| Tue 23 Nov 2004, 13:15 | | Bullish Kumba Resources says iron ore prices may r |
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Bullish Kumba Resources says iron ore prices may rise 15% next year
November 23, 2004
Johannesburg - Kumba Resources, which is two-thirds owned by Anglo American and is the world`s fourth-biggest iron ore producer, said iron ore prices might rise by as much as 15 percent next year.
`There is a very bullish view for the next round of price talks,` said Con Fauconnier, Kumba`s chief executive. `Our view is that there will be a double-digit increase in the mid-teens.`
Kumba also said it expected power utility Eskom Holdings to agree by April 26 to expand a power station that it supplied with coal.
Eskom might approve an 1 800 megawatt expansion to the 3 600MW Matimba power station in the government`s next fiscal year, which begins April 1, said Ernst Venter, the head of Kumba`s coal division.
The expansion, which would be complete within four to six years, would allow Kumba to boost production at its 18 million tons-per-year Grootegeluk coal mine by an additional 6.3 million tons, tapping coal fields in the Waterberg that, Kumba said, held 50 percent of South Africa`s reserves.
Eskom`s spokesperson, Fani Zulu, was not available for comment. The government said in October 20 that it had to add as much as 7 000MW to South Africa`s power generation capacity to avert power shortages that might begin from 2007 unless projects were started. Most of that expansion would come from Eskom, Africa`s biggest power company.
At a later stage, Eskom might build a new 3 600MW power station near Matimba, which would allow a further 14.7 million ton expansion to Grootegeluk, with 12.2 million tons of that going to the station and the rest exported, Venter said.
That station would take eight to 10 years to build, Venter said. The expansion and the station could create 7 000 jobs.
South Africa is the world`s fourth-biggest coal exporter after Australia, Indonesia and China. It produced 233 million tons of coal last year and exported 70 million tons. Most of the rest was burnt in power stations owned by Eskom, the world`s biggest coal purchaser.
Kumba also said the Richards Bay Coal Terminal might be given approval in the first week of December to expand its capacity by 14 percent. The approval, which would boost exports from the world`s second-largest coal export terminal, might be given after Transnet held a board meeting, said Venter. It would boost annual shipping capacity to about 82 million tons.
Kumba lost 1c at R45 yesterday and the mineral extractors sector lost 2.62 percent.
