Kumba output gets 14% boost

Johannesburg - Kumba Iron Ore said on Thursday that in the first quarter of 2009 total production increased 14% from a year earlier to 9.3 Mt (million metric tonnes), which is 2% or 0.2 Mt, lower than production in the fourth quarter of 2008.

Releasing its production report for the quarter ended March 2009, Kumba said Sishen Mine's production increased by 1.2 Mt to 8.7 Mt for the quarter ended March 2009. The 2.0 Mt produced by the jig plant accounted for 23% of Sishen Mine's production.

The ramp up of production from the jig plant has seen a healthy increase during the quarter, reaching 806Kt in March, equivalent to an annualised rate of 9.6Mtpa. Kumba remains on schedule to achieve an annualised rate of 13Mtpa from the Jig plant during the fourth quarter of 2009

The group said although the yield from the DMS plant at Sishen Mine has improved during the quarter to 84% production was negatively impacted by the availability of feedstock. Production from Thabazimbi Mine was stable during the quarter.

It noted that the challenges faced by the global economy that led to unprecedented volatility and rapid decreases in commodity prices and iron ore sales volumes traded have continued into the first quarter of 2009.

Kumba has targeted customers in China in an attempt to redirect any lost export contract volumes from Europe and Japan. Export sales volumes into China have increase by 45% during the first quarter of 2009 from a year earlier as Kumba increased production from the Jig plant and redirected certain export sales volumes.

Finished product stockpiles at Sishen Mine, Saldanha and Qingdao ports have increased to 7.5 Mt at end March 2009, an increase of 1.7 Mt from the 5.8 Mt stockpiled at end December 2008, in line with expected sales. Of this increase, 0.6 Mt is due to domestic iron ore sales from Sishen Mine falling below contractual volumes and 1.1 Mt is due to difficult export market conditions.

The stockpiles are currently 5.2 Mt in excess of base operating levels. The decrease in domestic demand has resulted in a build up of finished product stock now occurring at Thabazimbi Mine - with stockpiles growing 0.2 Mt during the quarter to 0.7 Mt as at 31 March 2009.

Production during the first quarter was in line with plan and Kumba remains committed to increase production by some 10% during 2009 should market conditions permit, it said.

Management continues to monitor closely stock levels and will consider cut-backs in production should the extent to which demand cuts from Europe and Japan escalate and are not absorbed by China, domestic demand decreases further and physical stockpile capacity is exceeded, it concluded.

- I-Net Bridge