KUMBA Iron Ore would be “reconfigured in the short-term” to account for export bottlenecks, said Duncan Wanblad, CEO of Anglo American which owns 70% of the South African business.
Miningmx reported on Wednesday Kumba had cut back on project capital expenditure because it was unlikely to sell the material owing to problems experienced by the Government owned rail and port operator, Transnet. “It doesn’t make sense to invest capital that we don’t need to,” Mpumi Zikalala, Kumba CEO said in an interview.
An increase in copper cable theft had led to a number of derailments this year on the iron ore line connecting Kumba’s Northern Cape mines and Saldanha Port. Zikalala said theft was “a new thing” for the iron ore export line, yet it resulted in Transnet able to only freight roughly 80% of Kumba’s production. Stockpiles, most of which are on-mine, were about 7.9 million tons as of June 30.
Said Wanblad: “The situation is not great for Kumba. We have been working extremely hard with Transnet and government to unlock the bottlenecks holding back the industry on that corridor. But it doesn’t feel like anything is going to change anytime soon.
“The consequence of that is Kumba is producing more than it can ship as it can’t get material down the rail. So we have to reconfigure the business.”
Kumba announced earlier this month it had cut R2bn in capital expenditure for the remainder of 2023, some of which was on Kapstevel South, an extension of its Kolomela mine as production couldn’t be realised in saleable tons in the short term.
However, the reconfiguration was not currently existential to Kumba despite the fact that the company was “ex-growth” in the short-term, Wanblad said.
“First I am hoping it will be short term and given that we have to consider how we deploy capital and where. We will never try to anything that will be prejudicial to the resource base in the long run. It just means it will take longer to expand or replace resources at Kumba.”
In 2021, Kumba announced a R3.6bn project to extend mining at its flagship Sishen mine to 2039. Including existing extension projects, this latest project increased mine life by six years. This was to have Kumba fall in line with the 25 year life of mine average of the greater Anglo American group of which it’s a part.
Anglo American’s then CEO Mark Cutifani said at the time the group wanted to add another 10 years to Kumba’s Sishen as well as its smaller Kolomela mine.