Pretoria, South Africa — 10 May 2012 – South African-based and JSE-listed mining group Exxaro Resources Limited is studying the possibility of speeding up an iron-ore project in the Republic of Congo, after its 20% stake in a mine producing the commodity contributed more than half its earnings last year.
“We’re looking at the geology, the plans, the product, the possible start date, the size,” CEO Sipho Nkosi said in an interview with Bloomberg News here, referring to a revised production schedule due in July.
Exxaro “’ South Africa’s second-largest coal company “’ plans to boost profitability by expanding into iron ore at the Mayoko project and elsewhere, after a failed bid for Australian producer Territory Resources Limited. The coal miner’s holding in Kumba Iron Ore Limited’s Sishen mine added US$$582 million to after-tax profit in 2011, or 58% of the total.
“We’re going to look beyond this one over a period of time for other opportunities,” Nkosi said. “Australia will always be a very good destination, and so is South America.”
“Exxaro is reviewing work at Mayoko by African Iron Limited, which it bought for US$321 million in March, and will negotiate with Congo on access to rail and port facilities and on upgrade costs once revised plans are complete,” he said.
“The port at Pointe-Noire will have to be expanded to handle an estimated 40 to 50Mt of ore annually for Exxaro, Xstrata Plc and Equatorial Resources Limited,” he added.
Exxaro has a “very good working relationship” with Equatorial, developer of the adjacent Mayoko-Moussondji project, he said.
Macquarie First South Securities (Pty) Ltd., which last month said African Iron planned initial output of an annual 5Mt by mid-2013, sees opportunities for Equatorial and Exxaro to collaborate on infrastructure or to merge their projects.
“Such consolidation, which we expect would be driven by Exxaro, would also then give Exxaro the next leg of a broader West Africa iron-ore strategy,” it said in a note.
This would open access to Equatorial’s Badondo project in the northeast of the Congo, leveraging Exxaro into the middle of another emerging iron-ore project cluster with export options via Cameroon or Gabon.”
Source: Bloomberg News. For more information, click here.