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Oresome! Kumba posts record interim earnings and pays out more than R23bn in dividends

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)

Kumba Iron Ore is the latest Anglo American unit to post record interim earnings on the back of sizzling prices. Its shareholders have been rewarded with more than R23bn in dividends, 100% of its earnings for the period. 

Prohibition was lifted this week in South Africa just in time for Anglo boardrooms to order in some bubbly. Hot on the heels of Anglo American Platinum’s (Amplats’) record interim earnings and dividend, Kumba Iron Ore unveiled historic results of its own on Tuesday. 

The commodities cycle is red hot at the moment as the global economy rebounds from last year’s meltdown and major economies such as China start building things again at a furious pace. The cash generated from record prices for the commodities needed to build this stuff is churning directly to the bottom line of mining companies.

So, to wit, Kumba delivered a record-smashing earnings before interest, taxation, depreciation and amortisation (Ebitda) of R44.4-billion, and paid R9.2-billion to the fiscus in taxes and royalties. 

And it rewarded its shareholders with more than R23-billion in dividends, a record payout equal to 100% of its earnings, or R72.70 per share. This was 178% higher than the headline earnings it posted for the same period in 2020.

“We have earned in the interim the equivalent of what we earned the whole of last year. That gives you a sense of the scale of the earnings potential,” Kumba CEO Themba Mkhwanazi said during a conference call with journalists. 

This comes after Amplats on Monday declared a mammoth R46.4-billion interim dividend. Between them, the two Anglo units have dished out around R67-billion in dividends so far this week, and paid more than R25-billion to the National Treasury in the first six months of the year. This is one of the reasons why President Cyril Ramaphosa on Sunday was able to announce the resumption of the R350 per month social relief grant programme. Commodity prices have also taken South Africa’s terms of trade into positive territory, with hefty trade and current account surpluses. 

“Mining has come to the rescue,” Mkhwanazi noted.

And it has done so despite numerous obstacles, including rail and port snags compounded by a spell of bad weather which led Kumba previously to reduce its sales guidance for the year by one million tonnes to between 39 and 40 million tonnes.

Kumba makes money by pulling iron ore out of the ochre landscape of the Northern Cape, and Mkhwanazi said in an interview with Business Maverick that the company remains focused on that region.

“We have always said that the Northern Cape offers great opportunities for high-grade ores,” he said

And on top of the blessings of geology, the region has the added bonus of sunshine galore as Kumba looks at a possible 100MW solar plant project to reduce its carbon footprint and reliance on unreliable Eskom. Meanwhile, the sun is shining on the company’s shareholders, who will be popping celebratory corks this week. DM/BM  

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