         Rand million                                           Reviewed         Reviewed          Audited    
                                                                 30 June          30 June      31 December    
                                                                    2018             2017             2017    
         Increase in environmental rehabilitation provision          137              120               77    
         Increase/(decrease) in decommissioning provision             27                1             (199)   
         (Decrease)/increase in profit after tax attributable                  
         to the owners of Kumba                                      (75)             (66)              42    
         Rand per share                                                                                       
         Effect on earnings per share attributable to                          
         the owners of Kumba                                       (0.24)            0.21             0.13    
         The change in estimate from the decommissioning provision has been capitalised to the related 
         property, plant and equipment and as a result had an insignificant effect on profit or 
         earnings per share.

3.  PROPERTY, PLANT AND EQUIPMENT
                                                                Reviewed         Reviewed          Audited    
                                                                 30 June          30 June      31 December     
    Rand million                                                    2018             2017             2017    
    Capital expenditure                                            1,429            1,071            3,074    
    Comprising:                                                                                               
      Expansion                                                      155              197              575    
      Stay-in-business (SIB)                                         369              218            1,305    
      Deferred stripping                                             905              656            1,194    
    Transfers from assets under construction to                               
    property, plant and equipment                                    237              663            1,704    
    Expansion capital expenditure comprised mainly the expenditure on the Dingleton relocation project and 
    Sishen's second modular plant. SIB capital expenditure to maintain operations was principally related 
    to infrastructure to support mining and plant operations.                                                  

4.  INVENTORY
                                                                Reviewed         Reviewed          Audited    
                                                                 30 June          30 June      31 December     
    Rand million                                                    2018             2017             2017    
    Finished product                                               1,933            1,577            1,240    
    Work-in-progress                                               4,511            3,969            4,238    
    Plant spares and stores                                        1,423            1,436            1,424    
    Current inventory transferred to assets of                                                
    disposal group classified as held for sale                         -                2                -    
    Total inventories                                              7,867            6,984            6,902    
    Non-current portion of work-in-progress inventories            3,206            3,533            2,841    
    Total current inventories                                      4,661            3,451            4,061    
    Total inventories                                              7,867            6,984            6,902    
    During the period, the group wrote down inventory by R176 million (30 June 2017: Rnil and 
    31 December 2017: R954 million). No inventories were encumbered during the year.

    Work-in-progress inventory balances which will not be processed within the next 12 months are 
    presented as non-current.                                                  

5.  NET CASH AND DEBT FACILITIES                                                  
    Kumba's net cash position at the statement of financial position dates was as follows:
                                                                Reviewed         Reviewed          Audited    
                                                                 30 June          30 June      31 December     
    Rand million                                                    2018             2017             2017    
    Net cash                                                                                                  
    Cash and cash equivalents                                     11,664           13,486           13,874    

    Movements in interest-bearing borrowings are analysed as follows:                                                 
                                                                Reviewed         Reviewed          Audited    
                                                                 30 June          30 June      31 December     
    Rand million                                                    2018             2017             2017    
    Balance at beginning of period                                     -            4,500            4,500    
    Interest-bearing borrowings repaid                                 -           (4,500)          (4,500)   
    Balance at end of period                                           -                -                -    
    The group's committed debt facilities consist of a R12 billion revolving credit facility which matures 
    in 2020. The group had undrawn committed facilities of R12 billion (30 June 2017: R12 billion and 
    31 December 2017: R12 billion) and undrawn uncommitted facilities of R8.3 billion (30 June 2017: 
    R8.3 billion and 31 December 2017: R8.3 billion).

6.  SHARE CAPITAL AND SHARE PREMIUM
    Reconciliation of share capital and share premium (net of treasury shares):
                                                                Reviewed         Reviewed          Audited    
                                                                 30 June          30 June      31 December     
    Rand million                                                    2018             2017             2017    
    Balance at beginning of period                                   (54)            (114)            (114)   
    Net movement in treasury shares under employee                                          
    share incentive schemes                                           43               21               60    
      Purchase of treasury shares                                    (14)             (61)             (61)   
      Shares issued to employees                                      57               82              121    
    Balance at end of year                                           (11)             (93)             (54)   

