KUMBA Iron Ore has approved R7.6bn for the commissioning of UHDMS technology at its Sishen mine that will improve yield and potentially lengthen the Northern Cape operation’s life of mine to about 2044.
The Ultra High Density Media Separation project will treble the proportion of high quality iron ore from Sishen which Kumba said was increasingly valued by customers as it helped steelmakers reduce their carbon outputs.
Kumba calculates a $2 to $3 per ton price premium could be extracted from its sales above current lumpy iron ore by using UHDMS.
The project was been under wraps for more than five years, partly owing to a review ordered by Kumba’s 70% shareholder Anglo American in 2022. The reason for the delay is that Anglo wanted to resolve the complexities of converting the current plant to the new technology.
At the time, Anglo had approved a budget of R3.6bn for the UHDMS project of which R1.8bn has been spent to date. Including the approved capital announced today, Kumba will spend R11.2bn on the project which will be phased in over four years from November for safety and disciplined capital purposes.
“This investment demonstrates our focus on value over volume,” said Mpumi Zikalala, CEO of Kumba Iron Ore in a statement on Thursday.
UHDMS, which will replace the current dense media separation processing plant is able to process a wider range of iron grades and densities. The technology will improve the proportion of premium iron ore and lower the waste stripping ratio, while maintaining the lump:fine ratio, said Kumba.
The impact in terms of recoveries is potentially spectacular increasing the volume of premium iron ore to 55% of Sishen’s production from 18% currently, hence the expected price premium the group anticipates.
The technology also reduces the mining cut-off grade – separating economic or payable ore from waste – to 40% from 48% at present. This will result in 15 million tons of less waste and help lower the cost of mining.
“This major investment is also a clear demonstration of our long-term commitment to South African mining and to our host communities in the Northern Cape,” said Zikalala
It also helps by small degrees Anglo American’s cause as it seeks to deliver on a restructuring strategy. As part of the strategy, it needs to maximise margins from the assets it intends to keep which includes Kumba.
In terms of a takeover proposal by BHP earlier this year, Kumba would have been unbundled to shareholders. Anglo has argued that in terms of its strategy it is the best owner of its assets.
