Kumba Iron Ore has warned of a significant decline in its headline earnings per share (HEPS) for the year ending 31 December 2024, reflecting the ongoing challenges in logistics and pricing in the commodity market.
The mining giant forecasts a reduction in HEPS of between 43% and 48%, with expected figures between R36.60 and R40.50, compared to R70.80 in the previous year.
The company’s expected headline earnings could fall between R11.7 billion and R12.9bn, a stark contrast to the R22.7bn reported in the last financial year.
This downturn is attributed to a lower average realised free on board (FOB) export ore price coupled with a 2% decrease in sales volumes compared to the comparative period.
Further compounding Kumba's difficulties, rail performance deteriorated by 2% for the full year 2024, impacting the transportation of finished stock to the Saldanha Bay Port.
This setback translated to a 2% reduction in sales, which closed out the year at 36.3 million tons. However, this figure aligns with the company's guidance of 35-37 million tons set forth earlier.
Production levels for 2024 remained relatively stable at 35.7 million tons, closely matching the ore railed by Transnet, which stood at 35.6 million tons.
Kumba CEO Mpumi Zikalala expressed confidence in the company’s focus on operational excellence and safety while emphasising ongoing collaboration with the government and Transnet to bolster logistics performance.
“Ore railed to Saldanha Bay Port decreased by 8% compared to Q3 2024 due to a planned 15-day maintenance shutdown and unfortunate train derailments following the re-opening of the Ore Export Channel (OEC). To maintain a balanced and efficient value chain, finished stock at the mines was drawn down, and production reduced by 17% compared to Q3 2024, while sales increased by 1% to 9.1 million tons,” Zikalala said.
Looking ahead, Kumba has updated its production outlook for the period of 2025 to 2027, contingent on improvements in Transnet's logistics performance.
Zikalala confirmed expectations of production between 35-37 million tons in 2025, followed by a drop to 31-33 million tons in 2026 due to a major shutdown of the dense media separation plant.
During this phase, the company plans to rely on finished stock at Sishen to supplement the saleable product. The trajectory looks brighter again in 2027, with forecasts returning to 35-37 million tons.
“As a member of the Ore User’s Forum, Kumba has been a strong advocate for Private Sector Participation (PSP) to potentially improve the performance of the OEC through concession models. We also continue to play an active role in the National Logistics Crisis Committee to collaborate on sustainable logistics solutions,” Zikalala said.
“The Network Statement released by Transnet at the end of 2024, which sets out the rules of engagement and the access charges, is a significant step forward in terms of the liberalisation of the South African railway industry. Kumba is engaging with Transnet on how the Network Statement will be implemented in relation to the current contractual agreements for both Sishen and Kolomela.”
BUSINESS REPORT