Kumba Iron Ore Ltd., the owner of Africa’s biggest mine producing the steelmaking raw material, said full-year profit slumped 28 percent as costs climbed, output decreased and prices declined.
Net income fell to 12.2 billion rand ($1.4 billion), from 17 billion rand a year earlier, the Johannesburg-based unit of Anglo American Plc said today in a statement. The result compares with the 12.4 billion-rand median of eight analyst estimates compiled by Bloomberg. Earnings per share excluding one-time items slid to 37.97 rand, from 53.13 rand, after the company a month ago projected a range of 36.30 to 38.80 rand.
Declining prices “had a negative effect on earnings” in addition to lower output, said Chief Executive Officer Norman Mbhazima on a call after the results. Average iron-ore export prices slid 23 percent to $122 a metric ton, the company said.
Kumba’s Sishen mine produced less ore in the fourth quarter, primarily because of a labor strike followed by low levels of employee attendance, it said on Jan. 25. Workers returned to the mine and production resumed in December.
Output at Sishen dropped 13 percent to 33.7 million tons in 2012, Kumba said. An extra 10 million to 20 million tons of mining waste will need to be extracted in 2013 because of lower output during the strike, raising costs per ton of ore mined.
Kumba fell 0.7 percent to 606.79 rand by the 5 p.m. close of trading in Johannesburg, paring a 7 percent gain so far this year.
While the company is still looking for iron-ore projects in West Africa, it has to be “very careful that what we find is something that can give value to our shareholder,” Mbhazima said. “It’s a difficult market at the moment.”
World crude-steel output this year is expected to grow at “similar levels” to 2012, when it rose 2 percent, Kumba said.
Kumba had ore reserves of 1.1 billion tons at operations including Sishen, Kolomela and Thabazimbi as of Dec. 31.
To contact the reporter on this story: Paul Burkhardt in Johannesburg at email@example.com
To contact the editor responsible for this story: John Viljoen at firstname.lastname@example.org