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Kumba Iron Ore records bumper earning for 6 months

Mining News - Published on Thu, 16 May 2019

Image Source: Kathu
Kumba Iron Ore, Africa’s largest iron ore producer, told investors that it would record bumper earnings for the six months ending June after benefiting from high iron ore prices and a weak exchange rate. Kumba, an Anglo American subsidiary, has seen its share price spike after the collapse of a tailings dam owned by Brazil’s iron ore giant Vale in January, which has boosted iron ore prices. “Kumba is expected to deliver a stronger financial performance, underpinned by higher average iron ore export prices and a weaker average rand/US dollar exchange rate,” the company said in a trading update.

Kumba, which operates the Sishen and Kolomela mines in the Northern Cape, said it was eyeing headline earnings and basic earnings in June to gain at least R4.76 billion and ZAR 4.7 billion, respectively, from ZAR 2.97bn and ZAR 2.94bn in the same period in 2018.

The accident in January resulted in Vale suspending iron ore production and the close of mines, sending iron ore prices into a frenzy on supply fears.

Luvuyo Booi, an investment analyst at Noah Capital, said Kumba’s improved earnings were on the back of the higher iron ore prices following the Vale incident earlier this year. Booi also said that there was a good incentive for a price recovery, given that Vale’s 90 million tons-a-year capacity had been taken off the market.

Booi, referring to the unusually high number of derailments on the railway line linking Kumba’s Northern Cape mines to the Saldanha port “Kumba did not do well in the previous financial year as headline earnings and dividend per share were flat at R30/share due to derailments that affected its exports.”.

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Posted By : Rabi Wangkhem on Thu, 16 May 2019
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