Iron Cargo (01029) announced its 2023 annual results. Revenue fell 9.2% year on year to US$253 million; base...
According to the Zhitong Finance App, Iron & Steel (01029) announced its results for the full year of 2023, with earnings down 9.2% year on year to US$253 million; basic profit of US$8.98 million, down 65.1% year on year; loss attributable to shareholders was US$157 million, up 78.4% year on year; EBITDA (excluding non-recurring items and foreign exchange) fell 18.4% to US$45.8 million; loss per share.
In the second half of 2023, K&S faced mining and ore quality issues, which affected production. Furthermore, heavy summer weather disrupted operations, which further affected production, causing iron concentrate production to drop 4.0% from 2,569,845 tons in 2022 to 2,466,829 tons in 2023. Despite these obstacles, the company continued to sell 2,528,596 tons of iron concentrate in 2023, a slight decrease of 1.5% compared to its youth (December 31, 2022:2,566,480 tons).
The fall in iron ore prices in 2023 is the main factor that has had a negative impact on Tiejiang's spot stocks. The realized sales price in 2023 was US$108 per tonne, down 8.5% from 2022. Compared with the 5.0% drop in 2023, the average price of iron ore with 65% iron content in Platts increased, mainly due to fewer spot shipping sales transactions in Tiejiang in 2023 compared to 2022. Although shipping customers usually pay higher prices, high handling and shipping costs also drive up costs accordingly. As iron ore prices continue to fall, seaborne sales are not economically efficient and have to be suspended in 2023. The reduction in transportation costs has been offset by an 18.2% increase in other cost components, making net cash costs in 2023 similar to 2022.
K&S is committed to strictly controlling operating and administrative costs. During the reporting period, the Group's cash costs (excluding transportation) increased by 18.2% to $62.9 per ton, mainly due to lower production due to lower total iron content in magnet ore, higher electricity prices set by the government, higher mining contractor rates due to higher fuel prices, payment of new temporary export tariffs, and increased expenses due to overall inflation. As the scale of shipping sales shrank, transportation costs fell by about 37.5% to $16.0 per ton. The reduction in transportation costs was offset by increases in other costs, so net cash costs in 2023 were $78.9 per ton, similar to the 2022 cash cost level of $78.8 per ton.