Name and Location
Sishen western expansion project (SWEP), Northern Cape, South Africa.

Client
Sishen Iron Ore Company (SIOC), in which Kumba Iron Ore owns a 74% share.

Project Description
The SWEP is designed to extend the expected life-of-mine at the Sishen mine and will provide access to 283-million tonnes of run-of-mine ore.

The second phase of the project will involve the resettlement of the Dingleton town. This project facilitates access to additional resources in 2015 and is currently in feasibility stage.

Net Present Value/Internal Rate of Return
None stated.

Value
Not stated.

Duration
Ramp up of production to 37-million tonnes is expected by 2016.

Latest Developments
The first phase of Kumba Iron Ore’s relocation of the Dingleton community, in the Northern Cape, is officially under way, with the first households moved into their new homes in Kathu.

The R4.2-billion relocation project is an important element of the SWEP, to ramp up production to 37-million tonnes by 2016.

The first phase, which will be completed by the end of December, will result in 17 private homeowners and the occupants of 54 municipal houses in the northern section of Dingleton being relocated. The rest of the community will be moved by the end of 2016. Two churches and one business – a guesthouse – will also be included in the move, which has been timed not to disrupt schooling for the children involved.

Dingleton and the mine are currently separated by a 500 m buffer zone. The town was established by the former operators, resources group Iscor, in the 1960s, to accommodate Sishen mine employees. With mining activities encroaching upon the town from all sides, the quality of life of residents has deteriorated over the year and many have moved to Kathu, 30 km away.

Currently, about 3 400 people remain in the town. To accommodate them, more than 500 new homes will be built in Kathu to replace the 309 privately owned houses, as well as 204 houses belonging to Kumba, State-owned logistics company Transnet, the South African National Defence Force and the municipality.

Also included in the relocation are 24 businesses; educational and medical facilities, including a new clinic; a satellite police station and related infrastructure; seven churches serving 16 church denominations; a town hall; offices and a community centre; roads; parks; an environment-friendly water, energy and sanitation supply; as well as all the needed bulk services.

The relocation follows an extensive consultation process with the community and other stakeholders, which started in March 2012, and was done in accordance with Anglo American's Social Way method and the International Finance Corporation’s sustainable performance standards. This made provision for compensation for loss of assets at full replacement cost, livelihood restoration and informed consultation and participation.

Owing to the difference in property values between Dingleton and Kathu, the 309 private homeowners will see the value of their properties increase, on average, more than tenfold once they have relocated.

Kumba will pay all capital gains taxes that private property owners incur as a result of the relocation. All replacement houses were designed to be low-maintenance and environment-friendly.

The difference in rates and taxes and water tariffs that home owners will be liable for, as a result of the move, will be paid in full by Kumba over the next 20 years, as well as partially during a five-year phase-out period. Each homeowner will also receive a one-off inconvenience and curtain allowance.

The relocation plan makes provision for support for various training and educational programmes, as well as small enterprise development. Once relocated to Kathu, residents will have easier access to potential sources of employment, such as the town’s commercial and industrial centres, as well as Sishen and other surrounding mines; and also to skills training or educational facilities.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Project development remains within budget and construction activities have been completed.

Contact Details for Project Information
Kumba Iron Ore manager corporate communication Gert Schoeman, tel +27 12 683 7019 or email gert.schoeman@angloamerican.com.