The mining company declared a final cash dividend of R24.20 per share, taking the total payout for the year to R46.80, 4% above the 2022 payout to shareholders. File photo
Kumba Iron Ore has declared a final dividend per share of R24.20 after raising revenues by 16% and growing headline earnings per share by 26% in a difficult year that was, however, characterised by higher prices for the commodity mainly used in the manufacture of iron and steel.
The company, which mines iron ore in the Northern Cape and runs a port operation at Saldanha in the Western Cape, realised an average free-on-board (FOB) export price of $117 (R2 212) per ton, which was 15% above benchmarks.
Kumba Iron Ore CEO Mpumi Zikalala attributed the higher price received for the year to “a rebound in iron ore markets” late in 2023. This had contributed to the group’s average realised price of $117 per wet metric ton, an increase of 3.5% on the prior year’s prices that had been affected by Covid-19-related lockdowns in China.
Earnings before interest, tax, depreciation and amortisation (Ebitda) in Kumba Iron Ore touched R45.7 billion on a 53% margin, contributing to the company’s attributable free cash flow of R14.9bn for the full-year period under review.
This enabled the board of Kumba Iron Ore to declare a final cash dividend of R24.20 per share, taking the total payout for the year to R46.80, 4% above the 2022 payout to shareholders. Attributable and headline earnings per share for the period of R70.80 and R70.80 per share lifted up from R46.64 and R56.19, respectively, per share in the prior year.
This was after the company raised the total mined tons for the year by 5% to 267.7 million tons. Total waste stripping for the period also went up 6% to 216.8 million tons, attributable to “improved operational stability” for Kumba Iron Ore.
“Waste mining reduced in the fourth quarter of 2023 following the decision to slow down production and enable the drawdown of high on-mine stockpiles to rebalance our value chain,” the company said.
The stronger operational stability for the period was attained against the backdrop of macroeconomic volatility and uncertainty, which weighed down global markets amid an escalation in geopolitical tensions and persistent cost inflation.
In South Africa, Kumba Iron Ore and other companies were hammered by load shedding and logistics constraints and this had resulted in an increase in the cost of doing business.
Increasing cost pressures and lower production volumes contributed to Sishen’s unit cost increasing to R589 per dry metric ton, while improved efficiencies and tight cost discipline at Kolomela, helped reduce the unit cost to R482 per dry metric ton,” Zikalala explained.
Unit costs of $41 per metric ton for the period had been driven by a 12.7% weaker average exchange rate of R18.45/$1 and cost savings of R1.0bn in line with the company’s targets for the year under review.
Kumba Iron Ore has nearly completed the Kapstevel South at Kolomela, it said, highlighting that the project remains on track to produce its first ore this year.
Its UHDMS project, however, remains under review as the company reprioritises to focus on reconfiguration of its operations.
Operating expenses excluding mineral royalties and the impact of the R5.4bn impairment charge in 2022 paced up 7% to R43.1bn. The increase in total expenses for the period was driven by a 13% increase in transportation and selling costs of R7.5bn due to higher Transnet tariffs and higher logistics volume.
There was also a 14% increase in repairs and maintenance, which amounted to R4.2bn for the period as well as a 7% increase in raw material and consumable costs that stood at R2.6bn for the period.
“This was offset by a 20% decrease in freight costs due to lower freight rates. In addition, operating expenses includes a 37% decrease in the capitalisation of deferred stripping costs to R1.6bn, due to mining in lower strip ratio areas and also reflects the impact of an increase in inventory levels.”
After capital expenditure of R9.9bn for the period, Kumba Iron Ore’s liquidity position closed December 2023 at R29.2bn in net cash resources and debt facilities. Shares in Kumba Iron Ore fell 2.76% on the JSE to R544.41 in afternoon trade yesterday.
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