Kumba Iron Ore is considering regional consolidation, exploration and technology to grow and replace mined ore at its Sishen and Kolomela mines in the Northern Cape.
Kumba, which is majority owned by Anglo American, is SA’s largest iron ore miner and exports about 44-million tonnes of ore, making it the world’s fifth-largest source of seaborne iron ore.
The flagship Sishen mine, which produces about 31-million tonnes a year, has a 13-year life left.
Kumba is exploring on and around its tenements in the Northern Cape for additional ore and CEO Themba Mkhwanazi said: "We are quite confident and excited about potential prospects."
During a media visit to Sishen on Tuesday, Mkhwanazi declined to be drawn on what further growth prospects were outside of technological improvements to ramp up productivity, lower costs to be globally competitive, and tap into low-grade ore that has been stockpiled until a cost-effective way could be found to upgrade its quality.
"What we are saying is we are looking beyond the current business as it stands. This has to be opportunistic and value accretive for Kumba. If opportunities come we will consider those, but they have to be value accretive," he said.
Kumba was inching its way closer to the high-value 65% iron content ore, which was trading at a premium of $19 a tonne to the medium-grade 62% iron ore, said Timo Smit, the executive head of marketing and seaborne logistics.
The premium product is selling for $84 a tonne.
Kumba had increased the iron content in the bulk of its ore to 64.4% from 64.1%, Smit said, arguing Kumba was doing this at a time when the demand for high-quality iron ore from China was growing.
In China, stricter pollution controls and efforts to improve smelter efficiencies were driving the demand for good-quality lumpy iron ore, which makes up two-thirds of Kumba’s annual production, and higher iron content, he said.
The lumpy premium above the price for fine iron ore was $12 a tonne and Smit saw no reason for it to fall any time soon.
Lumpy ore is basically small chunks of ore, while fine ore is like sand, which has to be sintered and made into pellets.
Chinese steel production was a high 865-million tonnes in the first quarter of the year, he said, and the country’s steel mills were running at full capacity while iron ore production was flat.
The iron ore price for 62% iron content delivered to China — which is now close to $65 a tonne, down from the $70 a tonne earlier this year — was expected to remain strong well into the third quarter of this year before weakening towards the end of the year, Smit said.
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