An additional R5,5-million has been approved for the completion of the expan-sion of the Khumani iron-ore mining project to a capacity of 16-million tons of iron-ore a year, Assmang said last week.

Assmang, which is jointly controlled by the JSE-listed African Rainbow Minerals (Arm) and the JSE-listed Assore, announced concurrently that the first ten-million-ton phase of the Khumani mine had been completed on time and within budget.

Subsequent to that, the Assmang board had approved the additional capital expenditure (capex) of R5,5-billion for the expansion project to increase Khumani’s capacity by another six-million tons a year.

Arm Ferrous CE Jan Steenkamp esti-mated total capex for the expansion at R6,7-billion, based on the feasibility study completed in June 2009, which compared favourably with the previous September 2008 estimate of R7,2-billion.

Expenditure of R1,2-billion was approved 
in September 2008 for early works and long-lead items, hence the outstanding capital requirement of R5,5-billion for the expansion’s completion.

Of the annual six-million-ton expansion, four-million tons was intended for the export market and two-million tons for the domestic market.

Assmang had received a commitment from Transnet to extend its current iron-ore export allocation on the Sishen–Saldanha export channel from ten-million tons a year to 14-million tons a year, dovetailing with the iron-ore channel expansion from 47-million tons a year to 60-million tons a year.

Robust Returns
Steenkamp said that Assmang would fund the completion of the Khumani expansion project by making use of existing cash resources, operational cash flows and borrowing facilities.

He said that the project had robust returns and the high-grade iron-ore resource, which had a stripping ratio of one-to-seven over the life-of-mine operations, ensured competitive mining costs.

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