JSE-listed steel producer ArcelorMittal South Africa (Mittal), which is currently exploring an as-yet-unnamed iron-ore resource in the Northern Cape, hopes to begin mining on the property by 2015, partly in a bid to close an anticipated supply gap that would arise from Kumba Iron Ore’s aged Thabazimbi mine, the life of which had already been extended to 2014.

CEO Nonkululeko Nyembezi-Heita refused to name the property, nor provide the identity of its black economic-empowered (BEE) joint venture partner. Such disclosures would only be made once the Department of Mineral Resources had issued a Section 11 mining notice, as required by the Mineral and Petroleum Resources Development Act.

Nevertheless, CFO Rudolph Torlage indicated that some R207-million had been set aside mostly for the exploration and development of the property, which was located close to existing iron-ore logistical infrastructure.

The budget also included some funding for a joint exploration venture with Kumba in the Limpopo province at a project known as Zandrivierspoort. However, Nyembezi-Heita stressed that the 50:50 partnership with Kumba was at a very early stage and was not expected to be developed in the short- to medium-term.

Exploration on the Northern Cape prospect, which started in February and would continue until early 2013, was being fully funded by the steel company.

The BEE partner would remain a participant, as it participation was critical to securing a mining licence.

The exploration campaign was designed to advance the prospect to a point where a decision on a new mine could be made. But Torlage stressed that it would be premature to offer a capital expenditure figure for the proposed development.

The project formed part of a larger backward integration programme to secure steelmaking materials, such as iron-ore and coking coal – a programme that had been intensified following the cancellation by Kumba of a cost-plus-3% supply agreement struck at the 2001 unbundling of Iscor into separate mining and steel companies. The dispute was currently the subject of legal and arbitration processes, which Mittal hoped would be concluded by mid-2013.

In the area of coking coal, the company was beginning to diversify its supply away from Australia. It had already tested material arising from Vale’s mine in Mozambique and was also planning to integrate material from Rio Tinto’s Mozambique coking coal operations.

GM procurement and logistics Willem Nel said the company expected to receive about 350 000 t of material from Mozambique this year and increase purchases to around 500 000 t next year, logistics permitting.

He said it was also testing material from Coal of Africa Limited’s Makhado and Vele projects.

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