Picture: REUTERS
Picture: REUTERS

Kumba Iron Ore’s interim earnings, fuelled by higher iron-ore prices, would grow by at least R602m compared with 2016’s earnings of about R3bn, the JSE-listed Anglo American subsidiary said on Thursday.

Kumba, SA’s largest iron producer, reported interim headline earnings of R3.009bn and basic earnings of R2.974bn in the six months to June 2016 and in 2017 those figures would grow by a minimum of R602m "largely attributable to an increase in export iron-ore prices during the period", it said.

The interim results are due on July 25.

Iron-ore prices had come off their highs since February but had posted a small recovery "since hopes of Chinese fiscal policy loosening were sparked by intervention in the financial markets on April 21", said a Macquarie Securities report.

It noted that iron-ore prices had risen to nearly $68/tonne from below $62 since the government’s intervention.

"However, we continue to believe that as we pass peak demand season and supply of steel and iron ore both continue to rise in response to high margin incentives, then prices will resume the downtrend we have seen since late February," the report said.

Kumba has restructured its flagship Sishen mine in the Northern Cape and is producing ore below $40/tonne.

Anglo American has said it could sell its 70% stake in Kumba to focus on commodities such as platinum, diamonds and copper. It has agreed with Seriti Resources to sell its South African thermal coal mines, which supply Eskom. It is in talks to sell its export-focused coal mines in SA.

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