Anglo American’s subsidiary Kumba Iron Ore has received board approval for an additional ZAR7.6 billion ($430m) investment in its ultra-high-dense-media-separation (UHDMS) technology project at the Sishen iron ore mine.
The mine is located in the Northern Cape, South Africa.
The latest approval by Kumba Iron Ore’s board supplements the ZAR3.6bn ($204m) previously sanctioned in February 2021. It brings the total investment in the UHDMS project to ZAR11.2bn ($633.5m).
To date, ZAR1.8bn ($101.8m) has been allocated to detailed engineering, earthworks, and the technical review. The remaining ZAR9.4bn ($531.6m) will be invested between the latter half of 2024 and the end of 2028.
The Sishen mine is expected to achieve full operational capacity by the end of 2028.
The additional investment is primarily attributed to the advancement in engineering design and the extended execution period due to the phased upgrade and conversion of the processing modules, which will enhance safety and operational stability.
Kumba Iron Ore said that the UHDMS project will upgrade the existing dense-media-separation (DMS) processing plant at the Sishen mine to UHDMS technology. This technology, which utilises specialised ferrosilicon, enhances the plant’s ability to process a broader range of iron ore grades and densities.
The implementation aims to increase the proportion of premium iron ore produced and reduce the waste stripping ratio, while maintaining the lump-to-fine ratio.
Currently, the Sishen mine produces iron ore with an average iron content of approximately 64% and a lump-to-fine ratio of 70:30.
With the introduction of UHDMS technology, the proportion of premium iron ore is expected to rise to around 55% of the Sishen mine’s production, up from the current 18%.
The project also holds the potential to extend the Sishen mine’s operational life until 2044.
In addition, the total investment in UHDMS technology is expected to yield an EBITDA margin exceeding 50% and an internal rate of return (IRR) of over 30%.
The implementation will adopt a modular approach, converting six out of eight UHDMS coarse modules and five out of seven fines modules. The process is scheduled to begin in November 2024, with the main integration phase expected in 2026.
Kumba Iron Ore CEO Mpumi Zikalala said: “This investment demonstrates our focus on value over volume. Through utilising UHDMS processing technology, we can treble the proportion of premium iron ore product from our world-class Sishen mine.
“Premium iron ore is increasingly highly valued by our customers because it reduces carbon emissions from the steelmaking process and so plays a key role in green steel production. This supports higher margins and a compelling return on investment as well as creating a new pathway to extend Sishen’s life to 2044.”
