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NC’s Kumba expects drop in headline earnings

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The derailments affected Kumba’s export sales, which increased one percent to 9.6million tons in the six months ended June 30

File picture.

IRON-ORE producer Kumba said it expected its headline earnings to fall between 34 and 37percent for the half year to end June as a combination of a stronger exchange rate, lower export iron ore prices and derailments on the railway line linking its Sishen mine in the Northern Cape to Saldanha Bay hampered its performance.

Kumba, the world’s fourth largest iron ore producer, said in its production and sales report for the period that the earnings were likely to be between R2.884billion and R3.033bn.

The group also revised its full-year total sales guidance to between 42 and 44million tons. The company attributed the reduction in forecasted tonnage to rail performance problems experienced in the six months ended June 30.

Kumba said it had trimmed the full-year production forecast “to more closely align to rail supply levels, as part of the integrated sales and operations planning drive and focus on optimal efficiency”.

It said it was working closely with Transnet to secure delivery of the contractual capacity and to mitigate further derailments.

The derailments affected Kumba’s export sales, which increased onepercent to 9.6million tons in the six months ended June 30.

Export sales fell fourpercent compared to the first quarter. Derailments were also a factor in the 2017 financial year, despite the company reporting a sevenpercent increase in total shipments to 41.6million tons for the year. Kumba said total production increased by twopercent year-on-year, largely thanks to improved operational performance from the Sishen and Kolomela mines.

It said Sishen’s waste stripping increased by fourpercent to 44.4million tons, up from the 42.7million tons produced in the second quarter of last year. – Siseko Njobeni