Whilst Kumba Iron Ore may not be a household name for us, there is a high probability that our homes contain products or are located close by to structures that are made with the iron ore that this company source. Offering a truly superior product to their ever-expanding customer base, Enterprise Africa dig around to find out just what it is that Kumba are doing right.
During his time as CEO of Kumba Iron Ore, Norman Mbazima has guided his company into the realms of prosperity and international renown. In a 2013 interview, Mr Mbazima alludes to how such leadership skills were honed during his childhood, stating that ‘a family as big as mine…we had to be close knit! We learnt how to share…how to work as a team. We also needed a leader…I was able to change my position in the family when it was required, to offer guidance and support’. In 2014 alone, Kumba had a workforce of 14,040, produced 48.2Mt of material and achieved an operating profit of around R19.2bn. Thus, it seems evident that overseeing operations of a company with such a high reputation and presence is something that Mr Mbazima has been nurtured to do
At a glance, Kumba Iron Ore is just like all other burgeoning businesses in South Africa, working hard to sate the demands of its customers and turn a profit for its shareholders. Predominantly owned by one of the largest mining companies in the world, Anglo American, Kumba is the largest enterprise of its kind in the whole of South Africa and they themselves hold the majority share in another successful mining operation, the Sishen Iron Ore Company (SIOC). With various factions of the business spread between Gauteng, the Northern Cape and Limpopo provinces and Saldanha Bay, the company have extended their presence and reach throughout the country. However it is not just South Africa in which Kumba are known, with international companies in Asia, Europe, the Middle East and India flocking to them to do business. Whilst this may seem like a smooth operation, Kumba have not been without their challenges. The mining strikes of 2012 greatly affected productivity for obvious reasons and even more recently, the catastrophic crash in iron ore prices and subsequent 13% revenue loss led to a 40% reduction of Head Office staff at Kumba. Yet, regardless of these hurdles, the company have soldiered on, providing South Africa, and the world, with iron ore. On average, 11% of Kumba’s product remains in the country with the other 89% being sent abroad, which has is in large part facilitated by the drastic drop in freight rates. Interestingly, 55% of total sales in 2014 were entirely to Chinese businesses, highlighting the lengths some companies will stretch to in order to obtain Kumba’s wares.
In general, the importance of iron ore should never be underestimated; Kumba predominantly supply this raw material to the steel industry, who in turn provide components for the construction and automotive spheres amongst others. Iron ore is also used by the pharmaceutical, cosmetic and paint industries and so one can begin to see how ubiquitous and in-demand such a substance is in our everyday lives. As such, Kumba make huge efforts to ensure that the end product that reaches the customer is of superior quality. They hire engineers and geologists to design and maintain their mines, resulting in ore that is both high in actual iron content and breaks up less in transit so that customers get more content for their cash. Furthermore, they can get ore from mine to port in just 9 hours via their dedicated rail link, the Sishen/Kolomela-Saldanha Iron Ore Export Link, offloading 10,000 tons per hour onto ships to be sent all around the globe. Clearly, Kumba as a business is a well-oiled machine and it seems that they really do live up to their mantra that ‘Our company exists to make a real difference for everyone whose lives we touch’. Obviously, proffering a good that is highly sought after is a good start for any business, but the real key cogs of this machine are the people behind Kumba – a sentiment foregrounded by Mr Mbazima in 2013 when he stated that his favourite part of working for Kumba was ‘[the] people’.
As a business head, Mr Mbazima distinctly values his employees and he runs a company that is staunchly dedicated to employee equality, skills development, education and wellbeing. Of the 14,040 employees, 8191 of these are on permanent contract, 4987 are external contractors from allied industries and companies and 869 are on learnerships, a scheme which cost the company a reported R73.3 million. 86% of staff are drawn from local areas with an average tenure of 10 years. Women comprise 19% of the general workforce, 13% of core mining positions and 20% management positions. Kumba are also dedicated to ensuring that women have the appropriate facilities, receive development and mentoring training and are offered a safe environment to work in; there have been no reported cases of sexual harassment to date. Throughout their careers at Kumba, employees are offered free counselling for personal issues, fatigue management education and medical testing for diseases such as HIV and TB, which has been utilised by in excess of 90% of staff. This privilege is also extended to their dependents and external contractors may also take advantage of these schemes. Furthermore, staff are offered custom made hearing protection devices if they are to be exposed to noise levels exceeding certain levels and the company even invested R9.5 million to expand a local district hospital in Postmaburg’s where many employees reside. The company also hosts the annual ‘Laurel Awards’, in which employees are recognised and commended for their hard work and achievements.
Staff safety is also of paramount importance to Kumba, and they report that they have only ever had one fatality. Rather touchingly, in a 2014 report which can be found on the company’s website, Mr Mbazima dedicates a proportionate section to acknowledging this tragic employee death and vows to further improve safety so that it may never happen again. In particular, under their ‘Snakes Alive’ scheme, Kumba endeavour to ‘find the snakes before they bite us’; employees are encouraged to report and situation or conditions that may lead to untoward circumstances and staff are continually trained in risk identification. According to Mr Mbazima, such implementations are all in the name of building trust in his employees and ensuring that staff can ‘feel secure and knowledgeable about their working environment…[and]…feel confident in communicating to management at any level’. This sentiment is echoed in a recent strategy undertaken by Kumba, in which they will be working closely alongside Exxaro, a 52% black owned company hat have a 19% stake in Kumba. Their 10 year contract with major shareholder, Mainstreet 333 expires in 2016 and so the future of Exxaro is in some turmoil. However, with a staunch dedication to Black Economic Empowerment, Mr Mbazima has vowed that Kumba will do ‘everything in its power’ to ensure that black employees of Exxaro maintain their jobs, extrapolating his care beyond the borders of his direct employment. Furthermore, such borders are breached for all shareholders of Kumba; Govermental/Political Groups, Civil Society, Businesses, Customers and the Media; according to their website, the company believes that ‘No-one is on their own. We’re a company with a joint ambition – all working together to make decisions and get things done more effectively’. Such dedication clearly resonates with Mr Mzabima’s family orientated drive to foster a safe, close-knit environment for all associated with his company. Consequently, it is no wonder that Kumba consistently appears in lists from the Top Employees Institute.
However, perhaps the most significant faction of the business which is also treated with great respect is the very source of Kumba’s wares; the earth and environment. The company are committed to ensuring that they rehabilitate as much of their mining areas as possible once they are no longer in use. In place are schemes to reduce emissions of harmful greenhouse gasses and there are also protocols in place to save and reuse water. In the Kolomela mine, one of three mines Kumba currently operate in, the Aquifer Recharge Project is ensuring that ground water extracted for initial mining is returned, a scheme Kumba are also hoping to introduce this in their Sishen mine. Furthermore, the company have even commissioned new drills which not only reduce noise pollution but also decrease the amount of dust created by machines.
Overall, through providing such a superior product, demonstrating a staunch commitment to staff wellbeing and a dedication to sustainable mining, it is no wonder that Kumba are receiving attention and business on a global scale. Although already the fourth largest iron-ore producer in existence, the company certainly look set to become the Iron Giants of the world.