JOHANNESBURG (miningweekly.com) – The benefit of South Africa’s public-private logistics collaboration is reflected by an increase in South African-mined iron-ore railed from Anglo American’s Kumba to the Port of Saldanha Bay by State-owned rail company Transnet in the six months to June 30.

Overall, this demonstrates the progress made through the public-private ore corridor restoration programme as well as the benefit of the public-private ore user’s forum in working more closely with Transnet’s operational teams to deal with upkeep requirements identified in the independent technical assessment.

In addition, because of the premium quality of South Africa’s iron-ore, Kumba managed to achieve a price 8% higher than the benchmark, despite the market environment being disrupted by US-induced tariff talk.

Interestingly, despite two second-quarter derailments, the volume of iron-ore railed to the Saldanha port increased by 4% to 18.9-million tonnes (Mt), while the average realised free-on-board (FOB) $91 per dry metric tonne (dmt) export price was pleasingly considerably above the average $84/dmt benchmark figure, mirroring the increased amount that Kumba customers are prepared to pay for South Africa’s quality ore.

The average realised FOB export iron-ore price achieved this half-year was below the $93/dmt achieved in the corresponding period of last year with last year’s average benchmark price also being a higher $86/dmt.

While production remained steady at 18.2 Mt, sales increased by 3% to 18.7 Mt, giving Kumba confidence to keep full-year guidance at 35 Mt to 37 Mt for both production and sales.

Optimisation is helping to offset inflation-related costs, resulting in unchanged full-year unit cost guidance of $39/t and capital expenditure guidance of R9.5-billion to R10.5-billion.

Encouragingly, a greater premium proportion of margin-enhancing production is on the way from Kumba’s ultra-high-dense-media separation (UHDMS) project.

Very creditably, Kumba has achieved nine-years-plus of fatality-free production at Sishen and more than two years of zero fatalities at Kolomela.

“Our strategic focus on safely and sustainably unlocking the full potential of our premium quality iron-ore assets continued to underpin our performance in the first half of the year. Our operational performance continues to improve and we have made further progress on our UHDMS project to increase the premium proportion of our production and enhance margins,” Kumba CE Mpumi Zikalala stated in a media release to Mining Weekly.

Weak global steel demand and lower iron-ore supply from Australia and non-traditional producers was partly offset by an increase in supply from Brazil.

The gradual workforce and service partner reduction has resulted in Sishen’s half-year waste mining decreasing by 9% to 68 Mt and Kolomela’s by 10% to 12.3 Mt but with full-year 166 Mt to 182 Mt being maintained.

The Johannesburg Stock Exchange-listed Kumba has advised that headline earnings for the period are likely to be between R6.8-billion and R7.3-billion and headline earnings a share are likely to be between R21.33 and R22.89 owing to the lower average realised FOB export iron-ore price and strong currency, partly offset by cost optimisation initiatives.

Kumba exports to customers in China, Japan, South Korea, and Europe and the Middle East.