Exxaro Resources had finally clinched a mining convention with the Republic of Congo, paving the way for production at its Mayoko iron ore project there, the diversified mining company said yesterday.
Output is expected only in the fourth quarter as a result of the delays in concluding the convention, which the company applied for in the first quarter of last year.
“This is a milestone for Exxaro following the nine-month delay in the signing of the mining convention,” Mzila Mthenjane, the executive head of strategy and corporate affairs, said on the sidelines of the Investing in African Mining Indaba.
He said the convention was subject to the fulfilment of conditions, including access to rail and port activities. The company was mulling building a harbour and a new power plant at the mine.
“We are confident that the operation will be financially viable,” Mthenjane said, adding that the board would be informed of the financial implications of the project.
Unlike the mining rights issued by the South African government mainly for mining and exploration activities, a mining convention deals with access to infrastructure. Macquarie Research said the “requisite documentation” was delayed “at the mercy of politicians”.
The development of the Mayoko project is divided into two parts. In the first phase it will produce 2 million tons of iron ore a year by the fourth quarter, increasing to 10 million tons between 2018 and 2019.
The iron ore will be exported mainly to China for its urban development, and countries in eastern Europe with a large manufacturing base.
In 2012 Exxaro acquired African Iron, which owns the Mayoko project, and it is expected to spend $340 million (R3.8 billion) on the development of the project.
Exxaro said further details of the project would be released at its annual results presentation on March 6.
The share price closed 0.63 percent up at R148.99 on the JSE yesterday.