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2023 annual results, cash dividend declaration and an update on the reconfiguration,including a section 189A process
Kumba Iron Ore Limited
Registration number: 2005/015852/06
JSE share code: KIO
ISIN: ZAE000085346
Income tax number: 9586/481/15/3
("Kumba" or "the Company" or "the group")
2023 ANNUAL RESULTS, CASH DIVIDEND DECLARATION AND AN UPDATE ON THE RECONFIGURATION,
INCLUDING A SECTION 189A PROCESS
KEY FEATURES
Committed to safety and sustainability
- The total recordable incident frequency rate improved to 0.98 from 1.55
- Relentless drive to reduce occupational hazard exposure
- Sishen 67 megawatt Solar photovoltaic on track
- R71.1 billion of shared value created
Continuing to unlock value
- Average realised FOB export price of US$117/tonne, 15% above benchmark
- Cost savings of R1.0 billion, underpins C1 unit costs of US$41/tonne
- Resilient EBITDA* margin of 53%, up from 50%
- Closing net cash* of R13.2 billion
Balanced capital allocation:
- Attributable free cash flow* of R14.9 billion, 43% higher
- Return on capital employed of 82%, up from 76%
- Final cash dividend of R24.20 per share, total cash dividends for 2023 of R46.80 per share, up 4%
* This constitutes pro forma financial information in terms of the Listings Requirements of the JSE
Limited and should be read in conjunction with the basis of preparation, refer to supplementary
non-IFRS financial measures and the corresponding report on the assurance engagement, contained in
the annual financial statements.
MPUMI ZIKALALA, CHIEF EXECUTIVE OF KUMBA, SAID:
"The safety, health and wellbeing of our people and our mine communities is our first priority. We continued
our relentless pursuit of achieving zero harm and the elimination of fatalities resulting in a significant
improvement in our total recordable injury frequency rate, while providing R71.1 billion of enduring shared
value to all our stakeholders.
"Macro-economic volatility and uncertainty continued to weigh on global markets with geopolitical tension
escalating and persistent cost inflation amidst multi-year high interest rates. Domestically, businesses were
further impacted by loadshedding and logistics constraints, increasing the cost of doing business in South
Africa.
"Over a number of years, Kumba along with other members of the Ore User's Forum have suffered significant
losses due to derailments and logistics infrastructure and equipment failures. These issues continued in 2023
and in order to rebalance our value chain, we took decisive action to slowdown overall production in the fourth
quarter of 2023 following our product stockpiles peaking at unsustainable levels. As a result, production
decreased by 5.3% to 35.7Mt, while sales increased by 1.6% to 37.2 Mt relative to 2022 when industrial action
at Transnet disrupted rail and port operations.
"Increasing cost pressures and lower production volumes contributed to Sishen's unit cost increasing to
R589/dmt, while improved efficiencies and tight cost discipline at Kolomela, helped reduce the unit cost to
R482/dmt. Our C1 unit cost of US$41/wmt reflects the benefit of a 13% weaker average exchange rate of
R18.45/US$1 and cost savings of R1.0 billion delivered in line with our target for 2023.
"A rebound in iron ore markets late in 2023 contributed to our average realised price of US$117/wmt, an increase
of 3.5% on 2022 prices. Despite these challenging conditions, Kumba delivered earnings before interest, tax,
depreciation and amortisation (EBITDA) of R45.7 billion and an EBITDA margin of 53%. This contributed to our
attributable free cash flow of R14.9 billion, and we will be paying a final cash dividend of R10.3 billion.
This represents valuable dividend income to our shareholders, including our empowerment partners, the community
development trust and our Semela employee share option scheme.
"We are committed to supporting key measures by the National Logistics Crisis Committee to improve logistics
performance and encouraged by the Cabinet's approval of the Freight Logistics Roadmap that will allow for
greater and much needed private sector participation in the logistics sector. Logistics challenges will, however,
take some time to resolve and unless we act now to align our production and cost base to current logistics
constraints, this business will not have the resilience it needs to deliver across its stakeholders.
