Ispat Iscor seeks more Kumba ore
March 9, 2005
By Ingrid Salgado
Johannesburg - Following the multibillion-rand deal announced by Transnet and Kumba Resources on Monday, Ispat Iscor said yesterday it was in talks to secure additional iron ore from Kumba.
Once finalised, this could form part of Kumba`s second expansion wave, announced jointly with Transnet this week.
Mike Kilbride, Kumba`s executive director of business operations, said yesterday that Iscor was quantifying its own expansion plans. Once completed, the parties would `sit down and work out a strategy`.
Iscor said yesterday discussions with Kumba were well advanced but were `subject to final operational investment decisions by Ispat Iscor to increase our liquid steel output`.
The sister companies have a 25-year supply agreement dating back to Kumba`s unbundling from Iscor in 2001. It gives Iscor iron ore at cost plus 3 percent as well as the option to participate in Kumba`s capital expansion projects if Iscor wants to take up more iron ore.
Iscor said that should capital investment be found to be the most economical option, a cost-plus participation was likely to be maintained on a `mutually acceptable basis`.
Kumba this week announced that it would spend R3 billion to expand its Sishen mine by 12 million tons a year, while Transnet would be ploughing R4.5 billion into its rail and port facilities to handle the additional Kumba production.
The two companies were continuing talks for a second expansion project to boost capacity by a further 17 million tons a year.
Iscor estimates its total additional iron ore requirements at 2 million tons a year. It sources 6.75 million tons a year from Sishen and about 2.6 million tons a year from Thabazimbi. Both are Kumba mines.
Kumba shares closed 44c higher at R71.50 on the JSE yesterday. The other mineral extractors and mines sector declined 1.49 percent. Ispat Iscor shares closed 19c lower at R63.80. The steel and other metals sector declined 0.34 percent.
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