KUMBA Iron Ore is investing a further R7.6 billion in an ultra-high-dense-media-separation (UHDMS) processing technology that is expected to extend the life of its Sishen mining operation while also bumping up the mine’s proportion of production from 18% to 55%.
This follows the completion of a full technical review of the UHDMS processing technology project at Kumba’s Sishen mine in the Northern Cape.
“Kumba is pleased to announce board approval for a further R7.6 billion investment in the UHDMS project, in addition to the R3.6bn previously approved in February 2021,” the company said yesterday.
This brings up the total capital investment by Kumba into this project to to R11.2bn. The company has already spent R1.8bn on the project’s detailed engineering design, earthworks and technical reviews.
The remaining R9.4bn is set to be invested over the period to 2028 “in line with the phasing” of the project. Kumba expected full capacity under the new project technology to be achieved by the end of 2028.
“Through utilising UHDMS processing technology, we can treble the proportion of premium iron ore product from our world-class Sishen mine,” said Mpumi Zikalala, CEO of Kumba Iron Ore.
“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.”
The investment also supported higher margins and a compelling return on investment in addition to creating a new pathway to extending Sishen’s life to 2044.
“The UHDMS processing technology will provide Kumba with an enhanced ability to respond to future customer requirements and improve flexibility across the value chain,” Zikalala said.
“The implementation will be phased over four years to ensure safety and operating stability across the site during construction whilst maintaining disciplined capital allocation.”
Zikalala said the investment into the Sishen mine’s processing technology was a reflection of Kumba’s long-term commitment to South Africa’s mining industry and to host communities in the Northern Cape.
Kumba is among South African miners worst affected by Transnet’s rail and port inefficiencies. The company has, however, been working together with Transnet, the Ore User’s Forum and government through the National Logistics Crisis Committee to improve the logistics performance in South Africa.
“We are encouraged by the policy reforms and the value that this will bring to the turnaround of the performance of the logistics network to the benefit of all our stakeholders,” Zikalala said.
The new processing technology at Sishen reduces the mine cut-off grade and the mine strip ratio, with waste material processed as ore while also maximising product premium by an additional $2 to $3 a ton.
The process will help Kumba deliver an estimated internal rate of return of more than 30% and an earnings before interest, tax, depreciation and amortisation margin of more than 50%, in addition to the potential to extend the life of Sishen mine to 2044.
This new processing technology uses specialised ferro silicon in the plant processing of raw iron ore, allowing for greater flexibility to process a wider range of iron ore grades and densities.
“The project will commence in November 2024, with the main tie-in of the project in 2026, and the plant reaching full capacity by the end of 2028. During the implementation phase, production will be supplemented by finished product stock,” said the company.