Kumba Iron Ore Limited · JSE:KIO
Kumba Iron Ore — FY2024 Earnings Presentation
42 slides from Kumba Iron Ore's earnings presentation, Feb 18, 2025
Slide 1: Kumba Iron Ore 2024 Annual results
[OFFICIAL] Kumba Iron Ore 2024 Annual results 18 February 2025
Slide 2: Disclaimer
[OFFICIAL] Disclaimer This presentation is for information purposes only and does not constitute an offer to sell or No assurance can be given that such future results will be achieved; actual events or the solicitation of an offer to buy shares in Kumba. Further, it does not constitute a results ma
Slide 3: Agenda
[OFFICIAL] Agenda Business overview Mpumi Zikalala, Chief Executive Operational performance Mpumi Zikalala, Chief Executive Financial performance Bothwell Mazarura, Chief Financial Officer Looking ahead Mpumi Zikalala, Chief Executive 3
Slide 4: Strong fundamentals with pathway for value delivery
[OFFICIAL] Strong fundamentals with pathway for value delivery Unlock full value Position for a Create of core sustainable future stakeholder value Safety improved, Progressing value accretive Solid financial results with business reconfigured UHDMS project total dividends of R12.5bn Operational exc
Slide 5: 2024 business overview
[OFFICIAL] 2024 business overview Safety Attributable free cashflow 0.76 TRIFR R14.5bn 2023: 0.98 TRIFR 2023: R14.9bn Production Enduring stakeholder value 35.7Mt R57.3bn 2023: 35.7Mt 2023: R71.1bn Adjusted EBITDA¹ Dividend declared R28.1bn R12.5bn 2023: R45.7bn 2023: R15.1bn 1. Adjusted EBITDA repr
Slide 6: Record safety performance
[OFFICIAL] Record safety performance Safety Health & wellness LTI TRIFR Occupational diseases (new cases) Level 4 -5 1.74 1.55 0.98 0.80 0.76 18 8 28 17 11 0 0 1 0 0 2020 2021 2022 2023¹ 2024 2020 2021 2022 2023 2024 Lowest TRIFR on record, safety leadership Support provided to employees impacted in
Slide 7: Sustainable Mining Plan at the heart of our business
[OFFICIAL] Sustainable Mining Plan at the heart of our business Healthy environment Thriving communities Trusted corporate leader 17.5BL 13% 20% 3 048 11 088 32 000 BBBEE Inclusivity IRMA 75 & of freshwater Reduction in Total energy Jobs created Learners, Local community Level 5 & diversity ValuTrax
Slide 8: Enduring shared value of R57.3bn for our stakeholders
[OFFICIAL] Enduring shared value of R57.3bn for our stakeholders Community Government Shareholders Employees livelihoods Capital investment R9.0bn Income Owners of BEE business Salaries tax Kumba suppliers & benefits R5.9bn R12.5bn R17.3bn R6.7bn Mineral Empowerment Host community Employed from Dire
Slide 9: Operational performance
[OFFICIAL] Operational performance
Slide 10: Stable and capable operations
[OFFICIAL] Stable and capable operations Waste Ore railed to port 155.7Mt 35.6Mt 2023: 216.8Mt 2023: 36.3Mt Production Sales 35.7Mt 36.3Mt 2023: 35.7Mt 2023: 37.2Mt Finished stock 7.5Mt Mine: 92% 2023 Port: 8% Mine: 93% 2024 Port: 7% 2023: 7.1Mt 10
Slide 11: Operational excellence driving cost improvements
[OFFICIAL] Operational excellence driving cost improvements Value over volume Optimised mine plan Delivered savings production focus & improved productivity well ahead of target 40.9 Improved equipment R4.4bn 39.3 reliability & utilisation 37.7 R2.5 - 3.0bn 35.9 36.3 Fleet optimisation 35.7 35.6 35.
