IRON ORE MINING
Transnet sent us R2bn off track, says Kumba
SA’s largest iron ore miner lost R2bn in revenue in the first half of the year due to problems on SA’s premier railway line, including train cancellations and four derailments, Kumba Iron Ore CEO Themba Mkhwanazi said on Tuesday.
His comments are sure to sting line operator Transnet, which prides itself in running what it says is one of the world’s best heavy-haul export lines.
"The entire rail system has been under pressure. Actual load scheduling was often significantly below plan. Besides the major disruption of the derailments to our operations, there have been train cancellations and failures," he said.
"It has resulted in 2.4-million tonnes of lost opportunity. These constraints seriously impacted our overall performance and we are extremely concerned about the wider implications this has for growth of the economy, employment and investment in the country."
Kumba’s revenue for the six months to end-June fell to R19.5bn from R21.5bn the year before because of a stronger rand and weaker global iron ore prices during the period.
The R2bn lost in revenue due to the rail issues "would have gone a long way to offset currency and price headwinds", said Kumba chief financial officer Bothwell Mazarura.
Kumba reported an interim dividend of R14.51 per share, including a once-off top-up over and above its new policy of returning between 50% and 75% of headline earnings to investors. Analysts criticised the policy, saying it was not enough and was delivering dividends in line with earlier policies.
Transnet said on Tuesday it had deployed 300 new wagons to the line servicing Kumba and the Assmang iron ore mines shared by African Rainbow Minerals and Assore, and that it was not in breach of any contracts with Kumba.
"Penalties are payable if annual contract commitments are not met. Transnet did not have to pay any penalties in the previous financial year and all contractual commitments have been met to date," it said.
Transnet said it noted that Kumba had reported a loss of 2.4-million tonnes due to derailments, "but this is incorrect".
"Penalties are payable if annual contract commitments are not met. Transnet did not have to pay any penalties in the previous financial year and all contractual commitments have been met to date,” it said.
“Transnet also notes with concern that Kumba reported a loss of 2.4-million tonnes due to derailments but this is incorrect,” it said, adding its data showed a gross loss of 2.898-million tonnes due to trains cancelled by Transnet offset by recoveries by the parastatal of 1.014-million tonnes, leaving a net loss of 1.884-million tonnes.
“Another important factor that was not mentioned is that Kumba cancelled trains from 1 January 2018 to 30 June 2018 for various reasons. The cancelled volumes by Kumba were 393,200 tons,” it said.
Both sides are working on a recovery plan and once that was finalised, Kumba wanted to hold discussions with Transnet about its expansion plans at its operations in the Northern Cape, Mkhwanazi said.