    Reconciliation of number of shares in issue:                                                              
                                                                Reviewed         Reviewed          Audited    
                                                                 30 June          30 June      31 December     
                                                                    2018             2017             2017    
    Balance at beginning and end of period                   322,085,974      322,085,974      322,085,974    
    Reconciliation of treasury shares held:                                                                   
    Balance at beginning of period                             2,626,977        2,797,627        2,797,627    
    Shares purchased                                              50,000          284,194          284,194    
    Shares issued to employees under the Long-Term                                            
    Incentive Plan and Kumba Bonus Share Plan                   (342,667)        (200,194)        (454,844)   
    Balance at end of period                                   2,334,310        2,881,627        2,626,977    
    All treasury shares are held as conditional awards under the Kumba Bonus Share Plan.

7.  SIGNIFICANT ITEMS INCLUDED IN OPERATING PROFIT
    Operating expenses is made up as follows:
                                                                Reviewed         Reviewed          Audited    
                                                                6 months         6 months        12 months    
                                                                 30 June          30 June      31 December     
    Rand million                                                    2018             2017             2017    
    Production costs                                               9,608            8,200           17,824    
    Movement in inventories                                         (653)             513              452    
      Finished products                                             (380)              16              224    
      Work-in-progress                                              (273)             497              228    
    Cost of goods sold                                             8,955            8,713           18,276    
    Impairment reversal                                                -                -           (4,789)   
    Mineral royalty                                                  532              648            1,239    
    Selling and distribution costs                                 3,006            2,659            5,815    
    Cost of services rendered - shipping                           1,868            1,761            4,485    
    Sublease rent received                                           (19)             (20)             (37)   
    Operating expenses                                            14,342           13,761           24,989    
    Operating profit has been derived after                                                  
    taking into account the following items:                                                 
    Employee expenses                                              2,262            1,796            4,030    
    Net restructuring cost                                             -                8                8    
    Share-based payment expenses                                      59               55              146    
    Depreciation of property, plant and equipment                  1,874            1,497            3,014    
    Deferred waste stripping costs                                  (905)            (656)          (1,194)   
    Net loss on disposal and scrapping of                                                    
    property, plant and equipment                                     62               32               63    
    Net finance (gains)/losses                                       (18)             170              216    
    Unrealised losses/(gains) on derivative                                                  
    financial instruments                                              5               42             (112)   
    Net foreign currency losses/(gains)                                                                       
      Realised                                                       112              208              310    
      Unrealised                                                    (128)             (51)              77    
    Net fair value gains on investments held by                                              
    the environmental trust                                           (7)             (29)             (59)   

8.  TAXATION
    The group's effective tax rate was 27% for the period (30 June 2017: 23% and 31 December 2017: 25%).

9.  SEGMENTAL REPORTING
    Operating segments are reported in a manner consistent with the internal reporting provided to the chief 
    operating decision-maker (CODM). The CODM, who is responsible for allocating resources and assessing 
    performance of the operating segments, has been identified as the Kumba Executive Committee.

    The Kumba Executive Committee considers the business principally according to the nature of the products 
    and services provided, with the identified segments each representing a strategic business unit. 
    'Other segments' comprise corporate, administration and other expenditure not allocated to the 
    reported segments.

    The total reported segment revenue comprises revenue from external customers, and is measured in a manner 
    consistent with that disclosed in the statement of profit and loss. The performance of the operating 
    segments is assessed based on earnings before tax, interest, depreciation and amortisation (EBITDA), 
    which is considered a more appropriate measure of profitability for the group's business. Finance 
    income and finance costs are not allocated to segments, as treasury activity is managed on a central 
    group basis.

    Total segment assets comprise finished goods inventory only, which is allocated based on the operations 
    of the segment and the physical location of the asset.