Slide 12: Partnerships key to improving logistics performance
[OFFICIAL] Partnerships key to improving logistics performance Challenging logistics Collaboration to improve Continued reform performance performance (Transnet & NLCC) progress Stacker Annual maintenance reclaimer 90km rail replaced repairs Regulatory reform 50km of speed restrictions lifted 39.3 4
Slide 13: Financial performance
[OFFICIAL] Financial performance 13
Slide 14: 2024 financial results
[OFFICIAL] 2024 financial results Average realised FOB price Cost savings US$92/t R4.4bn 2023: US$117/t 2023: R1bn C1 unit cost HEPS US$39/t R38.94 2023: US$41/t 2023: R70.80 Adjusted EBITDA margin¹ DPS 41% R38.67 2023: 53% 2023: R46.80 1. Adjusted EBITDA margin represents net operating profit befor
Slide 15: Iron ore started strong in 2024, closing ~$100 /dmt
[OFFICIAL] Iron ore started strong in 2024, closing ~$100 /dmt Exports partially offset weak property demand China steel stocks at seasonal lows Iron ore prices fluctuating ~$100/dmt mark China steel production, Mtpa Weekly steel inventories, Mt Platts 62 $/dmt 50 -1.6% -0.5% -1.5% CNY holiday week
Slide 16: Product & customer strategy
[OFFICIAL] Product & customer strategy Fe content (%) Geographic share of sales (%) Price premium over Platts 62 FOB ($/wmt) Lump premium+Fe Price premium 25 3 17 13 15 54 6 22 5 3 11 13 10 10 Long-term 64.1 62.3 60.8 60.3 57.7 (7) target 45 – 55% Kumba Vale BHP Rio Tinto FMG outside of China 2020 2
Slide 17: Weaker prices partially offset by cost performance
[OFFICIAL] Weaker prices partially offset by cost performance Sales volumes C1 costs Average FOB price Average R/US Inflation Freight rates 2024 36.3Mt US$39/wmt US$92/wmt R18.33 4.6% US$18/wmt 2023 37.2Mt US$41/wmt US$117/wmt R18.45 6.1% US$16/wmt Adjusted EBITDA Rm (1 968) 3,246 46,988 45,710 (17
Slide 18: Break-even price reflects cost reduction offset by timing effects & freight costs
[OFFICIAL] Break-even price reflects cost reduction offset by timing effects & freight costs Platts 62% Break-even price (US$/wmt) 1 (0) 2 (1) 74 11 (2) 1 (1) 2 61 59 61 61 2023 Opex Marketing Fe Premium SIB Total after Timing Effect Lump Currency Freight Royalties 2024 Premium controllables premium
Slide 19: Savings of R4.4bn sustaining our cost competitiveness
[OFFICIAL] Savings of R4.4bn sustaining our cost competitiveness Operating expenses (Rm) C1 cost ($/t) Optimised Contractor General1 Organisational mine plan expenses costs reconfiguration 2025 target R1.7bn R1.7bn R0.7bn R0.3bn of R2.5 – 3.0bn 72 2,726 46 105 45 383 (4,361) Cost profile 708 reduced
Slide 20: Unit cost improvement despite lower production
[OFFICIAL] Unit cost improvement despite lower production Sishen unit cost (R/t) 27 (68) 616 589 (98) 86 531 (5) +4.6% -13.8% Kolomela unit cost (R/t) 22 504 (89) 482 (58) 9 38 404 +4.6% -19.8% 2023 Inflation and Total after Reduced mining Efficiency and Production WIP and 2024 cost escalation non-c
Slide 21: Capex supports business resilience
[OFFICIAL] Capex supports business resilience Capex¹ Rbn Expansion: Kapstevel South first ore June 2024 9.9 9.5 – 10.5 UHDMS2 early works programme 9.0 1.4 – 1.6 Medium term: ~R2.0bn p.a. 3.0 1.3 SIB: 4.1 – 4.5 Safety, asset integrity & sustainability 4.5 Medium-term: ~R4.0 – 5.0bn p.a. 5.3 Deferred
