KUMBA Iron Ore, South Africa's largest iron-ore producer, posted a sharp decline in headline earnings despite record export sales and revenue for the interim period to end-June 2012.

Kumba's headline earnings of R7,4bn for the first six months of the year were down 18% from R9,1bn a year earlier.

"The decrease in earnings was primarily as a result of substantially weaker iron-ore export prices together with cost increases, which were partially offset by higher export sales volumes for the six months," Kumba, which is 65% owned by Anglo American, said.

Revenue rose 5% to a record R25,2bn and the company declared an interim dividend of R19,20 per share.

Export and local sales were 6% higher at 23,4-million tons. Export sales of 20,7-million tons were at a record high, with the new Kolomela mine supplying ore and offsetting a decline in output from the Sishen mine, where wet weather, absenteeism in the first quarter and waste stripping affected production.

Looking ahead, Kumba expects iron-ore prices to trade in a range between $130 and $150 a ton for the rest of the year, which was the range it traded in during the first half of the year.

Anglo American announced on Thursday that Kumba CEO Chris Griffith would become the new head of Anglo American Platinum on September 1. He joined Kumba after 18 years at Amplats.

Norman Mbazima, head of Anglo's thermal coal division, will replace Mr Griffith at Kumba.

Anglo American also said on Friday it had raised its stake in Kumba Iron Ore by 4,5% at a cost of $950m with no other options outstanding to further increase its holding.

Anglo said it had raised its stake to 69,7% from 65,2% at an average weighted purchase price of R519 per share.

With Reuters

seccombe@bdfm.co.za