    Depreciation, staff costs, impairment of assets and additions to property, plant and equipment are not 
    reported to the CODM per segment, but are significant items which are included in EBITDA and/or reported 
    on for the group as a whole.
                                      
                                                   Products1                     Services                           
                                        Sishen   Kolomela   Thabazimbi                  Shipping                       
    Rand million                          mine       mine         mine   Logistics2   operations   Other    Total3
    Reviewed period ended                                                                                             
    30 June 2018                                                                                                      
    Statement of profit and loss                                                                                      
    Revenue from external customers     12,456      5,165            -            -        1,853       -    19,474    
    EBITDA                               7,295      3,095          (44)      (3,001)         (15)   (371)    6,958    
    Significant items included                                                                             
    in statement of profit and loss:                                                                       
      Depreciation                       1,290        563            -            5            -      16     1,874    
      Staff costs                        1,450        490            -           26            -     355     2,321    
    Statement of financial position                                                                                   
    Total segment assets                   928        463            -          496            -      46     1,933    
    (refer to note 4)                                                                                                 
    Statement of cash flows                                                                                           
    Additions to property, plant                                                                           
    and equipment                                                                                          
    Expansion capex                        155          -            -            -            -       -       155    
    Stay-in-business capex                 209        159            -            1            -       -       369    
    Deferred stripping                     723        182            -            -            -       -       905    
    Reviewed period ended                                                                                             
    30 June 2017                                                                                                      
    Statement of profit and loss                                                                                      
    Revenue from external customers     14,462      5,344            -            -        1,694       -    21,500    
    EBITDA                               8,883      3,352          (91)      (2,654)         (67)   (278)    9,145    
    Significant items included in                                                                          
    statement of profit and loss:                                                                          
    Depreciation                           950        488            1            5            -      54     1,498    
    Staff costs                          1,146        383            -           18            -     312     1,859    
    Statement of financial position                                                                                   
    Total segment assets                   552        157            -            -          807      61     1,577    
    (refer to note 4)                                                                                                 
    Statement of cash flows                                                                                           
    Additions to property,                                                                                 
    plant and equipment                                                                                    
    Expansion capex                        197          -            -            -            -       -       197    
    Stay-in-business capex                 139         73            5            1            -       -       218    
    Deferred stripping                     550        106            -            -            -       -       656    
   
    Audited year ended
    31 December 2017                                                                                                  
    Statement of profit and loss                                                                                      
    Revenue from external customers     30,252     11,723            -            -        4,404       -    46,379    
    EBITDA                              18,842      7,481          (56)      (5,806)         (83)   (820)   19,558    
    Significant items included in                                                                           
    statement of profit and loss:                                                                           
      Depreciation                       1,934      1,001           13            9            -      70     3,027    
      Staff costs                        2,522        848            -           41            -     771     4,182    
      Impairment reversal               (4,789)         -            -            -            -       -    (4,789)   
    Statement of financial position                                                                                   
    Total segment assets                   695        349            -          166            -      30     1,240    
    (refer to note 4)                                                                                                 
    Statement of cash flows                                                                                           
    Additions to property,                                                                                  
    plant and equipment                                                                                     
    Expansion capex                        575          -            -            -            -       -       575    
    Stay-in-business capex                 684        446            -            2            -     173     1,305    
    Deferred stripping                     942        252            -            -            -       -     1,194    
    1 Derived from extraction, production and selling of iron ore.
    2 No revenue is reported for this segment as its performance is reviewed with reference to volumes railed and 
      rail tariffs achieved by the mines.
    3 The amounts in the total column are inclusive of Thabazimbi mine amounts. These amounts are not included 
      in each line item in the statement of profit and loss as the Thabazimbi mine is a discontinued operation 
      and is disclosed separately.

    Geographical analysis of revenue and non-current assets                                                  
                                                                Reviewed         Reviewed          Audited    
                                                                 30 June          30 June      31 December     
    Rand million                                                    2018             2017             2017    
    Total revenue from external customers                         19,474           21,500           46,379    
    South Africa                                                   1,233            1,431            2,714    
    Export                                                        18,241           20,069           43,665    
      China                                                       10,338           11,962           27,260    
      Rest of Asia                                                 4,065            4,209            8,538    
      Europe                                                       3,657            3,326            6,626    
      Middle East and North Africa                                   181              572            1,241    
    All non-current assets, excluding investments in associates and joint ventures, are located in South Africa.

