Kumba Needs New Right to Access Reserve at Biggest Iron-Ore Mine

Kumba Iron Ore Ltd. (KIO) said it needs a new mining permit to access about a third of reserves at its Sishen mine in South Africa, the continent’s largest.

The Anglo American Plc (AAL) unit requires a right to properties on which Transnet SOC Ltd., the state-owned rail operator, had a track that was used to carry the steel-making ingredient to ports, the Pretoria-based company said in a statement today. The strip is 14 kilometers (8.7 miles) long and 30 meters (98 feet) wide and separates the current Sishen pit from part of the extension. Transnet has agreed to sell this land to Kumba, while the mining company has sold the properties for a new line to the transport utility.

Kumba lodged the request for the mining right with the Department of Mineral Resources yesterday, spokesman Gert Schoeman said.

“Should the applications be unsuccessful, the expansion of the Sishen pit in a westerly direction may be materially affected,” the company said. Kumba “would potentially not be able to access approximately 33 percent of the Sishen reserve,” it said.

South Africa’s highest court last month reserved judgment in a case where the department asked to overturn the grant of a partial prospecting right to Kumba for the Sishen mine. The asset accounted for 75 percent of the company’s production of 22 million metric tons during the first half of 2013. The Anglo unit spent 337 million rand ($34 million) on the Sishen Westerly Expansion project last year and estimates that this amount will increase to 1 billion rand by completion in 2016, it said on Feb. 12.

Kumba wants to start preparing the affected area for mining within six months to replace depleted reserves within the existing mine pit, Schoeman said by phone today. Transnet finished the relocation of the railway line in May, while the transfer of the property rights is pending at South Africa’s deeds office, the company said.

To contact the reporter on this story: Andre Janse van Vuuren in Johannesburg at ajansevanvuu@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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