Kumba Iron Ore said yesterday that its sales in the third quarter dropped by 12% year-on-year due to multiple equipment breakdowns at the Saldanha Port in the Western Cape.
In its production and sales report for the third quarter ended September 30, 2023, the group said the sales dropped to 8.9 million tons (Mt). The Anglo American subsidiary said adverse weather conditions also negatively affected the sales.
The group reported that it achieved a total production of 9.7Mt, which reflects an increase of 4% compared to quarter two 2023 and a 2% decrease relative to quarter three (Q3) 2022, in line with Transnet's logistics performance.
Kumba's CEO, Mpumi Zikalala said: "Although total production was 2% lower compared to the prior period of Q3 2022, we have seen a 4% increase in production since Q2 2023, due to some improvement in Transnet's rail performance, reflecting measures taken to reduce cable theft in Q3 2023," Zikalala said.
She said subject to logistics constraints, the group had maintained its full-year 2023 guidance. Both the rail and port have reopened on schedule following the Transnet annual maintenance shutdown.
Kumba said while it retained its full-year 2023 sales guidance, subject to logistics performance, it had in conjunction with its Ore User's Forum (OUF) peers, worked closely with Transnet to prepare for its annual logistics maintenance shutdown.
"The port reopened on schedule on October 15, and we were able to ramp up efficiently with improved levels of finished stock at Saldanha Bay Port ensuring that we had sufficient stock for shipments," it said.
Zikalala said improved levels of finished stock at Saldanha Bay Port ensured that Kumba had sufficient stock for shipments and was able to ramp up efficiently when the port reopened.
According to Zikalala, iron ore prices strengthened marginally in the third quarter of 2023, following signs of China's economy stabilising, underpinned by government stimulus. Low levels of iron ore inventory, reduced domestic iron ore supply, and steel scrap usage in China provided further price support.
"In addition, low levels of lump ore stock at Chinese ports and sintering cuts in September contributed to our premium product achieving a third quarter of 2023 year-to-date average realised price of $110 (R2085) per wet metric ton (wmt), 10% above the average benchmark price of $100 per wmt.
"Ongoing rail and port challenges have increased our focus on cost optimisation and initiatives to match production and optimise logistics capacity. We will continue to prioritise safe and stable operations and work with Transnet and various forums, including the OUF and National Logistics Crisis Committee, towards a sustainable logistics network to allow us to deliver long-term value to all of our stakeholders."
BUSINESS REPORT