South Africa`s Palabora may build pipe to export iron ore
mining-journal.com
South Africa`s Palabora Mining Co hopes to start building a pipeline in 2009 to pump magnetite to a port in Mozambique, to export its stockpiles of the low grade iron ore to booming China.
The company is doing a feasibility study on a 300-km pipeline from its mine in Phalaborwa to the Port of Maputo that would enable it to export its 240Mt of magnetite, a byproduct of its copper mining - in greater volume.
"No pun intended, it`s a gold mine we didn`t have to dig for," chief financial officer Charles Asubonten said on the sidelines of a mining conference in Singapore on April 8.
The magnetite slurry is made up of between 56 and 60% of iron ore, needed for making steel that is seeing strong demand from China. Iron ore term prices have risen fivefold since 2001.
Palabora, South Africa`s largest copper miner with a market cap of US$749 million, is now 58% owned by the world`s second largest miner Rio Tinto and 17% owned by the fourth-biggest mining group Anglo American plc , Asubonten said.
He said Palabora already has an agreement to supply 2Mt of magnetite a year to Shanghai-based Minmetals Development Co Ltd but wants to supply to more Chinese companies. The magnetite is currently transported by rail but to increase the volume would put a strain on the rail system, Asubonten said.
He said if the company goes ahead with the pipeline, the company may need to raise between US$500 million to US$1 billion dollars in 2009 and this could be either in debt or equity.
"We will approach our investors, and as you know, Rio Tinto is an investor, a big and strong investor." Palabora operates a copper mine and smelter complex in the Phalaborwa area of South Africa`s northeastern Limpopo province.
(Reuters, April 8) |
