Kumba Iron Ore’s output declined in the third quarter as the group kept working on its ultra-high-dense-media-separation (UHDMS) project at Sishen. However, sales grew by 3% to 10 million tonnes, aided by the use of finished stock.
CEO Mpumi Zikalala said the group delivered a resilient performance, with total production decreasing 19% to 7.5 million tonnes in the September quarter. This drop was largely due to the temporary shutdown of the Sishen dense-media-separation (DMS) plant during the UHDMS main tie-in.
UHDMS Project: A Key Driver of Long-Term Competitiveness
The R11.2 billion investment in the UHDMS project at Sishen is a critical factor for Kumba’s long-term competitiveness. The main tie-in is advancing safely and on schedule, with completion anticipated before the end of 2026.
The project’s progress is a significant development in the iron ore industry, as it aims to enhance efficiency and sustainability in mining operations. Iron ore is a key raw material for steel production, and projects like UHDMS can have a substantial impact on the industry’s future.
Market Conditions and Kumba’s Performance
Zikalala noted that market conditions eased during the quarter, as weaker Chinese steel output, squeezed mill margins, and robust seaborne supply pressured prices. Despite these headwinds, Kumba sustained a premium over benchmark prices, supported by its high-quality lump iron ore and diverse customer portfolio.
Kumba achieved an average year-to-date realized FOB export iron ore price of $86 per wet metric tonne (wmt), a 9% premium above the average benchmark price of $79/wmt.
Operational Updates and Future Prospects
Kumba’s revised full-year 2026 waste mining forecast ranges from 175-190 million tonnes, down from the previous 180-195 million tonnes range. Kolomela’s output rose 8% from the second quarter, supporting the full-year production target of roughly 10 million tonnes, while Sishen’s guidance remains steady at around 22 million tonnes.
The Sishen UHDMS project’s execution is progressing, with overall advancement at approximately 60% and construction work completed to about 50%. The main tie-in remains on schedule for completion before the end of 2026.
In addition to the UHDMS project, Kumba is also focusing on renewable energy initiatives. The company announced an offtake agreement with Envusa to receive renewable energy from a 63MW solar PV plant at Sishen. This project is expected to increase Kumba’s total renewable energy penetration to about 45% when completed in 2028.
Sishen Operations and Logistics Updates
Sishen’s ore railed to port decreased by 8% to 9.4 million tonnes, primarily due to a derailment. Despite this setback, sales increased by 3%, supported by high finished stock levels at Saldanha Bay Port, which facilitated efficient ship loading. During a 10-day logistics maintenance shutdown in October, 22km of rail line was replaced, contributing to the ongoing 517km replacement program, of which 33% is now complete.
The Sishen UHDMS project’s capital expenditure remains within the 2026 guidance of R3bn–R3.2bn, with the total project capex unchanged at R11.2bn. Upon commissioning, the converted UHDMS modules will operate alongside existing DMS modules, providing processing flexibility and supporting production and sales guidance.
