Con Fauconnier, CEO, Kumba
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No losers in Kumba unbundling
Brendan Ryan
Posted: Fri, 03 Nov 2006

[miningmx.com] -- KUMBA Resources non-executive chairman, Allen Morgan, said there are "no losers" in the deal to split Kumba into two separate operations: Exxaro Resources and Kumba Iron Ore. The transaction was approved by shareholders on November 2.

Kumba Iron Ore will be listed on the JSE on November 20, and Kumba will relisted as Exxaro Resources (Exxaro) from November 27.

Morgan was responding to the suggestion that Anglo American, which is the controlling shareholder in Kumba and driving force behind the split, would benefit by effectively disposing of its Namakwa Sands titanium business to Exxaro in return for a greater stake in Kumba Iron Ore.
outlook for the zircon market is good
Exxaro CEO, Con Fauconnier, said his company intends exercising the option it holds to buy Namakwa Sands from Anglo American, at a cost of more than R2bn, and a 26% stake in the Black Mountain base metals mine and Gamsberg zinc deposit in the Northern Cape for a further R180m.

Exxaro will combine Namakwa Sands, which operates a titanium smelter in the Western Cape, with its existing Ticor business. Ticor operates a titanium smelter in KwaZulu-Natal and owns 50% of an integrated mineral sands and titanium pigment producer in Western Australia.

The outlook for the iron ore business appears more attractive than the titanium market which faces an oversupply of titanium slag. Fauconnier confirmed it could take "three to four years before the oversupply of titanium slag works its way out of the system."

But he said this was more than offset by the booming market in zircon of which Namakwa Sands is already a major producer and is expanding output.

"The outlook for the zircon market is as good, if not better, than that for the iron ore market. We did a very careful due diligence on Namakwa Sands," he said.

Kumba Iron Ore CEO, Ras Myburgh, confirmed the company's plans to expand iron ore production from the current 32 million tons/year to 42 million tons/year by 2009 and then to push this output to 70 million tons/year by 2015.
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The focus of the group's expansion would be on brownfields and greenfields projects in the Northern Cape with some 10 million tons/year to be sourced outside of South Africa.

The most likely foreign development is the Faleme project in Senegal. Faleme is currently the subject of legal action in which Kumba is defending a $196m claim against it by Lithos Corporation. Kumba is also talking to Senegal's state mineral company Miferso, which recently agreed a deal with Mittal to develop the project.

Asked about possible future diversification, Fauconnier said Exxaro could add ferromanganese to its existing operations which are in coal, titanium/mineral sands products, zinc and ferrosilicon.

That will depend on development work on the 'Alloystream' process technology which Exxaro has been testing at pilot plant level.

Fauconnier said the process had produced both high carbon and low carbon ferromanganese at costs more than 30% lower than anyone else in the industry.

"We have a 50:50 joint venture with Samancor on this project and the next stage is to show that we can get the same performance in a full-scale plant.

"A bankable feasibility study should be completed towards mid 2007 and we would then establish a plant to produce 200,000 tons/year of high-carbon ferromanganese."