Kumba Climbs to Month High as Dividend Rises: Johannesburg Mover

Kumba Iron Ore Ltd. rose to the highest in more than a month after the Anglo American Plc unit that owns Africa’s biggest iron-ore operation increased its first-half dividend.

The shares advanced 1.5 percent to 469.99, the highest since June 19, and giving the Johannesburg-based company a market value of 151.4 billion rand ($16 billion). That pared Kumba Iron Ore’s decline this year to 17 percent, compared with a 4.9 percent increase in the FTSE/JSE Africa All Share index.

Kumba will pay an interim dividend of 20.10 rand 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.”