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Kumba looking to West Africa, but main focus remains in SA
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25th June 2012
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JOHANNESBURG ( – Anglo American subsidiary Kumba Iron Ore is turning its gaze to the emerging West African iron-ore region, but CEO Chris Griffith said that its main focus remained in South Africa.

“We are looking at a number of projects in West Africa and although there is nothing to report just yet, it is an ideal place to have a second footprint,” he told Mining Weekly Online at the official opening of the Kolomela mine, in the Northern Cape, last week.

West Africa is attracting the attention of global mining majors and is tipped to be the next significant iron-ore province after Australia’s rich Pilbara.

But Griffith said Kumba’s main priority is to ramp up Kolomela, near Postmasburg, to its full design capacity of 9-million tons a year by 2013. It would then focus on growth opportunities in South Africa, where it is targeting expanded output of of 70-million tons a year by 2019.

Griffith said Kolomela, which started production five months ahead of schedule, came on line when iron-ore prices were still at a peak.

“This is one of the reasons we did not cut back on production during the economic crisis, we were hoping to catch the crest of the highest price environment.

“Our view, therefore, is that iron-ore prices will not come falling off a cliff in 2013 and the longer-term prices in the iron-ore environment will persist. It will reduce gradually over the long term, but this will be much higher than was anticipated two years ago when everyone worried about a wall of iron-ore coming on in 2013,” he stated.

About two years ago, the long-term price of iron-ore was estimated to be about $60/t, but recently market analysts anticipated three-figure long-term prices.

“We are not at three figures yet, but we are at much higher than $80/t. This shows that the iron-ore pricing environment is still positive, despite the recent decrease in announcements of new iron-ore projects,” Griffith said.

He explained that the slow development of iron-ore projects globally, owing mainly to harsh market conditions, decreased the anticipated influx of supply.

Further, Griffith said Kumba was looking into the possibility of expanding production at Kolomela to 15-million tons a year.

He added that the company would undertake a concept study in 2013, and depending on the success thereof, a prefeasibility study would be launched in 2014. A decision would be made by the end of 2014.

Griffith said the aim was to time the expansion of Kolomela to run simultaneously with the expansion of State-owned freight company Transnet Freight Rail’s (TFR’s) Saldanha rail line from 60-million tons to 84-million tons.

“We hope to deliver Kolomela at the 15-million-tons capacity by 2017; the same time when the expanded rail line will come on stream,” he noted.

Further, Griffith said Kumba would seek allocation of 15-million tons from Transnet.

“At the moment we have a number of projects that are filling up the remainder of the 9-million tons. There are also some other projects around Kolomela that we are looking at. So, the 15-million tons will come from a range of projects, which are being studied at the moment.”

He said 24-million tons of projects were currently under study, all of which were expected to make the grade. The top 15-million tons would go into Kumba’s allocation as part of TFR’s expansion.

Anglo American CEO Cynthia Carroll said the company’s projections in terms of supply and demand in the iron-ore industry remained unchanged, with China still expected to demand between 900-million tons and one-billion tons a year over the long term.

She added that India could also loose its status as a net exporter of iron-ore.

“Today India produces between 70-million tons a year and 80-million tons a year and this will increase to between 150-million tons a year to 200-million tons a year in the long term. They are starting to import iron-ore and by 2015/16 they will be importing substantial amounts,” Carroll said.

Griffith added that iron-ore production from India for this year was estimated to fall further to 60-million tons.

“The Indian government is seeking to reduce the amount of iron-ore that is exported, as logistical challenges prevail. Although it will reduce exports, the country currently remains a net exporter of iron-ore and we, therefore, perceive it as an opportunistic market for now,” he said.

Kumba Iron Ore’s first shipment of iron-ore left for India two weeks ago.

Edited by: Mariaan Webb


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Kumba Iron Ore CEO Chris Griffith discusses the company's future plans. Camera work: Nicholas Boyd, Editing Darlene Creamer.
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