KUMBA Iron Ore's shares fell on Friday after it warned of lower interim profits because of reduced export prices.

The miner said its headline and basic earnings for the six months to the end of June would be between R7,1bn and R7,5bn, or between R22,10 and R23,40 per share.

This compares with headline earnings of R9,06bn for the same period a year earlier and basic earnings of R9,052bn.

Headline and earnings per share were R28,23 and R28,20, respectively.

"The decrease in earnings is largely attributable to a decrease in export iron-ore prices in the period," Kumba said.

Its shares fell 2% to R567,14 each.

Last month, it emerged that Kumba was proposing supplying iron ore to a government organisation at below market prices and was willing to help set up a 5-million-ton-a-year slab steel plant on the coast.

These proposals were included in a document submitted by Kumba's parent, Anglo American, to the African National Congress, ahead of a debate at the ruling party's policy conference on South Africa's mineral sector.

Kumba, which is 65% owned by Anglo, is willing to supply 6,25-million tons of iron ore to the domestic market at the all-in cost to mine the steel feedstock as well as a 20% contract mining fee, which would still leave the price well below the market price.

The condition is that Kumba has 100% ownership of the Sishen mine. Currently, there is a dispute over a 21,4% stake in the mine that is before the courts.

seccombea@bdfm.co.za