Modern Mining August 2015

IRON ORE

Price crash leaves Africa’s iron ore The long slide in the iron ore price – which peaked at US$191/tonne in early 2011 – has left the iron ore mining scene in Africa in tatters. Just two years ago, there were projects speeding ahead all over the continent. Nowmost projects have been slowed or deferred and some new mines which were launched with great fanfare several years back – Tonkolili and Marampa in Sierra Leone – are no longer producing (although Shandong is reportedly planning a resumption of operations at Tonkolili). Modern Mining’s Arthur Tassell gives a round-up of some of the latest developments.

O ne effect of the fall in the iron ore price is that activity in what used to be one of the most prom- ising iron ore destinations in Af- rica – the West Central African region taking in Cameroon, Gabon and the Re- public of Congo (ROC) – has tailed off sharply. The region was once touted as the next iron ore frontier. No more. Exarro has taken a R5,8 billion write down on its Mayoko project in ROC while ASX-listed Equatorial Resources announced earlier this month (August) that it had entered into a conditional agreement with Midas Global, a subsidiary of Interalloys Trading, for the sale of its nearby Mayoko- Moussondji iron ore project. Also under development in ROC is the plus US$2 billion Zanaga project (a JV between Glencore and AIM-listed Zanaga Iron Ore), which is at an advanced stage with a feasibility study and mining licence in place. Zanaga said at the end of last year that – in the light of changing iron ore market conditions – the JV planned to reduce the cost base of the project during 2015 while continuing to advance key prepa- ratory work. Sundance Resources, an ASX-listed com- pany, is continuing with its Mbalam-Nabeba project which straddles the border between ROC and Cameroon but activity on the ground seems to have waned, with Sundance now mainly focused on achieving funding of the mine infrastructure. Nevertheless, it says it is moving ahead with “a high level of confidence”. Interestingly, John Welborn, Equatorial’s MD for the past several years, has now stepped down from that role (although he remains a Non-executive Director of the company),

and has recently surfaced as CEO of another Australian miner with interests in Africa, Resolute Mining, which owns the Syama gold mine in Mali and the Bibiani gold mine in Ghana. As MD of Equatorial, he was obvi- ously a cheer-leader for the iron ore market but has now changed his tone markedly and was recently quoted in the Australian media as say- ing that “I can’t be more delighted to move from a commodity that’s measured by the tonne, and increasingly worth nothing, to one that has always been valuable and has been measured by the ounce.” Further south, in South Africa itself, Kumba Iron Ore’s recently announced interim results for the six months to 30 June, give some idea of the challenges facing the iron ore mining sector. Although the company’s Sishen and Kolomela mines in the Northern Cape contin- ued to perform strongly at an operational level and total sales volumes increased by 16 % over the equivalent period of 2014, headline earnings were 61 % lower at R2,5 billion. To handle the tough market conditions, Kumba

36  MODERN MINING  August 2015