Reuters | February 20, 2024
The Sishen mine is the company’s flagship operation and one of the largest open pit mines in the world. Credit: Kumba Iron Ore
Kumba Iron Ore shares fell more than 5% on Tuesday after it announced plans to cut about 490 jobs, following a reduction in production as it struggles to overcome South Africa’s persistent rail bottlenecks.
In December, the Anglo American Plc unit said it was curbing production to match the limited capacity of state-owned rail operator Transnet, hit by shortages of locomotives and spares, as well as rampant cable theft and vandalism.
Stockpiles of iron ore stood at 7.1 million tons in December and the persistent challenge in moving the commodity to ports for exports has forced Kumba to cut output to between 35 million tons to 37 million tons from this year to 2026.
Kumba CEO Mpumi Zikalala said during a conference call that the proposed job cuts, combined with the restructuring of head office roles which started last September, would affect 10% of the company’s workforce. The company employed about 7,000 full-time staff, according to its 2022 annual report.
The restructuring is “necessary” for Kumba to remain competitive, the company said.
Job losses across South Africa’s mining sector due to weaker commodity prices and infrastructure challenges add pressure for the government ahead of elections due later this year.
South Africa’s official jobless rate, measured at 31.9% in the third quarter of 2023, is among the highest in the world.
On Monday, Anglo American Platinum announced plans to cut 3,700 jobs in South Africa after a sharp decline in metal prices slashed annual profit by 71%.
Kumba’s headline earnings per share rose 26% to 70.80 rand in the year ended Dec. 31, up from 56.19 rand the previous year as its high grade iron ore continues to fetch prices 15% above the benchmark rate.
(By Nelson Banya; Editing by Muralikumar Anantharaman, Clarence Fernandez and Sharon Singleton)
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