By: OrePulse

Kumba Iron Ore's production fell 19% to 7.5 million tonnes in the third quarter, as planned downtime to tie in a new ore-processing module at its Sishen mine in South Africa's Northern Cape province curbed output, while softer Chinese steel demand and freight rates at a five-year high weighed on prices, the company reported Tuesday, October 20.

The majority Anglo American-owned miner's nine-month average realized iron ore price slipped to $86 per tonne from $94 per tonne a year earlier, a 9% premium to a benchmark price of $79 per tonne, compared with an $84-per-tonne benchmark in the same period last year. Kumba Chief Executive Mpumi Zikalala said "weaker Chinese steel production, compressed mill margins and strong seaborne supply weighed on prices."

Seaborne freight rates on the Saldanha Bay-to-Qingdao route rose to $32 per tonne in September, their highest level in five years, lifting the year-to-date average to $23 per tonne. Seaborne iron ore supply grew an estimated 1% over the period, adding further pressure to prices.

Rail volumes carried to the Saldanha Bay export terminal dropped 8% to 9.4 million tonnes from 10.2 million tonnes a year earlier, after a derailment disrupted roughly 400,000 tonnes of material. State-owned rail and ports operator Transnet replaced 22 kilometers of track during a ten-day shutdown in October; it has completed 33% of a planned 517-kilometer rail-replacement program and lifted 40% of speed restrictions along the export corridor.

The quarterly production decline reflected a deliberate pullback at Sishen, where output fell from 9.2 million tonnes a year earlier, to allow for tie-in work on the first module of a new ultra-high-dense-media-separation plant. The project, valued at 11.2 billion rand, is about 60% complete; Kumba expects the main tie-in before year-end, with the module's full conversion by 2028. Despite the lower output, Kumba's sales rose 3% to 10 million tonnes as the company drew down inventory; combined mine and port stockpiles fell to 4.8 million tonnes from 7 million tonnes in the prior quarter.

Kumba left its full-year production guidance of 31 million to 33 million tonnes unchanged. It trimmed waste-mining guidance to a range of 175 million to 190 million tonnes, down from 180 million to 195 million tonnes, and cut its outlook at the Kolomela mine to 40 million to 45 million tonnes, from 45 million to 50 million tonnes previously, after flooding at the operation.

Parent company Anglo American, which holds a majority stake in Kumba, reported group-wide iron ore production down 4% for the quarter, a smaller decline than at Kumba alone because higher plant availability at the Minas-Rio mine in Brazil partly offset the Sishen slowdown. Anglo American also reported group-wide copper production down 5% to 174,900 tonnes for the quarter, driven by weaker output in Chile and Peru. Anglo American's attributable share of production at Collahuasi in Chile fell 11%, and output at El Soldado dropped 12%; the company pointed to unusually heavy snowfall and the unplanned maintenance work that followed late in the period. In Peru, third-quarter production at Quellaveco was 3% lower than a year earlier, though the company said it improved from the second quarter as ore grades rose.

Anglo American Chief Executive Duncan Wanblad said the group was "on track to meet our 2026 guidance, supported by the planned improvement in copper ore grades in the fourth quarter." Copper production guidance for 2026 stands at 700,000 to 760,000 tonnes. Wanblad also said, "We continue to manage controllable costs tightly," pointing to energy cost volatility and higher ocean freight rates affecting spot iron ore price realizations.

Diamond production declined 11% for the quarter, while manganese ore output climbed 6% to 1,031,400 tonnes, which the company linked to improved underground productivity in South Africa.

Among other portfolio items, Anglo American's planned sale of its Australian steelmaking coal business to Dhilmar, for up to $3.875 billion in cash, is expected to close by the first quarter of 2027. Its proposed merger with Teck Resources is progressing, with a review by Chinese antitrust regulators remaining the final outstanding milestone before completion, expected by March 2027. The company also said it continues to work toward a transaction for its De Beers diamond unit "in a challenging market."