Despite its reputation as a significant South African coal miner, developing an iron ore portfolio has always fallen within Exxaro’s larger business strategy, writes Laura Cornish.

When it delivers its first iron ore later this year, its strategic vision will become a reality.

“Our movement into the sector should come as no surprise. Exxaro has embedded iron ore skills in the company, which we have retained since the Kumba Resources (Kumba) unbundling in 2006 when Kumba was relisted as Exxaro and Kumba Iron Ore was formed. Many of our employees used to work at Sishen mine, and have deep routed knowledge and understanding of the iron ore industry,” says Ernst Venter, executive head: growth, technology and services at Exxaro.

The combination of strategy and skill has seen the company invest in and develop its first iron ore project – Mayoko – in the Republic of Congo in central West Africa. Having searched the African and Australian continents, scouting the junior industry for the ‘perfect’ project, Mayoko was acquired in March 2012 as part of Exxaro’s acquisition of African Iron, an Australia-listed and domiciled iron ore developer working on the exploration and evaluation of Mayoko and its contiguous Ngoubou-Ngoubou prospects. They are located approximately 300 km north-east of Pointe-Noire (where Exxaro has an office) on the Atlantic Ocean.

And the company is hungry to bear fruit from its efforts and investment. “We want to bring this project to the market as soon as possible, and are on track to produce our first iron ore before year end. We are already being approached by potential customers.”

Venter declares the Republic of Congo as Exxaro’s iron ore destination of choice. “This is the area where we want to play in, which will provide us with a solid entry into the iron ore market. We believe it could be a new iron ore region with the potential to deliver between 40 and 50 Mtpa of iron ore in the long term.”

The Mayoko attraction

Mayoko meets every criterion in terms of what Exxaro defines as the ‘right project’,” Venter explains. “The demand for steel, and therefore  seaborne  iron ore, is expected to increase by 400 Mt/annum  and more  in the next 7 years and we knew upfront that we needed the right resource and reserve to be a successful player and meet the demands of this market. Mayoko’s resource is substantial and its iron quality superior. It is situated in a mining political and socially friendly country close to existing infrastructure and will be easy to mine and process.” In other words, it ticks every box.

The project already had a 121 Mt JORC-code compliant mineral resource when Exxaro acquired it in 2012, consisting of a lumpy hematite cap of direct shipping ore (DSO) at 55% iron and beneficiable DSO ore at 41% iron. The deposit literally sits on the surface, meaning the top material will require very little beneficiation.

Subsequent drilling across only 22% of the Mayoko project area has confirmed a 685 Mt resource by January 2013, which excludes banded iron ore formation magnetite at depth, revealing the massive open-ended project characteristics. Exploration drilling is continuing and by now a JORC resource of at least 750mt has been proven.

It is situated near an existing underutilized, railway line, passing within 2 km of the main prospect and terminating at the port of Pointe-Noire. Mayoko comprises 82 km of strike length running parallel to the railway line.

Exxaro completed a lot of additional drilling last year and we believes that there could be  as much as 2 billion t in the regional geology.”

Mayoko’s current status and long-term potential

“We are currently finalising the mining convention to have all necessary agreements in place for upgrade and use of the rail and ground exploitation and are in discussion with the necessary ministers as well as the Port Autonome de Pointe Noire for port access.  The process is flowing relatively smoothly and the government is open; they want us to mine and understand the economic value we are bringing to the country.”

“While the intention is to get up and running as soon as possible, the longer term potential for Mayoko is high,” Venter notes. The project is being developed in three phases. The first is to start production this year. The second is to produce 2 Mt of iron ore product in 2014. The third is to expand the project significantly to 10 Mtpa by 2016/17. A feasibility study for this expansion is already under way.

As described, the mining and beneficiation processes will be simple. “Mayoko will initially comprise three open-pits, mined as a truck and shovel operation with a zero stripping ratio. The ore will be crushed, de-slimed and then run through a dense media separation (DMS) plant to upgrade the ore to about 62% Fe.”

A mine manager has been appointed; Diesel Power has been awarded the mining contract and Tenova Bateman the DMS plant. The site is already taking delivery of all major equipment items and machines. There are already over 400 people on-site, including contractors, exploration and project teams. About 1 000 locals have also been employed since Exxaro became involved.

“The challenge will be training the local people, taking into account the language barrier – the Congo area is very French influenced.”

Venter adds that the volume of iron ore travelling to the port for export will initially require three trains a day, with 35 to 50 wagons per train. The railway line will be upgraded and Grindrod will supply locomotives for the line. There are currently two passenger trains a week using the rail line with numerous small villages alongside. “We need to take responsibility for safety all along the entire railway line once operational.”

While diesel generators will be used to power the project initially, a more permanent power solution will be sourced – which will supply up to 50 MW for the larger project’s needs. There is also potential for hydro power and gas power.

The significance of this project, coupled with the flow of Exxaro personnel passing through the site each week (between 60 and 70), has seen the company purchase its own second hand Boeing airplane, which is fully branded and ensuring commuters travel safely to the airport in Point-Noire from where they are chartered to an airstrip 4 km from the Mayoko site.

A new village surfaces

The remote location of the site has required Exxaro to further invest in the establishment of an entire campsite. The camp site includes enough accommodation to house 550 people. Because Exxaro is heavily invested in sustainable mining, it will further look to introducing a passive water treatment system, upgrade the healthcare facilities and also look at power supply options  for the community.

Additional Reading?

Request Free Copy