Kumba Heads for Month High as Dividend Rises: Johannesburg Mover

Kumba Iron Ore Ltd. (KIO) headed for the highest closing level in more than a month in Johannesburg trading after the Anglo American Plc (AAL) unit that owns Africa’s biggest iron-ore operation increased its first-half dividend.

The shares advanced as much as 2.5 percent to 474.32 rand, and traded 1.6 percent higher at 470.48 rand by 11:28 a.m. in the city. A close at this level would be the strongest since June 19.

Kumba will pay an interim dividend of 20.10 rand ($2.05) a share, up from 19.20 rand last year, the Pretoria-based company said in a statement today. It has made payouts in every six-month reporting period since the start of trading in 2006, according to data compiled by Bloomberg.

“It keeps churning out a dividend.,” Albert Minassian, a Cape Town-based analyst at Investec Ltd., said today by phone. The payout “had skepticism around it for a good three years,” with investors concerned that it would be smaller, he said.

Kumba’s first-half profit rose after production from a new mine and the rand’s weakness against the dollar countered output losses from strikes and a decline in prices, it said. In May, iron ore slumped into a bear market on concern that slowing economic growth in China, the world’s biggest buyer, will reduce demand as global supplies increase.

Ore with 62 percent iron content delivered to the Chinese port of Tianjin, the benchmark price, traded at an average of $136.97 a ton in the six months through June, 2.6 percent lower than the mean a year earlier, according to The Steel Index Ltd. in China, where the ore’s moisture can account for 8 percent to 10 percent of its weight. The price has fallen 9.2 percent so far this year.

The company will maintain its payment cover of 1.2 times, Chief Executive Officer Norman Mbazima told reporters in a conference call.

“We’ve always said we’re going to return money to our shareholders when we make money,” Mbazima said. “Until our projects move further along their development and we are more certain about expansion capital, we’ll continue to return money to shareholders.”

To contact the reporter on this story: Andre Janse van Vuuren in Johannesburg at ajansevanvuu@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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