JOHANNESBURG (Reuters) -Anglo American’s South African iron ore unit said on Tuesday private investors could help fix South Africa’s failing rail network as it continues to struggle with shipping products to ports for export.
Kumba Iron Ore said iron ore stockpiles at its mines swelled to 8.2 million metric tons in the first half of this year from 7.1 million during the same period last year as rail and port challenges worsen.
The rail line and the ports, managed by South Africa’s state-owned Transnet, have over the years been beset by derailments and equipment failure.
The persistent logistics constraints will likely weigh on parent Anglo, which is restructuring its businesses after fighting off a $49 billion attempted takeover by the world’s No. 1 miner, BHP Group.
Anglo has said it wants to retain the South African iron ore business and maintain a presence in the country even as it spins off its platinum unit. It also plans to divest or sell its De Beers diamond business and its Australian steelmaking coal assets.
“One of the key things that we would certainly like to look at it is the concessioning of the iron ore export channel and that would be both the rail and the port,” Kumba CEO Mpumi Zikalala said on a conference call.
To improve the system would require the government to continue to collaborate with mining companies, Zikalala said, adding that there needs to be “greater private sector participation” in the rail and ports network.
Africa’s top producer of iron ore hauls the product on an 861 km (535 mile) rail line that runs from its giant Sishen mine in South Africa’s Northern Cape province to Saldanha port.
The line continued to be constrained by a number of derailments and equipment failures in the first-half, Zikalala, said in an earlier results statement.
While the company has been forced to trim its iron ore production over the next three years as one way of managing the stockpiles, it would want to produce more iron ore as the rail network improves, Zikalala said.
Kumba’s headline earnings per share in the six months ended June 30 slumped 26% to 22.27 rand, hit by softer iron ore prices and the logistics challenges.
The miner declared an interim dividend of 18.77 rand per share.
(Reporting by Felix Njini; Editing by Jamie Freed and Miral Fahmy)
