KUMBA AT A GLANCE
BROAD AND MEANINGFUL OWNERSHIP AT ALL LEVELS
KUMBA IRON ORE LIMITED GROUP STRUCTURE
EXPORT DESTINATIONS AND EXPORT VOLUMES
Kumba Iron Ore Limited (Kumba or the group), a member of the Anglo American plc Group, is a leading value-adding supplier of high-quality iron ore to the global steel industry. With its headquarters in Centurion, South Africa, the group holds a 73.9% interest in and manages Sishen Iron Ore Company (Pty) Limited (SIOC) which, in turn, has three mining operations:
- Sishen mine, located near the town of Kathu in Northern Cape Province;
- Thabazimbi mine, situated in the town of Thabazimbi in Limpopo Province; and
- Kolomela mine, a new development in the vicinity of Postmasburg in Northern Cape Province, which was brought into commercial production in December 2011 and is anticipated to produce between 4 million tonnes (Mt) and 5Mt while ramping up in 2012, before reaching design capacity of 9 million tonnes per annum (Mtpa) in 2013.
Both the Sishen and Kolomela mines are long-life operations with current life of mine (LOM) estimates of 21 and 27 years respectively. Thabazimbi mine is reaching the end of its life (planned for 2016), after some 80 years of continuous operation. The Phoenix project, which is adjacent to Thabazimbi mine, is currently at a feasibility stage. Subject to board approval, this project will replace production from Thabazimbi mine. At the end of 2011, the group reported total attributable Ore Reserves of 1,197.7Mt and attributable Mineral Resources of 1,340.4Mt. These are reported in accordance with the South African Code for Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC).
Kumba produced 41.3Mt of iron ore for domestic and export markets in 2011. The export ore is railed via a dedicated iron ore rail link operated by Transnet Freight Rail (TFR), the national transport utility for rail operations, to the port of Saldanha Bay.
In 2011 the company exported 37.1Mt of iron ore from the port of Saldanha Bay to customers in countries and regions around the world, including China (68%), Western Europe (13%), Japan and South Korea (18%) and the Middle East (1%).
The group continues to invest significantly in the development and expansion of its business. In 2011 Kumba spent R5.8 billion on capital – 53% on growth projects and 47% on stay in business capital.
Kumba’s South African project pipeline is extensive, with the potential to grow production to 70Mtpa by 2019; Kolomela mine is expected to produce an additional 9Mtpa by 2013 while a further 15Mtpa could come from other Northern Cape Province operations and 5Mtpa from Limpopo Province. As much of this growth potential resides in lower-grade ore, the group is intensely focused on turning this material to account. In the year under review, Kumba announced its intention of seeking growth in other parts of Africa, in a second footprint, most notably west and central Africa, with the aim of growing production by a further 10 to 20Mtpa by 2020.
At the end of December 2011, Kumba employed 11,898 people, comprising 6,303 full-time employees and 5,595 full-time contractors. A further 4,131 fixed-term project contractors were employed on capital expenditure projects during the year.
Kumba, which is listed on the JSE Limited (JSE) in South Africa, had a market capitalisation of R161 billion at 31 December 2011, the eighth largest company listed on the JSE by market capitalisation.
The company’s largest shareholder is Anglo American plc, with a 65.2% interest. Also holding a significant stake is South Africa’s Industrial Development Corporation (IDC), a national development finance institution set up to promote economic development and growth in the country, which holds 12.9%. The balance (free float) is held largely by institutional investors in South Africa (45%), the United Kingdom (19%), North America (26%) and Europe (5%).
Achieved in a landmark transaction in 2006, SIOC is fully empowered, with a black economic empowerment (BEE) ownership of 26.1%. Through this empowerment structure, Kumba has achieved a significant and broad-based BEE shareholding as set out below. The slight increase in the BEE ownership from 2010 is as a result of the unwinding of the first phase as well as the implementation of the second five-year phase of the Envision scheme.
- Exxaro Resources Limited (Exxaro), a leading BEE company listed on the JSE, has a 19.98% stake.
- SIOC Community Development Trust (CDT) has a 3% unencumbered interest.
- The Envision employee share participation scheme has 3.1%.