kumba iron ore limited

Document Sample
kumba iron ore limited Powered By Docstoc
					chapter 6       company listings

kumba iron ore limited                                                            DEtAilS: Lakefield Office Park, 272 West Avenue, Extension 189, Centurion 0175
                                                                                  P O Box 9679, Centurion 0046 | |

        kumbA iron orE limitED (kumbA) iS A                                    thE wAy forwArD:                               are negotiated annually with the major
      SubSiDiAry of thE AnGlo AmEriCAn PlC                                     opportunities & challenges                     international steel producers. Histori-
                                                                               The seaborne market is responsible for a       cally Kumba has followed these inter-
         GrouP AnD thE only PurE PlAy iron
                                                                               large proportion (more than 88%) of the        national price settlements in its annual
       orE ComPAny on thE JSE limitED (JSE).
                                                                               group’s revenue. Strong growth in steel de-    price negotiations with its clients.
                                                                               mand, primarily from China, and increas-         With skilled and committed sustain-
                                                                               ing supplier consolidation over the past       able development teams in place, Kumba
GoinG unDErGrounD toDAy:                                                       decade have driven the recent record price     will continue to build on creating a group
Current activities and structures                                              increases for seaborne iron ore. The group     that is rooted in South Africa but is global
Kumba Iron Ore Limited (Kumba) is a member of the Anglo American               exports iron ore to 30 customers in more       in its implementation of best practices,
plc group that came into existence when the iron ore assets of Exxaro          than 10 countries. Some 37% of Kumba’s         that will focus on economic, social and
Resources Limited, formerly Kumba Resources Limited, were unbundled            export tonnage is sold to customers in         environmental criteria, and that will de-
and listed separately on the JSE in November 2006. It is the only pure play    China, 27% in the rest of Asia and 36%         liver sustainable prosperity.
iron ore company on the JSE Limited (JSE) and a fully empowered com-           in Europe.                                       In formulating a group-wide approach
pany in terms of the 2014 equity ownership requirements set out in the            Despite the preoccupations and activi-      to sustainable development and its inex-
Mining Charter. Shareholders include the Industrial Development Cor-           ties of the unbundling process, the group’s    tricable component of local economic
poration (13,2%), Anglo American (64,1%) and minorities (22,7%).               strong value system and inherent strengths     development, Kumba is guided by the re-
  The non-executive chairman of the board is Lazarus Zim. Non-ex-              have enabled it to achieve record produc-      quirements of South African legislation,
ecutive directors include Philip Baum, Gert Gouws, Peter Matlare, Dolly        tion figures and keep its expansion projects   recommendations on corporate govern-
Mokgatle, Allen Morgan, and Nkosana Moyo. Executive directors are              in line with development schedules.
Ras Myburgh (chief executive officer) and Vincent Uren (chief financial           Its business is impacted by effective
officer).                                                                      logistics and sound infrastructure. As a
  Kumba Iron Ore’s beneficiated Sishen ore is a sought-after product           result it works with Transnet to ensure
because of its consistent quality, high iron content, resistance to physical   its growing transport and infrastructural
degradation during transportation and handling, and very low moisture          demands are met. Developments include
content. The ore also enhances efficiency in most blast furnaces. For these    Transnet’s upgrading and expansion
reasons the group is a preferred supplier to many customers worldwide.         of the Sishen-Saldanha export channel.
  The company operates two opencast mines in South Africa – Sishen             Kumba does not own or operate any of its
Mine and Thabazimbi Mine.                                                      logistical chain assets and exports its iron
                                                                               ore to its international customers. Labour
l o o kin G b A C k :                                                          and other operational risks associated
Defining moments in the history of the company                                 with management of the rail operators’
Kumba Iron Ore Limited was registered as a legal entity in May 2005            assets therefore fall outside the scope of
with no trading taking place until November 2006.                              the group’s direct control and may impact
  Through the unbundling transaction Kumba has satisfied the empow-            on its results.
erment ownership requirements of the Mining Charter. Kumba started                The focus of Kumba is to maximise
the process of converting the old order mining rights to new order mining      opportunities represented by its substan-
rights before the effective date of the transaction.                           tial existing brownfields and greenfields
  Against the background of a market for seaborne iron ore that is pro-        project pipeline, while taking advantage
jected to remain attractive for some years, Kumba’s secure access to high      of the current and projected strength in
quality reserves and to existing infrastructure provides the basis from        seaborne iron ore markets.
which to rapidly expand its production capacity. Proven reserves and re-          While typically iron ore prices lag the
sources can support an increase in production from the current 32 Mtpa         steel commodity cycle by approximately
to approximately 70 Mtpa by 2015.                                              18 months, prices for this commodity

16 4 DE E P S A A celebration of mining in South Africa
intErEStinG fACtS
AnD fiGurES

kumba resources was named
‘the best South African mining
company to work for by a com-
prehensive independent survey
for three successive years.

kumba iron ore is working                                        ance and international benchmarks such        job losses due to lower carrying capacity.
closely with transnet, which is
                                                                 as the Global Reporting Initiative.           These plants are cut and processed into
currently engaged in expand-
                                                                   It will therefore report to stakehold-      various products, including charcoal,
ing the capacity of the Sishen-
                                                                 ers on an integrated triple bottom-line       firewood and compost.
Saldanha export channel to
give effect to an agreement,                                     basis as part of its annual reporting and       During November 2006 the project re-
concluded in february 2005, to                                   has developed a tiered approach to en-        ceived a Nedbank Green Mining Award as
increase allocated rail tonnages                                 sure that its sustainable development         one of the national top three projects in the
to 35 mtpa. Sishen mine is con-                                  initiatives complement government’s           socio-economic category.
currently ramping up its pro-                                    identified priorities.                          The Tshwaranang Jewellery group
duction (inclusive of the SEP)                                     The group’s sustainable development         project teaches unemployed and un-
to ensure that increased output
                                                                 practices are reflected in some of the lo-    skilled people at Thabazimbi the skills
is achieved at about the same
                                                                 cal economic development community            to manufacture jewellery. With the in-
time that transnet completes
                                                                 projects that were handed over to com-        volvement of Mintek, a group of seven
its expansion works towards
the second half of 2007.           Kumba will continue to        munities in 2006.                             individuals was selected to begin the
                                   build on creating a group       Projects focus mainly on eradicat-          project. Mintek provides all the nec-
kumba iron ore aims to more        that is rooted in South       ing the indigenous invader plant, Black       essary training and equipment for the
than double its output by 2015.    Africa but is global in its   Thorn, on stock and game farms. The           students. At the end of the training pro-
the associated challenge of this   implementation of best        invader plant decreases grazing capac-        gramme students receive an accredited
opportunity is to bring online     practices                     ity on the farms, which in turn results in    qualification.
new growth projects, on time
and within budget. kumba iron
ore seeks to develop new min-
ing properties and expand its
existing operations as a means
of generating shareholder
value. new mining proper-
ties are identified through an
active exploration programme
whilst current operations are
expanded by technology ap-
plications to upgrade medium
grade iron ore.

CurrEnt finAnCiAl
=revenue for 2006 increased
by 32% to r8,7 billion, year
on year, and earnings before
interest and tax rose by 38%
to r5,4 billion. new benchmark
prices for 2007/2008 have been
settled by most of the major
iron ore producers and steel
manufacturers at 9,5% percent
for both lump and fine ore.

                                                                                                D EEP SA A celebration of mining in South Africa         16 5

Shared By: