Business Maverick


Kumba latest in Anglo stable to post record earnings — now it’s set to expand Sishen mine

Kumba CEO Themba Mkhwanazi. Kumba Iron Ore is the latest Anglo American unit to post record interim earnings. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

The upswing in the commodities cycle is flowing to the bottom line of miners across the board. Kumba Iron Ore is the latest company from the Anglo American stable to report record earnings. It is expanding the life of its key South African asset, though that says little about the national investment climate.

Kumba Iron Ore said on Tuesday that its profit for the year climbed 40% to R29.8-billion, of which R26-billion will be delivered to shareholders in dividends. The average price for iron ore Kumba received in 2020 was up 19% on the year before, not least because China weathered the Covid-19 pandemic better than virtually any other economy.

Kumba also paid R10.1-billion in total income tax in 2020 compared with R7.8-billion in 2019, and R3-billion in mineral royalties from R2.6-billion the year before. This reflects a wider trend, with South Africa’s mining industry being one of the very few sectors — if not the only one — that actually contributed more to the National Treasury in 2020 than it did in 2019. A shout out may be in order from Finance Minister Tito Mboweni when he delivers his budget speech on Wednesday. 

This follows the posting of huge profits and dividends by Anglo American Platinum. The Anglo bench looks pretty deep at the moment and the group’s full results will be released on Friday

Kumba, which is focused on pulling iron ore from the ochre-tinged earth in the arid Northern Cape landscape, notched some impressive milestones along the way. It has marked four years and seven months of fatality-free production and none of its employees fell ill to an occupational disease in the period under review. Kumba’s CEO Themba Mkhwanazi and Anglo CEO Mark Cutifani have made such issues central to how the group does business. 

“On a broader scale, Kumba responded quickly and comprehensively to the Covid-19 pandemic by supporting the ecosystem in which we operate, enabling us to rapidly resume safe production. Our WeCare programme, covering the four pillars of physical health, mental health, living with dignity and assisting our communities, has become part of our daily operations and supplements the essential services provided to our local communities,” Mkhwanazi said in a statement. 

The company is also expanding in South Africa, with an R3.6-billion investment approved in February to extend the life of its key Sishen mine to 2039 from 2035.

This, it must be said, is no thanks to South African government policy. The Canadian-based Fraser Institute has just published its annual survey and Investment Attractiveness Index of mining jurisdictions. It shows that South Africa has fallen to 60 out of 77 in 2020 from 40 out of 76 in 2019. New investment in South Africa’s mining sector these days is in existing operations such as Sishen, and the incentive is roaring prices, not the overall investment climate. DM/BM


Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

No Comments, yet

Please peer review 3 community comments before your comment can be posted