| Wed 30 Mar 2005, 15:39 | | Kumba may give zinc business a miss |
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Kumba may give zinc business a miss
John Fraser
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Resources Editor
ANGLO American subsidiary Kumba Resources may move out of zinc due to the volatility of the commodity, CE Con Fauconnier said in the company’s latest annual report, which was released yesterday.
Kumba would then focus on iron ore, coal and heavy minerals, Fauconnier said, and might move into manganese, to exploit its own new processing technology.
Fauconnier said Kumba’s aim was to “build a balanced portfolio of globally competitive commodity businesses”.
Kumba executive director Richard Wadley, who is responsible for strategy and business development, said while there was currently “great buoyancy in the zinc market, historically it has been very volatile”.
He said the treatment charges for processing zinc were currently low, and so had an adverse impact on the profitability of the Zincor refinery at Springs.
In addition to Zincor, Kumba’s zinc assets include a stake of 89,5% in the Rosh Pinah mine in southern Namibia, and a 28% interest in a Chinese refinery at Chifeng, China.
Wadley said Kumba was currently focusing on improving the efficiency and competitive positions of its zinc assets, but would need to decide whether “this business is comparable to the group’s other three businesses”.
Fauconnier said that “as the prognosis on zinc is uncertain, the immediate challenge is to restore the business to a sound financial footing, and make an appropriate decision when there is more clarity in the market”.
Wadley said no decision had been made on the future of the zinc assets, but he said that one future option might be to dispose of them.
Meanwhile, he said Kumba was excited by the prospects of its AlloyStream technology for the processing of ferroalloys, which could be “the key to unlock the door into manganese”.
Kumba has built an AlloyStream pilot plant that has produced ferromanganese at lower cost and with less pollution than current technology.
Fauconnier said Kumba would consider “investing in other commodities such as manganese, given the potential synergies in Northern Cape (where the Sishen iron-ore mine is sited) and the potential of our AlloyStream technology”.
Wadley said that AlloyStream was a “breakthrough technology” that operated at a fraction of the cost of conventional technology.
An analyst said that while it would be logical for Kumba to move into manganese, he questioned where it would find manganese in SA. “It all seems to have been tied up by Samancor and Assmang,” he said. “However, there has been talk in the past of asset swaps between Kumba and Assmang, and maybe that could be one way forward.”
He said there may be benefits with regard to government credits, as such a deal would probably include an empowerment element.
The analyst said while there could be valid arguments for Kumba moving out of zinc, “the question is who would want to buy the businesses. “Possibly, again, there might be an empowerment player with whom to do business.”
