KUMBA RESOURCES LIMITED - ACCOUNTING STANDARD AC 133 RESULTS IN KUMBA AND
TRANSNET AGREEING TO JOINTLY REVIEW IRON ORE EXPORT AGREEMENT
KUMBA RESOURCES LIMITED
(Registration number 2000/011076/06)
JSE Share code KMB
ADR CODE KBREY
ISIN CODE ZAE000034310
JOINT NEWS RELEASE
KUMBA RESOURCES LIMITED
TRANSNET LIMITED
27 August 2004
ACCOUNTING STANDARD AC 133 RESULTS IN KUMBA AND TRANSNET AGREEING TO JOINTLY
REVIEW IRON ORE EXPORT AGREEMENT
Diversified metals and mining company Kumba Resources (Kumba) and national
transport and logistics company, Transnet Limited (Transnet), today announced
that they will jointly review their current agreement regarding the transport
and handling of iron ore from Kumba`s Sishen mine in the Northern Cape to the
export facilities at the port of Saldanha on the west coast.
The decision to review the agreement was precipitated by the annual financial
results which included a negative fair value adjustment of R4 532 million
resulting from the current pricing arrangements for the transport and handling
of iron ore from the Northern Cape through the Sishen-Saldanha export channel.
These pricing arrangements have been regarded as embedded derivatives for the
purposes of accounting standard AC 133 and accounted for accordingly by
Transnet.
The price payable by wholly-owned Kumba subsidiary, Sishen Iron Ore Company
(Pty) Limited, to Transnet for its services under the agreement is determined by
two external variables, namely the US Dollar-denominated iron ore price and the
South African Rand/US Dollar exchange rate.
While the review of the current agreement is driven by the implications of the
AC133 accounting treatment of the agreement, the parties have been engaging one
another for some time to provide for a further 19Mtpa growth in Kumba`s exports
of iron ore.
`Transnet and Kumba will work together to review the contractual pricing
mechanism in the existing contract in an endeavour to reach a mutually
beneficial solution. At the same time, existing negotiations to increase rail
capacity on the Sishen-Saldanha line to accommodate Kumba`s iron ore expansions
in the Northern Cape are continuing. We remain committed to providing optimum
services to one of our most valuable customers,` said Maria Ramos, Transnet`s
group chief executive.
`The existing rail arrangements are not affected and will continue to run to the
mutual benefit of Kumba and Transnet. We will continue to engage closely with
Transnet regarding rail and port capacity needed to support Kumba`s expansion
plans at the Sishen mine and planned Sishen South mine,` said Dr Con Fauconnier,
Kumba`s chief executive.
The review process will start in September 2004.
ends
Note:
Kumba Resources Limited, one of the largest South African-based mining companies
listed on the JSE Securities Exchange, is a focused metals and mining company
with a diverse commodity portfolio consisting of iron ore, heavy minerals, coal,
base metals and industrial minerals. www.kumbaresources.com
Media enquiries:
Pat Mdoda
General Manager: Corporate Affairs, Kumba Resources
Tel: 012 - 307-4553
Mobile: 083 609 1204
Vuyo Kahla
Transnet Limited
Group Executive: Legal
Tel: 011 - 308-2342
Mobile: 083 778 8903
Investor relations enquiries:
Trevor Arran
General Manager: Investor Relations, Kumba Resources
Tel: 012 - 307-3292
Mobile: 083 609 1444
Date: 27/08/2004 01:25:37 PM
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