Kumba Iron Ore plans layoffs as Transnet failures force production cuts

South Africa’s largest iron producer has announced plans to cut around 490 jobs.

Posting its year-end results, Kumba Iron Ore cited cost pressures and Transnet's logistics failures as drivers of the decision to reduce staff numbers.

The mining giant said that in parallel, a contractor/vendor review process is underway that could impact about 160 service providers.

CEO Mpumi Zikalala reiterated Kumba's commitment to supporting key measures by the National Logistics Crisis Committee (NLCC) to improve logistics performance, but pointed out that this is not a quick fix.

"We are... encouraged by the Cabinet’s approval of the Freight Logistics Roadmap that will allow for greater and much needed private sector participation in the logistics sector. Logistics challenges will, however, take some time to resolve and...

"...unless we act now to align our production and cost base to current logistics constraints, this business will not have the resilience it needs to deliver across its stakeholders."

Mpumi Zikalala, CEO - Kumba Iron Ore

In conversation with Bruce Whitfield , Zikalala says the key Sishen–Saldanha railway line is the biggest challenge affecting exports, with its performance declining consistently over the last five years.

It is critical to get that turned around, she emphasizes.

"...not just for Kumba but also for our employees whose lives get impacted when we have to take these tough decisions... as well as our suppliers and our communities. And of course, that essentially gets us to a space where we deliver less taxes and royalties towards our fiscus as well."

"Over, time clearly there hasn't been sufficient maintenance that's been going towards both the line and the port, and that is catching up with us."

Mpumi Zikalala, CEO - Kumba Iron Ore

It is a positive sign that the current leadership of Transnet has welcomed interventions through the NLCC, which Kumba is part of, Zikalala adds.

The Sishen-Saldanha line needs to get back to the capacity it should be running at she says, which is moving around 60 million tons,

"There is a lot of work which includes various workstreams... One has brought in added technical capacity to assist the various teams within Transnet, and what's been pleasing is that the current Transnet leadership has actually welcomed that - they've been open and transparent with us."

"If one looks at the current state of the infrastructure it will take some time to turn the line around... However, we've retained the capacity to ramp up production in the event of the turnaround coming through in a faster period of time."

Mpumi Zikalala, CEO - Kumba Iron Ore