Kumba nod to R7bn Kapstevel South project
Group has ‘positive outlook’ for its product
KUMBA Iron Ore yesterday bucked the slowdown in mining investments, announcing a R7 billion project to sustain output at its Kolomela mine in the Northern Cape despite expectations that the Covid-19 pandemic would curtail activity in the sector.
Kumba said the project was expected to produce high-quality shipping ore, and it included the development of a new Kapstevel South pit.
Kumba expected waste stripping to start this year, and the first ore was expected in 2024.
It said Kapstevel South pit would deliver an after-tax internal rate of return of 25 percent and would allow Kolomela to maintain an estimated 35 percent margin in long-term earnings before interest, taxes, depreciation and amortisation.
Chief executive Themba Mkhwanazi said the project had received the green light from both the Kumba board and that of its parent company, Anglo American.
“The approval of this project, at a time when the global and South African economies face the challenges of Covid-19, underscores Kumba’s positive longer-term outlook for demand for its high-quality product. It also demonstrates our commitment to extend the lives of our mines and continue providing much-needed jobs and livelihoods in the Northern Cape region,” Mkhwanazi said.
The project would ensure that the 6 000 jobs at Kolomela were protected.
Kumba said while the pit was included in the current life of the mine, it contributed significantly to sustaining production of 13 million tons for Kolomela’s remaining 13-year lifespan.
Asked whether there was a possibility that the Kapstevel project would enable Kolomela to survive below the projected lifespan, Mkhwanazi stuck to his guns, charging that Kumba was focused on sustaining the mine.
“Given the potential possibility of making improvements in our operations it might,” he said, “but I would keep to the 13 years.”
Mkhwanazi said the exploration activities, which had been suspended as a result of the lockdown at the company, had resumed.
“We previously announced that we had gained access to two new prospecting targets. I am pleased to say that we have commenced drilling activities on both of the sights post the lifting of the lockdown restrictions,” he said, adding that the company was embracing technology and transformation in its exploration programme.
“With our exploration partner Rosond, we are in the process of rolling out a fleet of next-generation exploration rigs in the Northern Cape.”
These were operated by remote control, he said. “This has delivered safety, productivity and transformation benefits. We are proud to announce that we have delivered our very first all-female exploration drilling crew at Sishen and we believe this is the first in South Africa, if not in the broader world,” said Mkhwanazi.
Kumba, which spends R200 million a year on exploration, said it had made progress with its ultra-high dense media separation (UHDMS) feasibility study, which was on track for completion in the fourth quarter.
The commissioning of the UHDMS project was expected in the first half of 2023.
Kumba declined 0.21 percent on the JSE yesterday to close at R549.49.
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