Diversified mining company African Rainbow Minerals (ARM) had iron-ore reserves that could “easily” maintain 16 Mtpa – or even 20 Mtpa production – for more than 20 years, ARM CEO André Wilkens told Mining Weekly Online in an exclusive interview.

“We have also said that, if the market takes a slightly lower grade of iron-ore in the future, we have significant upside in the current orebody,” he reiterated, after presenting a superb set of record results that saw ARM’s cash war chest soar to an unprecedented R2,6-billion.

“The first step is to get to the 16 Mtpa, but we are already thinking and planning beyond that,” Wilkens said, after the company disclosed an encouraging outcome in talks on rail and port capacity for the transport of iron-ore with state logistics company Transnet.

ARM, with its astute Assmang-Assore partners, started at 5 Mtpa of iron-ore a year and were currently increasing that production to 16 Mtpa, which was more than three times what it produced in the past, at a time of surging iron-ore demand and stratospheric prices.

“We will realise very significant prices on our material and the volume will grow from a long-life orebody.

“We have a very good quality of iron ore and we have been selling iron-ore for the past 40 years, so the markets know our material,” Wilkens added.

LOW-PHOS MANGANESE

Wilkens said that the company, again with its partners, also had low-phosphorus manganese as a second bow in its steel-material supply quiver.

He pointed out that there was a trend towards the use of more manganese in iron-ore to create quality steel.

While, in the past, only 9 kg of manganese was used per ton of iron-ore to create high-tensile and quality steels, advanced new steels were requiring more than double that quantity, which was increasing demand for manganese.

“You have sophisticated steels now that actually require more than 20 kg of manganese per ton of iron-ore, which shows a huge growth in the manganese market. That coupled to the iron-ore-steel market, which is also growing significantly, we think manganese is a good market to be in,” Wilkens said.

“Firstly, some 80% of the world’s manganese sits in South Africa and we own 60% of the top-quality manganese together with our partner Assmang.

“We are mining and selling manganese at the very-low 48% phosphorus content and it is used in a blend material in many a smelter,” Wilkens told Mining Weekly Online.

ENERGY COAL

A large portion of the coal ARM had with its partner Xstrata was 27 megajoules (MJ) and ARM sold it on export markets at margins “significantly higher” than in South Africa, while still having “adequate” coal to supply power utility Eskom.

“Even what we supply locally is the good 22 MJ coal,” he said.

PLATINUM

Wilkens dismissed the notion that platinum mines could be established quickly and emphasised that a significant period of time was needed to “build a platinum mine, get it into production, get the right efficiencies and get the right recoveries".

“We have two platinum mines with our partners. Both the mines have got further expansion potential and we are focussing on that.

“As far as the platinum goes in Zimbabwe, we have a number of opportunities that we are busy considering and whatever decision we take there has to be value-adding to our shareholders and we are very careful."

The amount of money for junior exploration companies had reduced substantially, which was creating opportunities for producers like ARM and others to consolidate the platinum-mining industry.

“We are looking at opportunities and also speaking to people,” Wilkens confirmed.

NICKEL

Metal credits were giving ARM its nickel for nothing plus $4 because of what the company was receiving for the co-mined chrome, copper and cobalt.

When ARM’s new large-scale but lower-grade mine produced at a level of 20 000 t of nickel, its nickel cost price would still be at a low $3,50/lb cash cost, compared to the current ruling nickel price of $10/lb, which would continue to provide a good margin of profit.

There was also potential to reduce the $3,50/lb cash cost still further to keep the company in the bottom 40% quartile of the nickel producers world wide.

COPPER

ARM was already producing a small amount of copper in the Democratic Republic of Congo.

“I would say if we start building at Konkola in Zambia, we could probably get that into production in about three years. We have put adequate money and support into Teal to allow them to accelerate the exploration process and increase the information going forward and that has earned good returns so far,” Wilkens told Mining Weekly Online.

Teal, which is ARM’s Toronto- and JSE-listed exploration junior, had raised R5-million in the market, received another R85-million guarantee as well as a letter of support for another R40-million from ARM.

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