Kumba Iron Ore Ltd. advanced to a record in Johannesburg as iron ore climbed to the highest in a month on speculation that China, the biggest buyer, is poised for a rebound after the government acted to spur growth.
Shares in the fourth-largest supplier of seaborne iron ore added 2.2 percent to 588.55 rand by the 5 p.m. close, the highest since its 2006 listing. Ore with 62 percent content delivered to the Chinese port of Tianjin rose 0.4 percent to $136.60 a dry ton yesterday, the strongest level since May 14, according to an gauge compiled by The Steel Index Ltd.
China’s economy is heading for a rebound this month following government measures to support growth, Commerce Minister Chen Deming said June 18. Policy makers in the world’s second-biggest economy are shoring up expansion as Europe’s deepening debt crisis curtails exports and foreign investment. In the U.S., the Federal Reserve may announce measures to spur growth as it concludes a two-day meeting today.
“China consumes about 50 percent of the world’s commodities so whatever happens there has a big impact on what happens with Kumba,” Simon Fillmore, an analyst at Independent Securities (Pty) Ltd., said by phone from Johannesburg.
Kumba exports 62 percent of its ore to China, according to data compiled by Bloomberg. Shares in Assore Ltd., a South African company that is joint owner of iron-ore and manganese producer Assmang Ltd., jumped 1.6 percent to 309.78 rand.
Expectations for a “fairly significant” interim dividend may also be boosting shares in Kumba, Fillmore said. The company reports earnings for the year through June on July 19 and may pay a dividend of about 22 rand, he said. The company has a dividend yield of 7.5 percent.