Exxaro, South Africa’s second largest coal producer,expects to start mining iron ore in the Republic of Congo this year, with an eye to producing up to 10 million tonnes a year, as the miner diversifies beyond its traditional reliance on coal.
Sipho Nkosi, Exxaro CEO told the Reuters Africa Investment Summit he was optimistic it would soon get a permit to begin production at the Mayoko project.
“We will get our mining convention and start mining this year,” says Nkosi.
South Africa’s coal producer acquired the project as part of its A$313 million ($328.10 million) takeover of African Iron in an effort to diversify from coal, which has been hit by sharp drops in prices and demand.
Exxaro plans to spend $320 million in the initial ramp up of the mine, with a view to producing up to 2 million tonnes by next year, Nkosi said. Exxaro aims to eventually mine 10 million tonnes of the steel making ingredient per year, although Nkosi declined to give a date for when that would happen.
Mayoko’s success depends on clearing bureaucratic hurdles and securing access to transport links and a port.
Nkosi said officials in Congo right up to the president were very accessible, but there were challenges to breaking ground in a country new to the mining game.
“It is a learning curve for the country, for any investor. Once we have gone through that loop, anyone who comes after us is probably going to find things much easier,” says Nkosi.
Nkosi said Exxaro would invest in upgrading a railway line leading to the deep-water port at Pointe Noire to handle 2 million tonnes of cargo per year and will manage the line jointly with the government.
He declined to comment on whether Exxaro would be interested in buying Equatorial Resources, which has a project adjacent to Mayoko, but he did say that the two companies often talked about a possible collaboration, notably in infrastructure.