Taking it easy
The Kumba Iron Ore update showed production levels dropping by 27% relative to the corresponding quarter last year. This is in line with the company looking to mine the easier and more profitable sections of its mine. When, or maybe if, iron ore prices move higher and stay there, Kumba can start mining the less profitable areas again. But in the current tough environment characterised by low prices, it makes perfect sense to mine the more profitable sections that are easier to access. That said, the moves in the Kumba share price have been wild with the share up five times since the January lows. But I think this is perhaps more to do with the planned exit by parent Anglo American rather than improved margins or iron ore prices.
Operations at Kumba’s Sishen mine in the Northern Cape.