Slide 22: Disciplined capital allocation
[OFFICIAL] Disciplined capital allocation Rbn ROCE 41% 17.2 Attributable free cash flow R14.5bn 21.51 2.8 8.5 2.1 Final dividend declared R6.4bn 6.4 13.2 14.7 Dividend payout ratio (FY) 100% 6.2 Dividend yield2 12% 2023 Cash flow after Base Discretionary FY 2024 Final Pro-forma Net cash sustaining d
Slide 23: Looking ahead
[OFFICIAL] Looking ahead 23
Slide 24: Lump's long-term fundamentals are strong
[OFFICIAL] Lump’s long-term fundamentals are strong Drop in direct charge share in China is temporary Lump ore supply is nearing its peak Direct Charge Ratio in China (%) Global Lump Production (Mt) 500 Replacement projects required 400 300 33 200 27.7 28.5 27.2 25.8 26.9 26.5 26.1 24.9 100 23.3 24
Slide 25: Structural drivers support higher quality premia
[OFFICIAL] Structural drivers support higher quality premia Pressure from low profitability at Chinese steel mills Industry consolidation will drive mill profitability High grade spread and profitability in China Share of top 10 steelmakers in China (%) 250 40% 60 200 30% 150 41 42 42 37 37 39 20% 3
Slide 26: UHDMS progressing to plan
[OFFICIAL] UHDMS progressing to plan Project On track to deliver modular substations update & convert first coarse and fines module in 2025 Capex phased over 5 years to 2029 Disciplined value creation IRR >30% & EBITDA margin >50% ~US$2 – 3/t product premium Premium-grade product market >50% of Sish
Slide 27: 2025 full year guidance
[OFFICIAL] 2025 full year guidance Total production (Mt) Total sales (Mt) C1 cash costs (≤US$/t1) Capital expenditure (Rbn) 2025 35 – 37 35 – 37 39 9.5 – 10.5 2026 31 – 33 40 2027 35 – 37 40 Production Waste Unit costs Strip ratio LoA Sishen ~26 Mt 140 – 150 Mt R510 – 540/dmt ~4.7 | LoA ~3.6² ~16 ye
Slide 28: Strong fundamentals with pathway for value delivery
[OFFICIAL] Strong fundamentals with pathway for value delivery World class Aligned to Operational Disciplined assets megatrends excellence value creation 28
Slide 29: Annexures
[OFFICIAL] Annexures 29
Slide 30: FY 2024 achieved price $92/wmt
[OFFICIAL] Annexure 1 FY 2024 achieved price $92/wmt1 Kumba FY 2024 realised FOB price Price drivers 109 Average market prices1: +$3/t P62 index CFR China price average: US$109 (2023: US$120/t) (18) 1 99 Fe premium average: ~US$1.82 per 1% Fe 6 (8) (2023: ~US$2 per 1% Fe) 93 Lump premium average: US
Slide 31: Sensitivity analysis
[OFFICIAL] Annexure 2 Sensitivity analysis Sensitivity analysis (1% change) – EBITDA impact (Rm) (420) Export volume 420 (587) Export price 587 (620) Currency 620 (800) (600) (400) (200) 0 200 400 600 800 Change per unit of key operational drivers, each tested independently Sensitivity analysis Unit
Slide 32: Logistics constraints impact on sales
[OFFICIAL] Annexure 3 Logistics constraints impact on sales Mt 2024 2023 % change 2H 2024 1H 2024 % change Railed to port (incl. Saldanha Steel) 35.6 36.3 (2) 17.5 18.1 (3) Sishen mine (incl. Saldanha Steel) 25.4 26.1 (3) 12.6 12.8 (2) Kolomela mine 10.2 10.2 — 4.9 5.3 (8) Total export sales1 36.3 3
Slide 33: Operating margin reflects weaker market prices
