South Africa's largest iron ore producer, Kumba Iron Ore, has warned of a dip in output and reduced profits in the fourth quarter of 2008. However, the company still expects to post strong full-year results.
Kumba, which is 63% owned by the multinational Anglo-American, told shareholders the first three quarters of 2008 had been strong and resulted in the company expecting full-year headline earnings and basic earnings to be between R6.8bn and R7.5bn against the previous period’s restated R3.1bn and R3.2bn respectively.
The strong financial performance came from high iron ore prices and a weaker rand versus the dollar.
“However, the performance for the year was adversely affected in late 2008 by the unprecedented volatility in the global economy,” the company said.
“Production volumes in the fourth quarter were marginally reduced as Sishen Mine increased the quality of its production in order to secure export volumes, it said.
“In addition certain export sales volumes were lower than planned due to lower demand and limited volumes of lower quality production were sold at below contractual prices,” it added.
A worldwide economic weakness has seen a drop in production and demand for steel causing South Africa's major ferrochrome producers to mothball furnaces. Xstrata, the world’s largest supplier of ferrochrome, has shut 80% or nearly 1.4 million tonnes of installed capacity in its joint venture with South Africa’s Merafe Resources.
Kumba CEO Chris Griffith has been visiting clients in Asia and elsewhere to assess their needs and stressing the high quality of Kumba’s lumpy iron ore which, he said,
doesn't break down much during transportation and which means buyers receive a better quality material compared to other iron ore miners.
Source: MiningMx.com
No comments:
Post a Comment