Andre Janse van Vuuren
KUMBA Iron Ore started moving more than 500 households as part of plans to raise output at Africa’s largest mine for the steelmaking ingredient as the Anglo American unit announced a business review.
Kumba would move some homes from the west of the Sishen mine to a new precinct in the nearby town of Kathu in the Northern Cape by year-end, public affairs head Yvonne Mfolo said yesterday. The rest, as well as businesses, schools, clinics and churches, will be moved by the end of 2016 in the R4.2 billion project.
It was reviewing all operations, spending plans and product portfolios after prices fell to a five-year low, spokesman Gert Schoeman said.
Kumba is expanding the Sishen pit as the price of iron ore, which has fallen 47 percent this year, dwindles, partly on concern China’s economic slowdown will weaken demand for the material. At the same time, BHP Billiton, Rio Tinto and Vale have increased production to bolster their market shares, creating a glut and preventing a price rebound. “Prices have moved to lower levels than we expected,” Schoeman said. The firm would announce more details on Anglo American’s investor day on December 9.
The commodity, which traded at $70.97 (R782) a ton yesterday afternoon in London, would fall to less than $60 in the third quarter of 2015, Citigroup said last week.
Only BHP Billiton and Rio Tinto, the world’s two largest mining companies, and Kumba produced profitably at that price, UBS analysts said.
Kumba wants to increase iron ore output from the open-cast mine to 37 million tons by 2016. South Africa is the world’s fifth-largest producer of the seaborne variety.
Owners of 17 homes and 54 municipal houses would be moved by the end of December, Mfolo said. – Bloomberg