[OFFICIAL] Annexure 4 Operating margin reflects weaker market prices Rm 2024 2023 % change 2H 2024 1H 2024 % change Revenue 68 529 86 234 (21) 32 727 35 802 (9) Operating expenses1 (42 168) (45 529) (7) (19 300) (22 868) (16) Operating profit 26 361 40 705 (35) 13 427 12 934 4 Operating margin (%)1
Slide 34: Revenue analysis
[OFFICIAL] Annexure 5 Revenue analysis 2024 2023 % change 2H 2024 1H 2024 % change Export (Rm) 60 346 80 322 (25) 28 888 31 458 (8) Tonnes sold (Mt) 36.3 37.2 (2) 18.2 18.1 1 US Dollar per tonne 92 117 (21) 88 97 (9) Rand per tonne 1 686 2 159 (22) 1 587 1 817 (13) Domestic (Rm) 1 1 — 1 — — Shipping
Slide 35: Operating expenditure analysis
[OFFICIAL] Annexure 6 Operating expenditure analysis Rm 2024 2023 % change 2H 2024 1H 2024 % change Raw materials and consumables 2 011 2 636 (24) 993 1 018 (2) Net movement in inventories 1 575 (3 279) (>100) 1 455 120 >100 Inventory written down to NRV 71 (63) (>100) 139 (68) (>100) Contractors' e
Slide 36: Operating expense reconciliation
[OFFICIAL] Annexure 7 Operating expense reconciliation Rm 2024 2023 % change 2H 2024 1H 2024 % change Cost of goods sold 28 566 29 920 (5) 14 777 13 789 7 Cost of goods produced 22 600 24 768 (9) 10 964 11 636 (6) Production costs 21 760 28 108 (23) 10 634 11 126 (4) Sishen mine 15 790 20 866 (24) 7
Slide 37: Unit cost analysis by mine
[OFFICIAL] Annexure 8 Unit cost analysis by mine Sishen Kolomela Sishen Kolomela Rm 2024 2023 % change H2 2024 H1 2024 % change 2024 2023 % change H2 2024 H1 2024 % change 7 920 Production costs 15 790 20 866 (24) 7 870 (1) 5 970 7 242 (18) 2 764 3 206 (14) WIP 1 069 (2 530) (>100) 466 602 (23) (229
Slide 38: Sishen and Kolomela mines
[OFFICIAL] Annexure 9 Sishen and Kolomela mines Unit cash cost structure (R/t) 589 531 160 482 163 124 136 404 97 113 129 54 66 41 148 112 133 109 26 32 82 25 22 59 42 14 8 10 11 164 130 115 104 (33) (13) (58) (23) (115) (80) (101) Sishen mine Sishen mine Kolomela mine Kolomela mine 2024 2023 2024 2
Slide 39: Sishen and Kolomela mines
[OFFICIAL] Annexure 10 Sishen and Kolomela mines Unit cash cost structure (%) 27 31 28 32 21 11 18 10 12 19 31 27 21 23 17 5 5 15 5 4 2 3 3 2 8 22 28 25 28 (8) (3) (10) (22) (6) (17) (17) Sishen mine Sishen mine Kolomela mine Kolomela mine 2024 2023 2024 2023 Deferred stripping Other Work in progres
Slide 40: Capital expenditure analysis
[OFFICIAL] Annexure 11 Capital expenditure analysis Rm 2024 2023 2025e Approved expansion 1 260 3 055 1 400 – 1 600 Deferred stripping 3 238 1 588 4 000 – 4 400 Sishen 2 906 1 455 3 680 – 4 060 Kolomela 332 133 320 – 340 SIB 4 502 5 300 4 100 – 4 500 Sishen 3 912 4 268 2 870 – 3 120 Kolomela 590 1 0
Slide 41: Investment aligned to phased implementation
[OFFICIAL] Annexure 12 Investment aligned to phased implementation Total capital spend to 2023 2024 2025 2026 2027 2028 2029 Total R1.8bn R0.5bn R1.3bn R2.8bn R2.6bn R2.0bn R0.2bn R11.2bn Contracts Complete final First production, main awarded, Modular substations; Continue conversion conversion & s
Slide 42: Working capital driven by reduction in inventories & receivables
[OFFICIAL] Annexure 13 Working capital driven by reduction in inventories & receivables Rm 20 755 (2,284) (4,592) 292 14,171 -32% 2023 Inventories Receivables Payables 2024 42