Sit­ting pretty

Finweek English Edition - - MARKET PLACE -

As ex­pected, Kumba Iron Ore’s re­sults were very good, but with one ex­cep­tion: ev­ery­body was ex­pect­ing a div­i­dend and we didn’t get one. Man­age­ment says it’s strength­en­ing the bal­ance sheet and con­sid­er­ing the tough pe­riod the com­pany just went through, one can’t blame the team. The mar­ket will get over its dis­ap­point­ment. Cost per tonne for the com­pany is now be­low $30, down from above $40. But this will rise as it’s fo­cused on min­ing the most prof­itable ore right now. How­ever, even be­low $30 this still makes the com­pany one of the more ex­pen­sive iron ore min­ers with the ma­jors pro­duc­ing at around $20 per tonne. For now, with the iron ore price above $90, it’s mak­ing great prof­its, but prices are ex­pected to slide back into the $60s – which will still be prof­itable for Kumba, but less so. That all said, un­less iron ore heads be­low $40, which I don’t ex­pect, prof­its will flow and we should see a div­i­dend in the next fi­nan­cial year.

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