Kumba digs deep to up production

Kumba, the global iron-ore producer, has announced impressive financial results marked by a 46% increase in headline earnings and a 9% boost in production for the year ending December 31. The company has declared a final dividend of 30 rand per share and a total dividend of just over 103 rand per share. In a recent interview with CNBC Africa, Mpumi Zikalala, CEO of Kumba, provided insights into the main drivers behind these remarkable results and outlined the company's strategies for sustained growth and sustainability. The key theme of the interview centered around Kumba's strong financial performance, commitment to operational excellence, and ambitious plans for decarbonization and product quality improvement. One of the main factors contributing to Kumba's success was the surge in iron-ore prices, driven by high demand in the first half of the year. Zikalala highlighted that the company ended the year with an impressive price of 161 US dollars per dry metric ton, marking a 38% increase from the benchmark. In addition to favorable market conditions, Kumba focused on enhancing operational efficiency and cost savings, leading to a reduction of nearly a billion rand in expenses. This dual strategy of capitalizing on market dynamics and internal operational improvements has been pivotal in delivering robust financial results. Looking ahead, Zikalala emphasized Kumba's commitment to maintaining operational excellence and product quality to sustain and replicate the current performance. The company is investing in innovative technologies like ultra high dense medium separation to enhance the premium element of its product, aiming to increase it from 18 to 50 percent. Despite the anticipated moderation in prices towards the end of the year, Kumba remains optimistic about continued strong demand, especially from China's construction sector post the winter Olympics. In terms of production outlook, Kumba has set guidance focused on balancing its production pipeline and optimizing logistical operations. The company aims to maintain steady growth in production while adapting to market dynamics and internal factors. Zikalala also addressed the growing risks associated with climate change, revealing Kumba's ambitious sustainability goals. The company is targeting carbon neutrality from scope 2 emissions by 2030 and overall carbon neutrality by 2040. Investments in solar energy projects and exploration of hydrogen fuel technologies reflect Kumba's proactive approach towards decarbonization and environmental responsibility. When questioned about the future prices for iron-ore, Zikalala remained confident in the industry's fundamentals and demand drivers. While expecting some price moderation in the latter part of the year, he projected prices to remain in the triple-digit range throughout the year. The optimism surrounding the iron-ore market's future prospects mirrors Kumba's belief in sustained growth and resilience in the face of market fluctuations. In conclusion, Kumba's strong financial performance, operational focus, and ambitious sustainability initiatives position the company for continued success and growth in the global iron-ore market. With a proactive approach to decarbonization and a commitment to product quality, Kumba is setting a high standard for sustainable growth and responsible business practices in the industry.