Kumba to invest further $428 million in iron ore processing plant upgrade

The Anglo American unit said the extra investment follows a technical review and brings the total investment in its ultra-high-dense-media-separation (UHDMS) processing technology project to 11.2 billion rand after an initial 3.6 billion rand was approved in 2021.

The UHDMS technology is expected to increase the volume of premium iron ore to about 55% of its flagship Sishen mine’s production, up from the current levels around 18%, boosting margins, Kumba said in a statement.

With 1.8 billion rand having been spent on the engineering design, earthworks and a technical review, the remaining 9.4 billion rand will be invested between the second half of 2024 and the end of 2028, when the project is expected to reach full capacity.

CEO Mpumi Zikalala said the investment showed Kumba was focusing on “value over volume”.

“Premium iron ore is increasingly highly valued by our customers because it reduces carbon emissions from the steelmaking process and so plays a key role in green steel production,” she said in the statement.

Kumba, Africa’s top iron ore producer, has had to curtail its production as it seeks to match output to South Africa’s freight rail company Transnet’s constrained capacity to transport minerals to port.

Transnet is struggling to provide adequate freight rail and port services due to equipment shortages and maintenance backlogs after years of under-investment. It is also battling cable theft and vandalism of its infrastructure.

Kumba expects to export 36-38 million tons of iron ore this year, after shipping 18.1 million tons during the first six months of 2024.