"Following a strategic review in 2023, Kumba is reconfiguring its business to an overall lower production profile
of 35-37 Mt for the period 2024 – 2026, in line with prevailing logistics capacity. This will enable the necessary
drawdown of high on-mine stockpiles and support cost reductions that will help ensure our business remains
competitive in the long-term for the benefit of all of our stakeholders. To this end, we have identified cost
savings initiatives of R2.5 - R3.0 billion for 2024, and revised our C1 unit cost guidance to US$38 - US$40/wmt
for the next three years.
"During 2023, we already streamlined our office-based roles and given the required change to our production
footprint in the medium term, we do also need to reconfigure the size of our workforce. Therefore, despite the
extensive measures taken to mitigate the impact of the logistics challenges on our business, Kumba has announced
a proposed reconfiguration process. As the reconfiguration will, regrettably, involve job losses, it will be
carried out in consultation with our stakeholders, including trade unions and other affected, non-unionised
employees in terms of section 189A of the Labour Relations Act, 66 of 1995 (S189A).
"The potential reconfiguration of our business is expected to impact ~490 jobs (including fixed-term
employees) across Kumba's operations. The section 189A process involves a consultation period with
trade unions and affected employees and will be facilitated by the Commission for Conciliation, Mediation
and Arbitration. Only when the consultation process is concluded will the final number of impacted jobs
be known.
"In parallel, a contractor/vendor review process is underway that may see ~160 service providers/contractors
impacted. This could result in some of the contractor services being rescoped or terminated as part of the
business reconfiguration process.
"We recognise that this is a challenging time for all our people. The decision to potentially reconfigure our
business has not been taken lightly but it is necessary if we are to remain globally competitive to sustain
our mines and those who depend on them for the long term, including our employees, service partners,
communities, local businesses, and our Government through our contribution to the fiscus. As part of the
Anglo American group, we are developing an integrated social response plan that is intended to help
mitigate the socio-economic impact on affected employees, contractors and communities.
"From a project perspective, Kapstevel South at Kolomela has largely been completed and remains on track to
produce its first ore in 2024. Our UHDMS project remains under review as our priority is the reconfiguration of
the business. The changes resulting from the optimisation of the mine plan will be incorporated into the
project's technical review. Our 67 megawatt (MW) solar PV project at Sishen is progressing to plan and we are
finalising an 11MW renewable electricity wheeling contract for Kolomela. These will contribute to our 2030
Scope 2 target of reducing carbon emissions by 30%.
"Despite the logistics impact on our business, we have procured R23 billion of goods and services from black
economic empowerment suppliers in 2023, including more than R6 billion with our local host community suppliers
and invested R376 million in social development projects. Kumba currently supports 85 schools and 76 000 learners
as part of the Anglo American education programme as well as 2 300 community members at training colleges.
"In the long-term, we remain positive on the iron ore market fundamentals. The carbon emission reduction
properties of our high-quality iron ore products ensure that we are well positioned to meet the growing
demand for green steel. We are already working with more than 30% of our customers by sales volumes to develop
steel-making technology with a lower carbon footprint.
"In line with our refreshed business strategy, we are focused on ensuring our business is sustainable and
unlocking further value through the reconfiguration of our business. My priorities for Kumba in 2024 are to
maintain operational safety, stability, and capability as we transition to a lower production profile, while
improving cost competitiveness. The streamlining and optimisation of our operations will bring increased
efficiency and position Kumba for a sustainable future to the benefit of all our stakeholders."
