Iron ore weakness to continue into 2025 and beyond, says Fitch Solutions’ BMI
Looking beyond 2024-2025, BMI analysts maintained their view that iron ore prices will likely follow a multi-year downtrend.
Sishen Iron Ore Company Proprietary Limited (“SIOC”), a subsidiary of Kumba Iron Ore Limited (“Kumba”), and ArcelorMittal South Africa Limited (“AMSA”) are pleased to announce that they have entered into an agreement to transfer Thabazimbi mine (“the Mine”) to AMSA (“the Transfer”).
Until 2014 Thabazimbi was a captive mine owned and run by SIOC, but supplying ore exclusively to and funded by AMSA. As a result AMSA is accountable for 96% of the Mine’s current rehabilitation liability, with SIOC responsible for the site’s management and the remaining liability. The transfer would simplify this arrangement by making AMSA solely responsible for Thabazimbi’s closure and rehabilitation.
Mining operations at Thabazimbi ceased on 1 September 2016. The identified assets and liabilities of the Mine will be transferred at a purchase consideration of R1 plus the assumed liabilities. The remaining 63 SIOC employees currently engaged in mine rehabilitation and the preparation and finalisation of the Mine closure plan will transfer to AMSA on comparable terms, conditions and benefits.
The needs of the Thabazimbi community were identified and have been incorporated into the Mine’s social closure plan. AMSA, as part of its current financial obligation, will take over the entire social closure plan and will be responsible for the execution, implementation and funding of these identified projects while SIOC will retain a right of oversight.
The transfer is dependent on certain conditions being met, most notably: competition authority approval, cession of the Thabazimbi mining rights in terms of section 11 of the Mineral and Petroleum Resources Development Act (“MPRDA”), and a satisfactory due diligence investigation by AMSA. On fulfilment of these conditions, the employees, assets and liabilities will transfer to AMSA. If the conditions are not satisfied by 28 April 2017 (or a later date agreed to by the companies), the agreement will lapse and SIOC will proceed with the closure of the Mine.
“In line with our strategy to manage our costs more efficiently in what is a particularly difficult time for the local steel industry, this agreement allows us to take full management control of the processes and costs related to the rehabilitation liability at the Thabazimbi mine. In addition we will investigate the feasibility of different options to possibly restart operations at the mine in order to supplement the company’s sources of iron ore and with the potential of job creation” said Wim De Klerk, CEO of ArcelorMittal South Africa.
Themba Mkhwanazi, CEO of Kumba, said, “A transfer of the Thabazimbi mine to AMSA demonstrates Kumba’s continued support for local beneficiation. This also simplifies the contractual relationship between the parties around the effective management of rehabilitation. We are pleased with this development as it would be to the benefit of both companies and stakeholders.”
