Kumba awaits ruling on rights
KUMBA Iron Ore has cautioned shareholders about a possible restatement of ore reserves and resources at the Sishen mine in the Northern Cape, depending on the outcome of an application for mining rights over ground previously owned by Transnet.
The Transnet ground is crucial because without it, about 33% of the Sishen mine’s existing reserves will be sterilised.
Kumba has just put in the application and needs it to be approved by the end of next year to avoid the restatement of its reserves and resources as of its financial year-end on December 31 2014.
It usually takes the Department of Mineral Resources anywhere between six months and a year to process a mining right application.
Kumba spokeswoman Yvonne Mfolo said the group would engage with the department to get the right granted as quickly as possible.
She added that Kumba would reassess its reserve position as at the end of December this year but no adjustments would have to be made until December next year.
A department spokesman said: “The department is aware of a mining right application lodged yesterday by Kumba.
“This application will be processed in line with applicable provisions in the Mineral and Petroleum Resources Development Act, including the time frames for compliant applications.”
The ground in question — dubbed the “rail properties” — is where Transnet’s rail line used to run just west of the current Sishen opencast mine pit.
That line is used to transport the iron ore to Saldanha Bay mainly for export but also to supply ArcelorMittal SA’s Saldanha Steel plant located just outside the port.
The line has now been moved to the far western extent of Sishen’s property to allow a planned westward extension of the present mining operations.
The rail properties were excluded from Sishen’s mining right area because Transnet previously held the surface rights.
The effect on Sishen should it have to reduce its ore resources and reserves statement because of a delay in granting the mining right, will be minor provided the situation is temporary. Should the department not grant the right, there will be serious negative implications for the company although Ms Mfolo commented that Kumba management is “not worried at all” about the situation because it believes the mining right application over the rail properties will be granted.
Outside observers are not so sanguine given Kumba’s previous problems with the department and the sometimes erratic performance of the department in dealing with prospecting and mining right applications. The department previously granted a prospecting right and then a mining right to Imperial Crown Trading over 26% of the Sishen mine, after ArcelorMittal failed to apply for conversion of its “old order” rights in the mine.
That dispute is now at the Constitutional Court after the department decided to appeal the Supreme Court judgment in Kumba’s favour.