10. DISCONTINUED OPERATION AND DISPOSAL GROUP HELD FOR SALE                                                  
    All remaining plant operations at the Thabazimbi mine ceased in 2016 following the decision taken in 2015 
    to close the mine. The Thabazimbi operation continues to be classified as a discontinued operation for the 
    period ended 30 June 2018 consistent with the periods ended 30 June 2017 and 31 December 2017. 
    Analysis of the result of the Thabazimbi mine is as follows:                                                  
                                                                Reviewed         Reviewed          Audited    
                                                                6 months         6 months        12 months    
                                                                 30 June          30 June      31 December     
    Rand million                                                    2018             2017             2017    
    Operating expenses                                               (48)             (92)             (69)   
    Operating loss                                                   (48)             (92)             (69)   
    Net finance (cost)/income                                        (18)               1              (34)   
    Loss before tax                                                  (66)             (91)            (103)   
    Income tax credit                                                 18               19               29    
    Loss after income tax                                            (48)             (72)             (74)   
    Attributable to owners of Kumba                                  (37)             (55)             (56)   
    Attributable to the non-controlling interests                    (11)             (17)             (18)   
    Loss from discontinued operation                                 (48)             (72)             (74)   
    Cash flow utilised in discontinued operation                                                              
    Net cash flow utilised in operating activities                   (67)             (31)            (128)   
    Net cash utilised in discontinued operation                      (67)             (31)            (128)   
    As previously reported, SIOC and ArcelorMittal SA entered into an agreement for the transfer of the 
    Thabazimbi mine, together with the mining rights, to ArcelorMittal SA. The agreement is expected to 
    come into effect by 28 September 2018, subject to certain conditions. If all conditions precedent have 
    not been satisfied by 28 September 2018, the agreement will lapse and SIOC will proceed with closure 
    of the mine. Current operating expenses represent closure activities.

    On 10 July 2018, SIOC received the grant letter from the DMR in respect of Section 11 of the MPRDA 
    approving the transfer of the Thabazimbi mining rights to ArcelorMittal SA.

    The requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations have been 
    considered and as a result, the Thabazimbi mine assets and liabilities that will transfer to 
    ArcelorMittal SA have been presented as assets and liabilities held for sale as at 30 June 2018.

    Assets and liabilities of disposal group held for sale at
                                                                Reviewed         Reviewed          Audited    
                                                                 30 June          30 June      31 December     
    Rand million                                                    2018             2017             2017    
    Assets                                                                                                    
    Property, plant and equipment                                      -               11                -    
    Biological assets                                                 11               18               11    
    Investments held by environmental trust                          329              308              325    
    Long-term prepayments and other receivables                      496              559              459    
    Inventories                                                        -                2                -    
    Trade and other receivables                                      399              220              440    
    Total assets                                                   1,235            1,118            1,235    
    Liabilities                                                                                               
    Non-current provisions                                          (850)            (885)            (812)   
    Current provisions                                              (198)            (102)            (237)   
    Total liabilities                                             (1,048)            (987)          (1,049)   
    Net carrying amount                                              187              131              186    

11. RELATED PARTY TRANSACTIONS
    During the period, Kumba, in the ordinary course of business, entered into various sale, purchase and 
    service transactions with associates, joint ventures, fellow subsidiaries, its holding company and 
    Exxaro Resources Limited. These transactions were subject to terms that are no less favourable than 
    those offered by third parties.                                                  
                                                                Reviewed         Reviewed          Audited    
                                                                6 months         6 months        12 months    
                                                                 30 June          30 June      31 December     
    Rand million                                                    2018             2017             2017    
    Short-term deposits held with Anglo American                                            
    SA Finance Limited1 (AASAF)                                    6,250            9,628            6,899    
    - Weighted average interest rate (%)                            6.99             7.17             7.17    
    Interest earned on short-term deposits with                                             
    AASAF during the period                                          227              299              577    
    Short-term deposit held with Anglo American                                             
    Capital plc1                                                   4,021            2,910            4,907    
    Interest earned on facility during the period                     25               11               32    
    Trade payable owing to Anglo American                                                   
    Marketing Limited1 (AAML)                                        350              374              635    
    Shipping services provided by AAML                             1,868            1,788            4,462    
    Dividends paid to Anglo South Africa Capital                                            
    Proprietary Limited2                                           3,368                -            3,586    
    Dividends paid to Exxaro Resources Limited3                    1,306                -            1,390    
    1 Subsidiaries of the ultimate holding company.
    2 Holding company.
    3 Exxaro Resources Limited is SIOC's 20.62% (30 June and 31 December 2017: 20.62%) Black Economic Empowerment 
      shareholder.