REVENUE for the year ended 31 December
Rand million 2023 2022 % change
Revenue 86,234 74,032 16
EARNINGS PER SHARE for the year ended 31 December
2023 2022 % change
Rand per share
Earnings
Basic 70.80 46.64 52
Diluted 70.64 46.54 52
Headline Earnings
Basic 70.80 56.19 26
Diluted 70.63 56.06 26
Dividend
Interim 22.60 28.70 (21)
Final 24.20 16.30 48
SALIENT FEATURES AND OPERATING STATISTICS for the year ended 31 December
2023 2022 % change
Market information
Closing share price (Rand) 615 492 25
Market capitalisation (Rand million) 198,083 158,466 25
Net asset value attributable to owners of Kumba (Rand per share) 161.51 127.44 27
Operating statistics ('000 tonnes)
Production 35,715 37,700 (5)
Sishen 25,421 27,018 (6)
Kolomela 10,294 10,682 (4)
Sales (export) 37,159 36,621 2
Sishen mine FOR unit cost (Rand per tonne)
Unit cost 740.36 595.50 24
Cash cost 589.14 479.27 23
Kolomela mine FOR unit cost (Rand per tonne)
Unit cost 706.09 643,18 10
Cash cost 482.36 489,60 (1)
NOTICE OF FINAL CASH DIVIDEND
At its Board meeting on 19 February 2024, the directors approved a gross final cash dividend of
2,420 cents per share on the ordinary shares from profits accrued during the year ended 31 December 2023.
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,
subject to withholding tax at a rate of 20%, amounts to 1,936 cents per share.
The issued share capital at the declaration date is 322,085,974 ordinary shares.
The salient dates are as follows:
Publication of declaration data Tuesday, 20 February 2024
Last day for trading to qualify and
participate in the interim dividend Tuesday, 12 March 2024
Trading ex-dividend commences Wednesday, 13 March 2024
Record date Friday, 15 March 2024
Dividend payment date Monday, 18 March 2024
Share certificates may not be dematerialised or rematerialised between Wednesday, 13 March 2024 and
Friday, 15 March 2024 both days inclusive. Any change of address or dividend instructions must be provided
by the last day for trading.
EXTRACTS FROM THE AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023
This unaudited short form announcement is the responsibility of the directors of the Company. The information
disclosed is only a summary of the information in the full audited financial statements and does not contain
full or complete details. The full audited annual financial statements should be considered for any investment
decisions. The audited annual financial statements for Kumba have been made available via the JSE cloudlink
at https://senspdf.jse.co.za/documents/2024/JSE/ISSE/KIO/KumbaFY23.pdf and on the Company's website
http://www.angloamericankumba.com/investors/financial-results-centre.aspx. The audited financial statements are also
available for inspection at the Company's registered office during normal business hours and are available at
no charge. Alternatively, copies of the annual financial statements may also be requested from the Company's
investor relations department (https://angloamericankumba.com/investors/shareholdercommunication).
The consolidated and Company annual financial statements were audited by PricewaterhouseCoopers Inc. who issued
an unmodified audit opinion on these financial statements.
Their audit opinion, together with the accompanying annual financial statements, can be viewed on the Company's
website http://www.angloamericankumba.com/investors/financial-results-centre.aspx. Any reference to future financial
performance included in this announcement has not been audited or reported on by the Company's external auditor.
Kumba Iron Ore Limited is a member of the Anglo American plc Group
Directors
Non-executive: TP Goodlace (British/South African) (Chairperson), MS Bomela, A Jeawon, MA Jenkins, NB Langa-Royds,
TM Mkhwanazi, SS Ntsaluba, MJ Tsele
Executive: ND Zikalala (Chief Executive), BA Mazarura (Zimbabwean) (Chief Financial Officer)
Registered office: 144 Oxford Road, Rosebank, Melrose, 2196, South Africa
Transfer Secretaries: Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue,
Rosebank, 2196, South Africa, Private Bag X9000, Saxonwold, 2132
Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
For more information please visit: http://www.angloamericankumba.com
20 February 2024
Date: 20-02-2024 08:05:00
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