Kumba Iron Ore cuts 2016 output guidance, shares tumble

JOHANNESBURG, Dec 8 (Reuters) - South Africa's Kumba Iron Ore cut its 2016 production target by about 28 percent to 26 million tonnes at its main mine as it forecast prices for its commodity sinking further, sending its shares to an all-time low.

Shares (Berlin: DI6.BE - news) fell 11 percent to 34 rand after Kumba Chief Executive Norman Mbazima said the Sishen mine would be restructured because the supply glut for the steel-making ingredient had persisted and growth in top consumer China was "ever more cautious".

Kumba, a unit of London-listed Anglo American (LSE: AAL.L - news) , and other South African mining firms have been hard hit globally in the wake of China's economic slowdown.

Kumba said it could would reconfigure its Sishen pit to allow for more flexibility, reduce risk and lower costs. The mine will target costs of $30 per tonne and a break-even price of $40 per tonne in 2016.

"Our industry is under tremendous pressure with the market now pricing in a more muted trend for the iron ore price over the medium to longer term," Mbazima said.

Iron ore fell to a decade low on Tuesday amid a global glut that showed no signs of abating as softer futures suggested further weakness. The commodity is down by nearly half this year.

As part of the cost cuts, Kumba transformed Kolomela mine from three pits into two but did not cut production targets.

In South Africa, mining firms are under pressure from rising costs and falling prices, forcing companies to close shafts and cut capital expenditure and jobs to survive. This has angered unions, which have opposed the layoffs. (Reporting by Zandi Shabalala; Editing by Mark Heinrich)