Kermas, Koreans target SA iron ore

[miningmx.com] — South Korea’s Dongbu Steel said on Thursday it and state-run KORES had signed an agreement with South Africa’s Kermas to develop iron ore and titanium in the country.

Under the memorandum of understanding the three firms will set up a smelting plant in Stoffberg, north of Johannesburg, to produce 1.2 million tonnes of pig iron per year from 2013, Dongbu Steel said in a filing to the stock exchange, without specifying the expected investment in the facility.

A spokesman at the steelmaker said the plant would cost an estimated $475m and that the firms had yet to decide on financing arrangments.

The two Korean firms will buy 50 percent of the plant’s iron output, as well as 50 percent of the output of by-product titanium, the filing added.

JSE-listed anthracite and silica miner Petmin also has a stake in the iron ore exploration project. The drilling programme has outlined a measured resource of 44.3 million tonnes of weathered iron ore, which is cheaper and easier to mine than fresh iron ore.

Petmin has converted a loan in the Veremo project to lift its stake to 35% from 25%. All in all, Petmin has spent R71m in cash and shares to acquire the current holding in the project and it is overseeing the exploration programme.

The majority shareholder in Veremo is Kermas, which is obliged to put up all the funding towards the construction and commissioning of a pig iron operation. Not only that, but it is contracted to begin paying an annual dividend of R65m a year for three years from 2012 whether the project is in production or not.