Kumba Iron Ore has released its production and sales report for the quarter ended 31 March 2015.
The company reported that total production increased by 7% compared to Q1 2014 and was 2% lower compared to the previous quarter at 12.2 With total export sales volumes increasing by 22% compared to Q1 2014 and decreasing by 2% compared to the previous quarter at 11.5 Mt.
Due to the weak iron ore prices, Kumba plans to cut spending and rein in production costs. In recent weeks the iron ore price has fallen to below $50/tonne. The price revived to between $52 and $54 a tonne after BHP Billiton indicated on Wednesday it would slow its iron ore production expansion.
“The significant weakness in iron ore prices has necessitated a review of our business,” said Kumba.
“While a number of actions have already been implemented, further initiatives are being taken to reduce capital expenditure and lower the cost of production,” SA’s largest iron ore producer said in a statement.
Kumba’s Sishen mine increased production by 3% year on year to 8.9-million tonnes in the March quarter, 4% lower than the December quarter. The mine retained its full-year production forecast of 36-million tonnes. Kolomela mine increased output by 18% year on year to 3-million tonnes, keeping it on track to meet an annual output of 11-million tonnes.
Kumba exported 22% more tonnes compared with the same period a year ago, with sales of 11.5-million tonnes. This was because of higher output at the mines and improved logistics, the company said.