Archive - 2011

Overview:

• Sishen mine’s production increased by 4% year on year to 10.5Mt (million metric tonnes) and by 3% quarter on quarter. Following an 18% increase in production in the second quarter of 2011 on the first quarter, production has normalised after excessive rainfall adversely affected production during the first quarter.
• Export sales volumes of 9.2Mt increased 11% year on year but decreased 7% quarter on quarter due to the annual maintenance shutdown of the iron ore export channel. Export sales volumes remain unaffected by the lower production experienced in the first quarter of 2011 as stock was used to supplement production.
• Domestic sales of 1.5Mt declined 0.6Mt year on year due to reduced off take from ArcelorMittal South Africa Limited (AMSA) during the September 2011 quarter.
• Thabazimbi mine’s production of 0.2Mt decreased 0.5Mt year on year mainly as a result of AMSA taking less finished product during the quarter, together with a planned decrease in production as the mine nears the end of its life.
• The commissioning of Kolomela mine commenced successfully during August 2011 with 0.3Mt of final product already produced during the quarter. Kolomela mine remains on track to ramp-up to between 4Mt and 5Mt in 2012.

Sishen mine’s production increased by 4% year on year to 10.5Mt (million metric tonnes) and by 3% quarter on quarter. Following an 18% increase in production in the second quarter of 2011 on the first quarter, production has normalised after excessive rainfall affected production during the first quarter. Whilst production from the DMS plant increased 6% year on year and 5% quarter on quarter, the plant continues to be impacted by mining feedstock constraints caused by the excessive rainfall experienced in the first quarter of 2011. It is therefore unlikely that the production shortfall from the first quarter of 2011 will be made up. The Jig plant, where production of 3.5Mt per quarter has been achieved for the past two quarters, continues to operate above nameplate capacity.

Export sales volumes of 9.2 Mt increased 11% year on year but decreased 7% quarter on quarter due to the annual maintenance shutdown of the iron ore export channel during August 2011. Export sales volumes remain unaffected by the lower production experienced in the first quarter of 2011, as stock was used to supplement production.

Finished product stockpile levels amounted to 4.5Mt at Sishen mine, Saldanha and Qingdao ports as at 30 September 2011.

South African domestic sales volumes of 1.5Mt declined 0.6Mt year on year due to reduced off take from AMSA from Thabazimbi mine during the quarter.

Production at Thabazimbi mine of 0.2Mt decreased 0.5Mt year on year mainly as a result of AMSA taking less finished product from the mine during the quarter coupled with a planned decrease in production as the mine nears the end of its life, scheduled for 2016.

The commissioning of the Kolomela mine commenced during August 2011, with 0.3Mt of final product produced as part of the hot commissioning of the plant. Kolomela mine remains on track to produce between 4Mt and 5Mt whilst ramping up in 2012, before reaching design capacity of 9Mtpa in 2013. The first empty wagons were transported under diesel locomotive power to the mine during September 2011 to allow for the commencement of the commissioning of the load out station during the fourth quarter.

In the current uncertain economic environment, steel mills are facing margin compression and are carefully managing raw material inventories. While we believe that the medium to long term market fundamentals will remain robust, this is expected to increase the volatility in short term iron ore prices.