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Anglo upbeat on mining licenses Posted: Mon, 27 Nov 2006 [miningmx.com] -- ANGLO American said it was optimistic Kumba Iron Ore (KIO) and Exxaro, which the UK group helped create by restructuring its 67% stake in Kumba Resources, would receive mining right conversions next year. “Anglo is confident the companies will receive their mineral right conversion early in the new year. But you have to complete the transaction first before getting the mining licences,” said Philip Baum, executive director of Anglo American. Anglo American has a 65% stake in KIO which was listed on the JSE on November 20, and a 19% stake in Kumba Resources which is due to change its name to Exxaro on November 27. KIO and Exxaro were created after Kumba Resources agreed to spin out its iron ore assets and accept the injection of coal assets from Eyesizwe Holdings, and mineral sands and base metal assets from Anglo American. Trade in KIO has been relatively upbeat. “There’s a lot of hype in the market about the iron ore price and there’s talk of a 5% to 10% increase in the iron ore price next year,” said Matt Brenzel a fund manager for African Harvest. However, a potential risk is that the blue sky potential evaporates from KIO’s share price as analysts factor in its relatively well-known growth plans, combined with a decline in the iron ore price. “There are signs of a faster than expected slown down in China,” said Brenzel. Baum acknowledges the potential risk in KIO. It’s clear that unless it grows KIO’s output aggressively and buys of minorities in KIO, Anglo’s iron ore exposure does not rival that of its peer group Rio Tinto and BHP Billiton which produce 124.5 million tons and 97.5 million tons in 2005 respectively. “At 31 million tons/year, KIO is quite small. But four years ago, Anglo had no access to the iron ore market at all. This has been a great entry point,” he said. “There are not many companies where you can double output with green and brownfield projects.” Ras Myburgh, CEO of KIO has said the company 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. In addition, KIO is hoping to develop Senegal’s Faleme iron ore mine. But there’s no sign yet KIO could revisit long-standing plans to rationalise infrastructure in the Northern Cape’s iron ore fields which it shares with Assmang, owned by African Rainbow Minerals and Assore.Free news alerts: click here to subscribe
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