Kumba recoups R942m in take-or-pay penalties from Transnet

KUMBA Iron ore said on Tuesday it had received R942m in ‘take-or-pay’ penalties following “lengthy” negotiations with Transnet regarding the under-delivery of contracted iron ore.Listed under ‘other income’, the R942m comprises a healthy portion of Kumba’s interim Ebitda reported today which totalled R16bn for the six months ended June (2024: R15.9bn).“The penalty is based on the contract over the last three years,” said Bothwell Mazurura, CFO of Kumba. “The penalty was based on lost revenue – volumes that we would never be able to recover,” said Mazurura.He added that the parties decided whether some of the lost revenue was owing to force majeure or “performance challenges”.In 2022, Kumba downgraded its production targets from 41 to 43 million tons to below 40Mt in 2023 and 2024 as a combination of technical problems, corruption and vandalism severely hampered Transnet from operating at capacity. It has guided to production and sales of 35 to 37Mt this year.The Anglo American company declared an interim dividend of R16.60 per share or R7.2bn after posting R22.17 per share (2024: R22.27/share).This was at the top end of its 50% to 75% of earnings payout policy and was achieved on the back of 3% higher sales and a realised export prices about 8% above the international benchmark.Mpumi Zikalala, CEO of Kumba said the company could have paid a larger dividend given the firm ended with cash of R16.1bn as of June 30, but the board decided to hold back. “If you look at particularly the cash that we retain, I guess others will argue that we could have paid even higher,” she said.“But we want to see what will play out [in the remainder of the financial year] particularly in terms of the markets,” Zikalala added. “We are seeing more capability from a Transnet perspective, but we essentially know that there’s still more work that needs to be done. So we’ve actually held back.”Green shoots at Transnet were a feature of Kumba’s interim presentation today. In addition to the take-or-pay penalties, Zikalala also disclosed that Transnet customer were now represented in the new-founded Mutual Operations Agreement (MOA) which enables ore users to urgently fix rail problems in return for a refund.“It gives us – both ourselves and the ore users – an instrument and mechanism that enables both the execution of any urgent maintenance work,” said Zikalala.“Transnet invoices us, we would owe them money and that would be linked to our rail allocation,” Mazurura added. “And if there’s money that needs to essentially be refunded from Transnet, it will be deducted from what we would normally pay to them,” he said.This agreement in terms of the MOA was separate to the ‘take-or-pay’ penalties that were agreed,” said Mazurura. Nonetheless, both interventions appear to reflect an improvement in transparency and accountability at Transnet.The post Kumba recoups R942m in take-or-pay penalties from Transnet appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com