[miningmx.com] – ANGLO American will join the rush for West Africa’s
iron ore as part of a new pact with 65%-owned, Kumba Iron Ore, to launch an
Africa-wide search for new reserves of the metal.
“Kumba will work with Anglo American in Africa to look for expansion projects,’ said
Chris Griffith, CEO of Kumba. He said the two companies had spoken about
cooperation in the past, and now was the time to launch the joint venture.
Commenting on the prospects for developing iron ore in West Africa, Cynthia Carroll,
Anglo American CEO, said: “We have looked at iron ore in West Africa. Now we’ve
decided to look again. It’s not a given that there will be iron ore projects in West
Africa. They will be a long time coming.’
A number of UK and Australian-listed companies are digging for iron ore in countries
such as Guinea (Rio Tinto), Sierra Leone (London Mining) and most recently, Republic
of Congo – a country in which Exxaro Resources is investing on completion of its
takeover of African Iron.
It has been estimated that some 400 million tonnes of iron ore projects – equal to
40% of seaborne trade – are in the works over the next 10 years. This will require
about $74bn in capital investment, which includes infrastructure. An estimated
5,000 km of rail and 11 new or expanded port projects also need to be completed in
West Africa in order to make a development of new iron ore node feasible, analysts
have said.
In South Africa, Kumba expects it will be able to grow production a further 20 million
tonnes/year through a series of smaller projects at its Sishen mine complex. Sishen
sold 38.9 million tonnes in 2010, a 6% decline year-on-year.
Griffith said the announcement by President Jacob Zuma in his State of the Nation
Address recently – that Transnet Freight Rail could grow capacity on the Sishen iron
ore line to Saldanha Bay to as much as 100 million tonnes/year – was one of the
bottlenecks that needed unlocking.
“That was a very positive development,’ said Griffith, who will see iron ore
production from South Africa grow to about 49 million tonnes/year. About 1.5 million
tonnes was produced from the recently commissioned Kolomela iron ore project
roughly four months ahead of scheduled completion. At full tilt, Kolomela will produce
about 9 million tonnes/year.
Carroll said Anglo’s Minas Rio iron ore project in Brazil was about 60% complete with
some 90% of land around the project now licensed. The discovery of nearby caves
presented the group with technical problems, but Carroll said this was not a unique
problem to Anglo in Brazil.
Of concern to analysts, however, is the vaulting cost of the project. Carroll said that
inflation in Brazil was at least 6%, and with the imminence of the Fifa Soccer World
Cup, this was unlikely to fall. Anglo said in December that the capital cost of Minas
Rio would increase to $5.8bn, the fourth adjustment, and doubling the initial cost
estimate of the project since Carroll inked the $5bn acquisition of the project in
2008.
“We are extremely pleased with the progress of the [Minas Rio] project,’ said Carroll.
“From an opex point of view it will be extremely competitive,’ she added.
First production from Minas Rio remained at the second half of the 2013 financial
year. “No delay at Minas Rio is a positive,’ said Macquarie Research in a note today.
