South African iron-ore miner Kumba Iron Ore’s production increased to 10.8-million tonnes during the third quarter, ended September 30, but equipment breakdowns at the Port of Saldanha Bay and weather disruptions affected ship movements, resulting in lower sales of 10.1-million tonnes.
Owing to rail and port logistics performing below planned levels, CE Themba Mkhwanazi says the miner’s full-year production and sales are expected to be at the lower end of guidance at 40.5-million and 39.5-million tonnes, respectively.
He notes, however, that Kumba “delivered a solid operational performance owing to improved mining stability and good plant availability” during the quarter.
On the market front, steel production cuts in China have weighed on iron-ore prices in recent months.
Increased sales to markets outside of China have supported an average year-to-date realised price of $181 per wet metric tonne (wmt) for the third quarter, 17.5% above the benchmark price.
Overall, Mkhwanazi says, market recognition for the premium quality properties of Kumba’s iron-ore products, including for their carbon emission reduction properties in the steelmaking process, will remain.
Mining stability increased in the third quarter following improved pit conditions and equipment availability.
While total waste mining of 56.8-million tonnes was 3% below the 58.8-million tonnes achieved in the third quarter of 2020, Mkhwanazi notes that “good progress has been made” relative to the first two quarters of the year.
Waste stripping was driven by a 6% increase at the Sishen mine to 40.7-million tonnes and a 2% increase at Kolomela to 16.1-million tonnes.
This is a result of improvements in shovel set-up and haul truck payload, demonstrating the effectiveness of the mining recovery plan, the miner reports.
Iron-ore production continued to improve, reflecting increased plant availability and reliability, supported by Kumba’s "Stable and Capable" programme as part of its operating model and defect elimination initiatives.
Production increased by 11% to 10.8-million tonnes, with Sishen production having increased by 14% to 7.5-million tonnes and Kolomela production by 6% to 3.3-million tonnes.
Strong production, combined with Transnet Freight Rail performing below expected levels, has resulted in materially higher levels of stock at the mines.
“We, therefore, expect to limit production in the months ahead and to finish the year at the low end of the production guidance range at 40.5-million tonnes,” Mkhwanazi says.
Since the first half of the year, rising diesel prices and a slower-than-anticipated ramp-up in operational efficiencies and cost savings have led to an upward revision in Sishen’s unit cost guidance from between R410/t and R420/t to between R430/t and R440/t.
Kolomela’s unit cost guidance has been maintained at between R305/t and R315/t and total C1 unit costs remain at $40/t.
Total sales, meanwhile, improved by 9% in the period to 10.1-million tonnes relative to volumes of 9.2-million tonnes in the second quarter, despite port equipment breakdowns and weather-related disruptions.
However, total sales decreased by 9% relative to the 11.1-million tonnes sold in the comparative period.
Transnet is currently carrying out a five-week refurbishment programme at the Saldanha Bay port.
Given some interruptions experienced, Kumba warned that there was a risk of overruns to that schedule, and that as a result, the sales guidance is also expected to be at the low end of the full year range at 39.5-million tonnes.
Year-to-date, Kumba achieved an average lump:fine ratio of 69:31 and an iron content of 64.1%, which has translated into an average year-to-date realised free-on-board (FOB) export iron-ore price of $181/wmt, outperforming the average benchmark Platts 62 index FOB price of $154/wmt.