Analysts work angles on Kumba Iron Ore bonanza
With an increase in iron ore demand, Anglo American's Kumba Iron Ore is bringing in an outstanding R2-billion in cash flow a month - and the question of the group letting the asset go now seems absurd, according to some commentators
Not that it would be short of buyers, now that it has resolved some of its issues: settling with the South African Revenue Service, closing the unprofitable Thabazimbi mine and completing its restructuring. This week, Kumba Iron Ore's 2016 annual results showed that the company had cut the R4.6-billion net debt of the previous year. Kumba produces at about twice the cost of its competitors but delivers a premium-grade ore that is increasingly in demand. China is trying to meet its gas emissions-reduction target, and the premium iron ore produced by Kumba is a more environmentally friendly product for manufacturing steel . Kumba offers a 64%-66% grade of iron ore; the next best is about 54%. But, as Kumba CEO Themba Mkhwanazi said this week, the company produces iron ore at about $27 (R350) a ton compared to its peers, which produce at $13 to $20 a ton. Global iron ore producers produce 150million to 350million tons per year, whereas Kumba produces about 45million tons. "We operate i...
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