Anglo plans fourfold increase in iron ore production
14 November, 2008
The Anglo Group is planning a fourfold increase in iron ore production by 2016. Speaking at the launch of the Sishen Expansion Project (SEP) at the Kumba Iron Ore's Sishen Mine in Kathu, Northern Province, yesterday, Cynthia Carroll, Chief Executive of Anglo American said that by 2016 Anglo would be producing around 150 million tonnes a year with a 13 percent share of the seaborne market for iron ore.
Referring to the current global economic turbulence, she emphasised that Anglo American was well placed to weather the storm. "We have both a healthy balance sheet and some of the most highly rated assets in world mining: the majority of them large-scale, long-life, low-cost operations."
She expressed confidence that the fundamentals of Anglo's business are strong and that the medium- to long-term future for the commodities business was a bright one. However, she cautioned that in the immediate term things are going to be tough. "We have an impressive project pipeline, but the current economic environment challenges the pipeline's viability. We are, therefore, in the process of actively reviewing the timing of our projects against the background of the difficulties in accessing capital – and the prospect of attractive acquisition opportunities that could generate cash from day one."
The Sishen Expansion Project (SEP) features the largest jig beneficiation plant in the world. It was officially launched by Carroll, Minister Buyelwa Sonjica, Minister of Minerals and Energy, and Premier Dipuo Peters of the Northern Cape Province
SEP was approved in 2005 following extensive testing which indicated that waste ore could be beneficiated into saleable product using jigging technology. SEP production began in the second half of 2007 and full ramp-up to nameplate capacity is expected during the second half of 2009. Total capex for the project was R5.1 billion, and it has taken 32 months to complete. It will extend Sishen Mine's life by at least five years.
SEP utilises jig technology to extract product from 21 Mtpa of feedstock – about 8 Mt that was previously regarded as waste and 13 Mt of which will be new ROM material. The final product will have an average iron content of 64 percent compared with the 66 percent iron content of the current Sishen product. All the ore produced is destined for the export market. The majority will go to China, but contracts have also been signed with other Asian and European customers. A large number of these customers from China, Japan, Korea and Europe attended the launch.
Chris Griffith, Kumba's Chief Executive said that the launch marked a significant milestone for the company. "The project is making a significant contribution to the local economy; it created 3 814 direct construction jobs as well as 464 direct and 600 indirect long-term jobs on the mine. At a more macro level, SEP will make a significant contribution to South Africa's foreign-exchange earnings for many years to come, generating around US$200 million per annum at full production."
Minister Sonjica congratulated Kumba and Anglo American on successfully executing this project, "and on the manner in which they have implemented it; helping support and empower local communities, facilitating sustainable development in the region and bringing valuable foreign revenue into South Africa."