Africa-Press – South-Africa. Anglo American subsidiary Kumba Iron Ore says rail dysfunction, including a two-week strike at Transnet, cost it more than a third of its sales in its fourth quarter to end-December, with the miner warning its socioeconomic contribution to SA remains inextricably linked to the performance of the state ports and rail operator.
While an improved performance at its Sishen mine helped lift production 3% to 10 million tonnes in the fourth quarter, sales slumped 35% year-on-year to 6.9 million tonnes, the miner said on Thursday. This occurred in the midst of a wage strike in October, as well as Transnet’s annual maintenance shutdown in November.
The wage strike had added pressure to a rail system already struggling with locomotive availability and issues including derailments and cable theft, with the Minerals Council of SA estimating in October SA was losing out on R815 million per day in bulk mineral exports, compared to average daily exports of R1.06 billion. It estimated SA would lose out on R50 billion in exports in 2022 as a result of ports and rail issues, up from R35 billion in 2022.
Kumba said on Thursday “operational headwinds” at its Kolomela operations in the Northern Cape, as well as rail constraints, had resulted in high levels of finished product, with stockpile levels having reached capacity.
“For the mining sector, including Kumba, the industry’s ability to continue contributing significantly to the fiscus, sustained employment, and delivering far-reaching socio-economic benefits are inextricably linked to Transnet improving its operational performance,” it said.
Kumba said it was actively participating in a push for joint collaborative structures between the industry and Transnet to improve that company’s performance. In December, the Minerals Council and Transnet announced they had agreed to joint measures, including an oversight panel, a recovery steering committee and channel optimisation teams for major commodities.
This occurred about two weeks after the council, in a confidential letter seen by News24, called for Transnet board to take over management, and fire CEO Portia Derby, part of what it said was an urgent need for drastic action to arrest an operational decline.
Kumba’s full year production of 37.7 million tonnes in 2022 was in line with guidance, but fell 8% year on year, but costs were better than expected as a result of a weaker rand. Sishen and Kolomela’s unit costs were R480 per tonne and R490 per tonne respectively, compared to a guidance range for the two operations of between R500 and R530.
Kumba said its premium product quality and geographically diverse customer base contributed to an average realised price of $113 per wet metric tonne, 13% above the benchmark price of $100. It added that an improving performance at Kolomela meant both its operations were well set up for 2023, although rail issues remained a persistent concern.
Kumba’s shares initially fell as much as 1.8% on Thursday, but at 11am were up 1.37% to R532.90. Click here for details on Kumba’s shares and other info.
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