Kumba Iron trims sales forecasts after Saldanha steel plant closure

Anglo American subsidiary Kumba Iron Ore has revised its sales guidance for 2019 downwards after the announcement by ArcelorMittal SA that it will close its Saldanha steel operations.

Because of this, sales are expected to fall 1.2% to between 41.5-million tonnes and 42.5-million tonnes, from a range of 42-million tonnes to 43-million tonnes previously.

The company said it would continue to review the effect of changes to ArcelorMittal’s asset footprint, and advise the market in due course.

“Importantly, export sales contribute 94% towards the company’s total sales and Kumba’s high-quality iron-ore products are well-positioned in global markets with ongoing customer demand and a stable export order book,” the company said.

ArcelorMittal SA, Africa’s largest steelmaker, said on Monday it  concluded that Saldanha lost its structural competitive cost advantage, due mainly to high raw material costs and regulated prices. The process of winding down Saldanha’s steel operations to a state of care and maintenance will begin immediately and is expected to be completed during the first quarter of 2020, the company said.

In morning trade, Kumba’s share price was up 2.5% to R369. ArcelorMittal SA was up 2.63% to R1.95, extending Monday's  11.1% jump.

Anglo American is this week hosting an analyst and investor visit to Queensland, Australia, to provide a detailed update on the group’s bulks businesses which include Kumba Iron Ore, Minas-Rio, and the metallurgical coal operations in Australia, as well as its nickel and export thermal coal operations.

“Kumba is on an exciting journey of transformation to create value through quality and efficiency,” said Kumba CEO Themba Mkhwanazi.

“We are unlocking value from our world-class assets, by leveraging our capabilities and technologies to ensure that Kumba provides sustainable returns through the cycle.” 

With Lisa Steyn

gernetzkyk@businesslive.co.za