Kumba production dips 15%, sales down 26% in Q2

JOHANNESBURG (miningweekly.com) –  JSE-listed Kumba Iron Ore’s production decreased by 15% to 8.9-million tons in the second quarter of this year, compared with the 10.3-million tons of iron-ore produced in the second quarter of 2015.

The iron-ore producer’s sales volumes also decreased by 26% to 9.6-million tons in the quarter under review, from 13-million tons during the second quarter of 2015.

Logistics volumes for the second quarter were impacted by low stock levels through the logistics chain as a result of lower production. At Kumba’s mines, finished product stock reduced to 1.1-million tons in the second quarter of 2015 and port stockpiles to 1.2-million tons, while total finished product stock decreased to 2.3-million by June 30, from 3.9-million tons in the prior comparable period.

Kumba released its production and sales report for the second quarter, on Wednesday, noting that, to position the company to withstand the “significant decrease” in iron-ore prices, it had revised the Sishen mine plan and reconfigured the pit to a lower-cost shell.

“Sishen’s operations were impacted by the implementation of the revised mine plan, which effectively halved mining volumes and resulted in a 31% reduction in the number of permanent employees and contractors,” the company said.

As a result, production at Sishen for the quarter decreased by 21% to 5.7-million tons from 7.2-million tons in the prior comparable period, while the volume of waste mined reduced by 47% to 31-million tons from 58-million tons in the second quarter of 2015.

The company stated that Sishen’s run rates were affected by the significant restructuring process, which had started in the first quarter of the year and had been substantially completed. Kumba added that the mine’s run rates were also affected by higher-than-normal levels of rainfall and safety incidences including a fatal incident in May which resulted in the issuing of a Section 54 notice.

Further, the iron-ore producer said the “successful restructuring” process had increased mine flexibility and run rates on key operating parameters which had resulted in a marked improvement during June 2016.

Total tons handled and ex-pit ore increased by 28% and 38% respectively from May to June, in support of the guided production level of 27-million tons for the full year.

Meanwhile, Kumba’s Kolomela operation produced 3.2-million tons of iron-ore for the quarter under review, a 10% increase from the 2.9-million tons produced in the prior comparable period.

Waste mining at Kolomela decreased to 12.5-million tons from 13.2-million tons in 2015, in line with the optimisation of the mine. The company pointed out that Kolomela’s plant efficiencies and throughput continued to improve in line with the mine’s full-year production target of 12-million tons for 2016.

Further, processing activities at Kumba’s Thabazimbi mine ended on March 31, following the cessation of mining activities on September 30, 2015. “Mine closure processes are going according to plan,” the company stated.