Kumba set to close its Thabazimbi mine

ANGLO American subsidiary, Kumba Iron Ore, is looking to close its Thabazimbi mine in Limpopo and this decision could see it cut more than 1 000 jobs amid difficult industry conditions.

Kumba declined by as much as 7.5 percent on the JSE on news that it had begun a restructuring process yesterday over the mine closure that is expected to affect about 800 Kumba employees and 360 contractors.

The company’s shares plunged 5.59 percent to close at R125 yesterday, paring an earlier session low of R122.45.

Kumba, which is 70 percent owned by Anglo American, said Thabazimbi was no longer viable given that it was more than 80 years old, and had over the past 15 years postponed its closure six times through a number of mine life extension plans.

It also blamed difficult mining conditions, which were a result of the inherent geo-technical complexities and exacerbated by a limited remaining iron ore resource, for the closure.

It said the high operating costs, which are due to high waste stripping requirements, and a slope failure on June 6, which had rendered the iron ore resources in the one remaining pit uneconomic to mine, had contributed to its decision to close the mine.

Norman Mbazima, Kumba’s chief executive, said the company was taking steps to ensure its business was a viable and resilient business for the long term amid the challenging environment in the iron ore industry.

“Closing a mine is a difficult and painful process and its impact cannot be taken lightly,” he added.

“We have looked at all options to further sustain the mine, having already extended its life several times in recent years, and have come to the inevitable conclusion that this mine has now come to the end of its life,” Mbazima said.

The closure comes amid tumbling commodity prices and concerns over the Chinese economy.

Kumba previously said the decreased export prices would hit its headline earnings for the half year to June.

It expects headline earnings per share to fall by between 60 percent and 63 percent compared with the previous comparative period.

Last week, the National Union Mineworkers ( NUM) threatened to go on strike to force Kumba to stop retrenching 175 workers at its operations in the Northern Cape.