12. FAIR VALUE ESTIMATION
    The carrying value of financial instruments not carried at fair value approximates fair value because of 
    the short period to maturity or as a result of market-related variable interest rates.
    
    The table below presents the group's assets and liabilities that are measured at fair value:
    Rand million                                                Level 11         Level 22         Level 33    
    Reviewed 6 months - 30 June 2018                                                                          
    Investments held by the environmental trust4                     961                -                -    
    Derivative financial instruments classified                                                  
    as cash and cash equivalents                                       -              (70)               -    
                                                                     961              (70)               -    
    Reviewed 6 months - 30 June 2017                                                                          
    Investments held by the environmental trust4                     888                -                -    
    Derivative financial instruments classified                                                  
    as cash and cash equivalents                                       -              (15)               -    
                                                                     888              (15)               -    
    Audited 12 months - 31 December 2017                                                                      
    Investments held by the environmental trust4                     952                -                -    
    Derivative financial instruments classified                                                  
    as cash and cash equivalents                                       -              244                -    
                                                                     952              244                -    
    1 Level 1 fair value measurements are derived from unadjusted quoted prices in active markets for identical 
      assets or liabilities.                                              
    2 Level 2 fair value measurements are derived from inputs other than quoted prices included within level 1 
      that are observable either directly or indirectly (i.e. derived from prices).
    3 Level 3 fair value measurements are derived from valuation techniques that include inputs that are not 
      based on observable market data.                                              
    4 Includes Thabazimbi mine's investment disclosed as asset held for sale in note 10.

13. CONTINGENT LIABILITIES
    On 29 June 2018, the South African Revenue Service (SARS) issued the group with additional income tax assessments 
    relating to a tax audit on the deductibility of certain expenditure incurred, covering the 2012 - 2014 years of 
    assessment. The group is in the process of preparing an objection to these assessments after consultation with 
    external tax and legal advisers. The group believes that these matters have been appropriately treated in the 
    results for the period ended 30 June 2018.

14. GUARANTEES
    The total guarantees issued in favour of the DMR in respect of the group's environmental closure liabilities at 
    30 June 2018 were R2.9 billion (30 June 2017: R2.8 billion and 31 December 2017: R2.8 billion). Included in 
    this amount are financial guarantees for the environmental rehabilitation and decommissioning obligations of 
    the group to the DMR in respect of Thabazimbi mine of R438 million (30 June 2017: R438 million and 
    31 December 2017: R438 million). ArcelorMittal SA has guaranteed R429 million of this amount by means 
    of bank guarantees issued in favour of SIOC.

    As a result of the annual revision of closure costs, a shortfall of R202 million arose. Guarantees in respect 
    of the shortfall will be issued in due course.

15. REGULATORY UPDATE
    Mining Charter
    The publication of the draft 2018 Mining Charter by the Minister of Mineral Resources on 15 June 2018 has been 
    noted. All parties have until the end of August to respond to the draft, following the decision by the Minister 
    of Mineral Resources to extend the public consultation period. Kumba will participate in the process through its 
    majority shareholder, Anglo American, who is preparing its submission in respect of the draft 2018 Mining Charter.

    Kumba shares the acknowledgment made by the Minerals Council that the draft 2018 Mining Charter is an improvement 
    on the draft 2017 Mining Charter. However, we have concerns surrounding several significant issues in the draft
    Mining Charter that we believe may affect the sustainability of the mining industry in South Africa, should they 
    not be reconsidered.

    Kumba has consistently affirmed its support for the Government's national transformation objectives 
    in relation to the mining industry and acknowledges its role in promoting transformation in South Africa. 
    To this end, we have a longstanding track record of driving and supporting transformation in 
    the mining industry and beyond, while contributing significantly to South Africa's economic growth and 
    development.

    Kumba believes that more work needs to be done, in consultation with all stakeholders, to create a 
    Mining Charter that promotes both investment for the long term and transformation. We look forward to the 
    ongoing discussions with the Minister, the DMR and other industry stakeholders to work towards these objectives.

