Kumba Iron Ore, a leading South African iron ore producer, has welcomed the new government’s commitment to addressing logistics issues that have been affecting exports. The company, part of Anglo American Plc, expressed optimism about future collaboration but acknowledged that solving the infrastructure challenges could take several years.
Kumba Iron Ore’s CEO, Mpumi Zikalala, shared her insights with reporters, highlighting that the new administration is open to working together to improve the situation. The company had previously announced plans to reduce production at its mines due to limitations in the state rail and port infrastructure necessary for transporting iron ore.
The African National Congress (ANC), which recently lost its parliamentary majority, has formed a coalition with other parties, including the pro-business Democratic Alliance (DA). President Cyril Ramaphosa has emphasized that boosting economic growth is the top priority of his administration.
Despite early indications of progress, Zikalala does not anticipate a complete turnaround of the infrastructure managed by state-owned Transnet SOC Ltd. for at least three years. An independent review of Transnet’s network is expected to be finished by the end of this quarter. Kumba Iron Ore relies on a 535-mile (861-kilometer) railway to transport iron ore to a port north of Cape Town.
In the first half of the year, Kumba Iron Ore reported a 26% drop in profit to 7.1 billion rand ($389 million), compared to the same period last year. This decline was attributed to lower iron ore prices and reduced sales volumes. The company currently has 8.2 million tons of iron ore stockpiled, with 90% stored at its mine sites. This represents an increase of 1.1 million tons over the past six months, which Zikalala noted is higher than desired.
Kumba was already engaged with the previous administration on initiatives to enhance the essential infrastructure. While the immediate goal is to work with current authorities to prevent further decline in Transnet’s performance, the company hopes for a future where port and rail assets are leased to new operators. Zikalala stressed the need for “policy reform to enable greater private sector participation.”
Kumba Iron Ore’s stance reflects a broader industry concern about the state of South Africa’s infrastructure and its impact on mining operations. The company’s proactive approach and willingness to collaborate with the new government highlight its commitment to navigating these challenges and contributing to the country’s economic development.
