Johannesburg - Diversified miner Assmang expects the first "pick in the ground" at its newly announced R3.2 billion Bruce, King, Mokaning (BKM) iron ore export project by midyear.
The company - a 50-50 joint venture between Assore and African Rainbow Minerals, which was delisted from the JSE on February 28 - approved the first-phase construction of the BKM project, now known as Khumani Iron Ore Mine (the name of the Southern Kalahari San tribe), in January.
The project lies adjacent to Kumba Resources' giant Sishen mine, near Kathu in the Northern Cape, and will replace and surpass the 5.5 million tons being produced yearly at Assmang's Beeshoek mine, located in the same iron-rich neighbourhood, but further to the south.
Assmang chairperson Desmond Sacco said that the first phase would result in a new 8.4 million tons a year export operation, with first production expected during the early months of 2008.
However, a second-phase expansion to 16 million tons is already being considered, with the current design incorporating a possible scaling-up of the operation, in line with necessary, but not yet approved, rail and harbour expansions.
The second-phase expansion, which still requires Assmang board sanction, could involve a further estimated R1.8 billion in capital expenditure, and Sacco believes this level of production is only likely by about 2013/14.
He stressed, though, that he sees no market or resource-level constraints to growth beyond 8.4 million tons, but that co-ordination with Transnet's rail and port expansions would be imperative.
"Discussions have been ongoing with Transnet for the past five years and we are, at last, at a point where we are communicating our requirements and Transnet is appreciating them and understanding their economic significance for South Africa.
"The Transnet expansion plans for the Saldanha rail and port facility really provides the underpin of Assmang's future iron ore growth strategy," said Assore chief executive Chris Cory. Similar transport-related discussions were under way across all five of Assmang's commodity groups - iron ore, manganese ore, ferromanganese, ferrochrome and chrome ore.
Assore operations director Phil Crous told Mining Weekly that Assmang was engaged in discussions with Transnet to ensure that its full 8.4 million ton export ambition was accommodated, acknowledging that the current plan to expand the line to 41 million tons only included an allocation of six-million tons to Assmang.
"Assmang has built a good relationship with Transnet over the years and we are in ongoing discussions with senior management to increase rail and port infrastructure beyond 41 million tons," Crous said.
Transnet has dubbed the expansion to 41 million tons a year, which was part of a deal it struck with Kumba Resources last year, phase 1A, and the utility was preparing a capital request for a so-called phase 1B to meet Assmang's export objectives of 8.4 million tons a year export by July 1 2008.
"Transnet has committed this capacity and the capital required in writing to Assmang," Crous said.
It was anticipated that the main additional capex would mainly relate to a fourth stacker/reclaimer and associated stockpile at the harbour, as well as additional rail rolling stock, and an upgrade to the electrical power distribution on the line itself.
It is possible the channel capacity could be raised to about 47 million tons per annum, but Transnet is believed to be considering various permutations.
Tariff negotiations were under way between Assmang and Transnet to facilitate the expansion, and Transnet chief executive Maria Ramos indicated recently that negotiations would endeavour to "tie our increases in capacity to what our clients need and are doing".
- A full version of this article appears in the latest edition of Creamer Media's Mining Weekly