Picture: REUTERS
Picture: REUTERS

Africa’s largest iron ore producer, Kumba Iron Ore, will target output of 40-million to 41-million tonnes for the next three years after Covid-19 disrupted operations at its two mines.

It dropped its forecast for 2021 by 2-million tonnes to a range of 40-million to 41-million tonnes.

Kumba, which is majority owned by Anglo American, the diversified London-based resources company, pegged its sales for this year at 39-million tonnes, the midpoint of its full-year guidance.

Production of 37-million tonnes from its flagship Sishen mine and the Kolomela mine in the Northern Cape will come in at the bottom end of its forecast of 37-million to 39-million tonnes.

The cost of ore put on ships in Saldanha will be $32/tonne.

The price of iron ore containing 62% iron is about $127/tonne delivered to the Tianjin port in China. Kumba delivers a higher grade ore called lump, which are fist-sized chunks of rock, and which fetches a premium over that price. More than two thirds of Kumba’s production is lump and the balance is fine or sand-like ore.

The Sishen mine will generate 25.5-million tonnes of ore in 2020, falling short of the 26-million tonnes target, while Kolomela will provide 11.5-million tonnes, compared with 12-million tonnes.

“To ensure that the value chain is balanced, and finished stock is maintained at optimal levels, production is likely to be closer to the lower end of the guidance range,” said Kumba CEO Themba Mkhwanazi.

The certainty on production and sales numbers for 2020 came after Transnet completed its rail and port maintenance programme, he said.

State-owned Transnet owns and operates the 861km railway line that links the iron ore mines to the Saldanha harbour.

Kumba forecast it will produce up to 42-million tonnes for the next three years.

The cost of delivering ore onto ships at Saldanha is forecast to be $34/tonne in 2021.

seccombea@businesslive.co.za

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