16. CORPORATE GOVERNANCE
    The group subscribes to the Code of Good Corporate Practices and Conduct and complies with the recommendations 
    of the King IVTM* Report. The Board charter is aligned with the provisions of all relevant statutory and regulatory 
    requirements including among others, King IVTM*. Full disclosure of the group's compliance is contained in the 
    2017 Integrated Report.
    *Copyright and trademarks are owned by the Institute of Directors in Southern Africa NPC and all of its rights 
     are reserved.
    
17. EVENTS AFTER THE REPORTING PERIOD
    At a Special General Meeting on 10 July 2018, shareholders approved a new employee share ownership plan, called 
    Karolo, for qualifying employees of SIOC. The qualifying employees will be allocated units that are equal 
    to Kumba shares, at no cost. This scheme replaces the Envision scheme which unwound in November 2016.

    There have been no other material events subsequent to 30 June 2018, not otherwise dealt with in this report.

18. INDEPENDENT AUDITORS' REVIEW REPORT
    The auditors, Deloitte & Touche, have issued their unmodified review report on the condensed consolidated 
    interim financial statements for the six months ended 30 June 2018. The review was conducted in accordance 
    with ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity.

    A copy of the auditor's report on the condensed consolidated interim financial statements is available for 
    inspection at the Company's registered office.

    The auditor's report does not necessarily report on all the information contained in the financial results. 
    Shareholders are therefore advised that in order to obtain a full understanding of the review engagement, 
    they should obtain a copy of the auditor's report, together with the accompanying financial information 
    from the registered office.

    Any reference to future financial performance included in this announcement has not been reviewed or 
    reported on by the Company's auditors. 

    On behalf of the Board
                
    MSV Gantsho                     TM Mkhwanazi
    Chairman                        Chief executive
    
    20 July 2018
    Pretoria


NOTICE OF INTERIM CASH DIVIDEND
At its Board meeting on 20 July 2018, the directors approved a gross interim cash dividend of 1,451 cents 
per share on the ordinary shares from profits accrued during the period ended 30 June 2018. The dividend has 
been declared from income reserves.

The dividend will be subject to a dividend withholding tax of 20% for all shareholders who are not exempt from 
or do not qualify for a reduced rate of withholding tax. The net dividend payable to shareholders after withholding 
tax at a rate of 20% amounts to 1,160.80000 cents per share.

The issued share capital at the declaration date is 322,085,974 ordinary shares.

The salient dates are as follows:
Declaration date                                                               Tuesday, 24 July 2018    
Last day for trading in order to participate in 
the interim dividend (and change of address or dividend instructions)        Tuesday, 14 August 2018    
Trading ex-dividend commences                                              Wednesday, 15 August 2018    
Record date                                                                   Friday, 17 August 2018    
Dividend payment date                                                         Monday, 20 August 2018    

Share certificates may not be dematerialised or rematerialised between Wednesday, 15 August 2018 and 
Friday, 17 August 2018, both days inclusive.

By order of the Board
 
CD Appollis
Company secretary 

24 July 2018

ADMINISTRATION

REGISTERED OFFICE
Centurion Gate Building 2B
124 Akkerboom Road
Centurion, 0157 
Republic of South Africa 
Tel: +27 12 683 7000
Fax: +27 12 683 7009

TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited 
Rosebank Towers, 15 Biermann Avenue
Rosebank, 2196, South Africa
PO Box 61051, Marshalltown, 2107

SPONSOR TO KUMBA
RAND MERCHANT BANK 
(a division of FirstRand Bank Limited)

DIRECTORS
Non-executive: MSV Gantsho (Chairman), MS Bomela, DD Mokgatle, NS Dlamini, 
SG French (Irish), TP Goodlace (British/South African), NB Langa-Royds, SS Ntsaluba, 
ST Pearce (Australian), BP Sonjica
Executive: TM Mkhwanazi (Chief executive), BA Mazarura (Chief financial officer)

COMPANY SECRETARY
CD Appollis

COMPANY REGISTRATION NUMBER
2005/015852/06
Incorporated in the Republic of South Africa

INCOME TAX NUMBER
9586/481/15/3

JSE code: KIO
ISIN: ZAE000085346
('Kumba' or 'the Company' or 'the group')

24 July 2018

www.angloamericankumba.com
A member of the Anglo American plc group
www.angloamerican.com

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