South African miner Kumba Iron Ore Limited headline earnings plummeted in the first half of 2015 as falling seaborne iron ore prices took their toll.

“Taking cognisance of the pressure of lower cash generation, the initiatives required to preserve cash… , and in order to maintain financial flexibility, the board has decided not to declare an interim 2015 dividend,”, Kumba says in its report for the period monitored by Kallanish. The company is part of the Anglo Amrican group.

Headline earnings were -61% lower at SAR 2.5 billion mainly as a result of realised iron ore export prices, which weakened by -41% to $61/tonne. This was so, even though the result was partially offset by the favourable impact of a -12% weakening of the rand against the US dollar, Kumba says. Whilst operating expenses increased by 4%, the controllable costs per tonne reduced by -16%, the miner adds.

The company is facing a challenging market by restructuring activities at its flagship Sishen mine and closing Thabazimbi mine as announced last week (see Kallanish 17 July). It will also refigure its mining activities at Kolomela, it says. Production during H115 fell by -1% only year-on-year to 22.6 million tonnes. Sales volumes meanwhile increased by 16% to a record 26mt in the period on the same basis.

Iron ore prices are expected to remain under pressure as Australian and Brazilian producers increase supply, and demand growth from China slows, Kumba confirms in its outlook. The company expects Sishen mine to now produce 33mt of ore in 2015 whilst Kolomela is expected to produce in excess of 11mt.