Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – In light of low iron-ore prices, JSE-listed Kumba Iron Ore was reviewing options for its Thabazimbi mine.
Speaking at the company’s year-end results, in Sandton, on Tuesday, Kumba CE Norman Mbazima said that, under the circumstances, the mine was “just not making money”, adding that the company was not expecting iron-ore prices to recover this year.
The options available to Kumba included mining the Thabazimbi deposit in a different manner to be more cost-effective, placing the mine on care and maintenance, closing the mine or selling it.
The mine's low-grade project had now been suspended, but the mine's operations would continue until a decision has been made.
An impairment charge of R439-million, relating to the mine’s deferred stripping asset, was incurred in the 2014 financial year. “After a detailed impairment assessment, it was concluded that the carrying value is not considered recoverable,” Kumba noted.
When asked what the possible closure costs, or care-and-maintenance costs would be, Mbazima said the company could not divulge any figures, as it was “looking at the figures as we speak.”
“A significant portion of the project rehabilitation and liabilities costs would be for the account of ArcelorMittal South Africa,” he added.
Kumba had spent R462-million in capital expenditure (capex) at the mine in the year ended December 31. Capex of between R400-million and R450-million that was to be spent this year was now also under review.
Production at the mine had increased by 74% from 600 000 t in 2013 to 1.1-million tonnes in 2014.
EXPANDING HORIZONS
Meanwhile, the company noted that, despite the challenges of the current low price environment, the group would continue to look for long-term opportunities in Central and West Africa to preserve long-term growth options.
When asked if the group would consider acquiring a stake in Rio Tinto’s Simandou project in southeastern Guinea, Mbazima answered with a resounding no, stating that the project was “far too large” for Kumba’s balance sheet.
“We would look at smaller-scale, more modest amounts to handle,” he added.