Charlotte Mathews
1 September 2008
Johannesburg — MANGANESE and chrome producer Assmang, which is owned jointly by Assore and African Rainbow Minerals, would proceed with a feasibility study into expanding the Khumani mine to produce an additional 6-million tons of iron ore a year, it said last week.
It said the initial estimate for the cost of expansion was R7,3bn, and R1,2bn in start-up expenditure had been approved. Assore would have to pay only half of this cost.
This is a substantial increase on the sum of R1,6bn mentioned in February last year for the expansion project and also compares with the total of R4bn that it has cost to build the first phase of Khumani, producing 10-million tons a year.
Assore CEO Chris Cory said last week he could not confirm the previous figure of R1,6bn but it should be noted that several years would elapse between the two projects and there had been significant inflation in the meantime in items like steel and skills, which were scarce in Northern Cape.
Assore said the expansion had been made possible by an agreement with Transnet to transport 4-million tons of iron ore to port. The other 2-million tons would be sold on the domestic market. Cory said it was Assore's policy not to name its customers.
The first phase of building Khumani in Northern Cape was on budget and on schedule to start production by the first quarter of next year.
Strong demand for manganese, in particular from the steel industry, buoyed Assore's results for the year to June, although prices of its other products, iron ore, chrome and chrome alloys, were also strong.
Assore's turnover more than doubled to R9,2bn compared with R4,3bn last year and headline earnings rose almost fourfold to R113,62 per share from R27,20. The total dividend for the year of R12,50 was 257% higher than last year.
Assmang grew production of manganese ore 59% to 3,7-million tons but production of manganese alloys fell 2% after an explosion at the Cato Ridge plant.
Cory said most of the lost production was offset by sales from stockpiles.
Assmang earned 73,6% of its profits from manganese, 14% from iron ore and 12,3% from chrome.
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