Workers at an iron-ore smelter. Picture: REUTERS
Workers at an iron-ore smelter. Picture: REUTERS

SOUTH Africa is not well placed to take advantage of the steep fall in Indian iron-ore output, but there are hopes there could be a boost for prices of the key steel-making ingredient.

South Africa is now the third-largest supplier of iron ore to China, the world’s leading steel manufacturer, leapfrogging India.

Indian authorities have introduced measures to bring its chaotic iron-ore mining sector under control, with sales to China falling about 55% to 33-million tons last year.

South African iron-ore sales rose 12% last year to 40.6-million tons, a distant third behind Australia, with 351-million tons, and Brazil.

"There is a benefit for us, but the problem is we are constrained by logistics," Andre Joubert, CE of African Rainbow Minerals’ (ARM’s) ferrous division, said on Monday. "The opportunity is there for us, but it will be about diversifying our market a bit and not really increasing the volume flow in the immediate future ."

The iron ore railway line between Sishen and Saldanha, which has the world’s longest trains, is busy with a ramp-up of capacity to 62-million tons a year, a target that should be reached next year. The aim is to haul 59-million tons on the 860km line this year.

"Things are going well on that line and we are very pleased with developments," said Transnet Freight Rail spokesman Mike Asefovitz. Studies were under way into ramping up capacity on the line to 83-million tons.

"Based on what we know about the ore bodies in the Northern Cape, they are not really conducive to another mega mine," Mr Joubert said.

There was no question of taking advantage of reduced output from its strike-hit neighbour, Sishen Iron Ore mine, which is owned by Anglo American subsidiary Kumba Iron Ore.

The unprotected strike in October and the slow ramp-up of production after the strike resulted in the loss of 5-million tons of iron ore. Kumba exported 9-million tons in the fourth quarter, a 28% fall quarter on quarter.

Mr Joubert said the Khumani mine was working at capacity and did not have extra material to rail to the coast. The mine is jointly owned by ARM, which is chaired by billionaire Patrice Motsepe, and Assore.

Kumba raised production 4% to 43-million tons last year despite the weak fourth quarter.

South Africa’s two biggest iron-ore mining companies, Kumba and ARM, are both in closed periods ahead of financial results due out next month, meaning they could not comment fully on their exports to China and operational performances last year.

ARM Ferrous operates the 14-million-ton-a-year Khumani mine for the export market and the 2-million-ton-a-year Beeshoek mine for domestic steel clients.

ARM exports to China, Europe, India and Turkey.