Kumba Iron Ore to restructure Sishen, cut production

Shares fall in Johannesburg.

Kumba Iron Ore, majority owned by Anglo American, said it will restructure Africa’s biggest mine for the steelmaking ingredient, cutting output there by 28% to combat the plunging price of the raw material. The stock fell to the lowest on record.

The new plan for the Sishen operation will target free-on-board unit costs of about $30 a metric ton and a break-even price of about $40 a ton cost and freight, Centurion, South Africa-based Kumba said onTuesday in a statement. Output for 2016 will be about 26 million tons, compared with a previous plan to produce 36 million tons.

Iron ore with 62% metal content delivered to Qingdao fell 2.4% to $39.06 a dry ton yesterday, a record low in daily prices compiled by Metal Bulletin dating back to May 2009. The metal has plunged 80% since its 2011 peak.

“Our industry is under tremendous pressure with the market now pricing in a more muted trend for the iron-ore price over the medium to longer term,” chief executive officer Norman Mbazima said in the statement. “These circumstances have reinforced the need to make tough decisions for our business, that will enable it to withstand a longer period of much lower prices.”

Kumba declined as much as 11% to R35, the lowest since November 2006, and traded 8.63% lower at R36.00 at the close in Johannesburg.

©2015 Bloomberg News

COMMENTS   0

You must be signed in and an Insider Gold subscriber to comment.

SUBSCRIBE NOW SIGN IN

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Subscribe to our mailing list

* indicates required
Moneyweb newsletters

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.
INSIDER SUBSCRIPTION APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING

Follow us:

Search Articles:
Click a Company: