‘Commodity prices are heading lower’Comment on this story
While commodity prices are heading lower and demand from China is slowing, Kumba chief executive Chris Griffith is upbeat about the future.
At the opening of Kumba Iron Ore's R8.5 billion Kolomela mine near Postmasburg in the Northern Cape last week he said:
“The price environment is still very good for iron ore, it is still very good for the iron ore industry and very recently seen a cut back in the announcement of iron ore projects, that may be the fact that people are cutting back on capital or just may be readjusting because of what the market senses compared to what actually is going to happen.”
Kumba’s Kolomela mine started shipping products to the port of Saldanha five months ahead of schedule.
According to Susan Shabangu, the Minister of Mineral Resource, last year iron ore productions contribution to total primary mineral sales was R62 billion or 17 percent and it employed 20 000 people of 4 percent of total mining production.
Stephen Mentjies, an Imara SP Reid analyst, said the demand from China steel demand was expected to double in the next ten years.
During a tour of the mine, Mike Carney, the head of the Kolomela resource team, said that while the life of mine of Kolomela was expected to be 28 years, it would be extended if more ore was found.
“We have identified ore bodies on site which were not in our plans and we are currently investigating,” Carney said.
Kumba Iron Ore is owned by Anglo American and the company is the biggest miner of the bulk commodity, which is used in the production of steel.
Kumba is in discussions with with the government to establish a developmental price for providing steel.
Cynthia Caroll, the chief executive at Anglo American, who was also at the launch echoed Griffith, said that they expected sustained growth in China and India would underpin the demand for commodities supplemented with early recovery signs from the United States.
However, she said the key was to be aggressive.
“We need to be globally competitive which is not easy. Markets are skittish, and stocks are down, this is more reason to be linked up with customers, suppliers, government and infrastructure providers to remain focused.”
Kolomela mine, which means digging deeper is Tswana, sold its first shipment to India two weeks ago is expected to produce between 4 and 5 million tons of iron ore this year and ramp up to 9 m tons next year.
The Kolomela mine is part of Kumba’s growth strategy to increase delivery at its South African operations to 70 m tons a year by 2019.
The Kumba board approved the investment in Kolomela in 2008, and roughly 15 000 jobs were created during the construction of the project, and 840 permanent jobs will be created at full production.
Kolomela is one of three Anglo mining projects the other two being Barro Alto a nickel mine in Brazil and Los Bronces a copper mine in Chile.