JOHANNESBURG (miningweekly.com) – The quality of iron-ore from the Northern Cape is continuing to differentiate South Africa in the global iron-ore market.

During the first half of this year, the average realised export price of $90 per wet metric tonne (wmt) was 8% above benchmark and among the strongest in the seaborne iron-ore market.

Kumba Iron Ore’s average iron content was 63.6% while its lump-to-fines ratio remained approximately 66%.

“We continue to supply markets beyond China, including Japan, South Korea, and Europe, achieving an overall price premium of $7 per ton above the benchmark,” Kumba CEO Mpumi Zikalala told journalists during a media call in which Mining Weekly participated.

While China’s steel demand is expected to plateau over time, long-term demand for premium iron-ore is expected to continue to be positive as higher-grade products play an increasingly important role in supporting new steel capacity, particularly in India as well as South East Asia.

Moreover, ultra-high dense media separation (UHDMS), an advanced mineral processing technology being implemented by Kumba at its Sishen iron-ore mine, is expected to increase the volume of premium iron-ore to 55% of Sishen's production, up from the current 18%. At its core, UHDMS provides greater flexibility across a wider range of ore grades and densities.

Meanwhile, Sishen’s production will be lower as Kumba goes ahead with the UHDMS project tie-in, which means that Kumba’s DMS plant at Sishen will be shut down, with only Sishen’s jig plant remaining operational. The main tie-in is on track to begin next month.

Engineering is substantially concluded, and all major procurement is complete at the UHDMS project, which is now 45% complete.

To date, we have invested R5.2-billion rand in UHDMS, with the approved project capital remaining unchanged at R11.2-billion.

“The UHDMS is an investment in Kumba's future. It will improve our product quality, increase recovery from our existing resource, strengthen the competitiveness of our business, and also more critically, extend the life of the Sishen mine,” Zikalala reported.

Kolomela production will continue at normal levels and Kumba remains on track to deliver full-year production guidance of between 31-million tons and 33-million tons.

ARTIFICIAL INTELLIGENCE

Mining Weekly put this question to Kumba: Are you planning any modernisation along AI lines?

Zikalala: Great question. Firstly, I can confirm that we do have an AI strategy as a business, and, as you would imagine, some people see AI as a threat. We actually see it as an opportunity, and it’s something that we're already working on in various parts of our business. We're implementing AI to assist us to improve the safety of our people in the business and I’m pleased to say that part of the reason why we can talk about the improved safety performance is due to work that our teams have been doing around AI.

Interestingly, we’re also implementing AI from a geology perspective and, as you can imagine, geology is very important in our business. We spoke earlier in the year about the growth in both our reserves as well as our resources, and our teams are utilising AI as we progress. Because ultimately, the significant growth that we saw from a resource base is something that we'd like to convert into reserves and actually ultimately see the extension of life at both Sishen and Kolomela.

Then, secondly, from a full potential programme perspective, we are implementing AI in all the various parts of our business from a value chain perspective, touching on the mining side as well as the processing side. Pleasing for me is that when I look at the teams that we have, it's something that we fundamentally decided we will see as an opportunity going forward.

EXTERNAL ENVIRONMENT

Looking ahead, Kumba expects the external environment to remain uncertain.

“However, as always, our focus will remain firmly on the things that we can control, which is how we will unlock the next phase of value at Kumba,” said Zikalala.

“It’s an operational excellence programme, and from the initial scoping work that's been done, I believe that we have significant opportunities to build on from the stable base that we have already established.”

The focus is to lower costs; secondly, improve overall equipment effectiveness, increase yield from assets, and improve returns from capital projects.

PRODUCTION GUIDANCE

In terms of 2026 guidance, Kumba expects total production of between 31-million and 33-million tons, as it cuts back to allow for the planned UHDMS tie-in.

During the half-year to June 30, fatality-free production extended to more than ten years at Sishen and more than three years at Kolomela.

Interestingly, Kolomela began receiving wheeled renewable electricity.

Women now represent 32% of all Kumba employees and enduring value created during the half year totalled R24-billion.

The unit cost of $46/wmt was driven by external headwinds.

Earnings before interest, taxes, depreciation and amortisation were at a margin of 35% and closing net cash was R12.1-billion.

Attributable free cash flow was R1.9-billion. Return on capital employed of 26% and an interim cash dividend of R7.90 per share were declared. This totalled R2.5-billion, of which empowerment partners will receive R0.8-billion. Delivered to stakeholders was R24-billion of enduring shared value.

In the half-year, Sishen recorded its highest rainfall on record since 1963, and Kolomela its highest since 1918.