The share price of Kumba Iron Ore (Kumba) was battered heavily on Tuesday after one of the world’s top 10 iron ore producers warned that its full-year earnings would drop 20 percent.
During intraday trading on the JSE, the stock price lost 2.6 percent from 541.00 to 526.00 rand ($62 – $60) as investors showed they were gravely concerned with the company’s announcement.
Analysts said investors or shareholders would wait for what the further profit warning will say before buying the shares of the company again.
The company said a further profit warning will be issued in due course to provide forecast ranges for headline earnings per share (HEPS) and earnings per share (EPS) as required by the JSE listing requirements.
Companies in South Africa use HEPS and EPS to measure their profits.
Kumba said its earnings would be hard hit by a wildcat strike that took place at its Sishen mine and lower international iron ore prices.
Early last month, mining operations at Kumba’s Sishen mine in the Northern Cape were suspended due to a wildcat strike.
About 300 striking employees blocked access to the pit, making it unsafe to continue with mine operations once the 300 workers had gathered there.
The strike was declared illegal by the South African courts with workers’ demands remaining unclear.
On Tuesday, the company said it had lost 2.6 million tonnes of finished product at Sishen, where output is still being hampered by low attendance.
It said intimidation was being reported even after the end of an illegal strike that led to the dismissal of about 200 employees.
Kumba, also the largest iron ore miner in Africa, resumed operations at the mine on October 20 after they were stopped by an unlawful occupation.
Kumba will report its earnings for the year to December in February next year.