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Appraisal
The Kolomela mine is South Africa’s third largest mine and contributes around 22% of South Africa’s iron ore production.
As for its sister mine Sishen, Kolomela’s high quality lump and fines products grading over 63% Fe receive significant
premiums, offsetting high operating cost. Kolomela’s FOB costs are in the middle third quartile due to a high stripping ratio
and the cost of rail freight 800km to port. The price premiums offset the structural high cost factors and Kolomela is in the
lower first quartile of AME’s FOB margin curve. Its cost performance is better than the much larger Sishen on lower strip
ratio and much less intensive processing. AME expects the structural factors will maintain costs in the third quartile and
profitability will continue to depend on price premiums. Forecast reserve life is 14 years and has declined each year since
2014. The continuing decline at Kolomela and at Sishen hovers over the future of South Africa’s iron ore exports.
Kolomela at a Glance
Introduction
Kolomela (formerly Sishen South) is in Northern Cape Province, South Africa. It was identified in the 1950’s and in 2011
commenced production of high grade DSO lumps and fines from haematite ore. Production is transported by the 60Mtpa
capacity government OREX rail system 800km to the 60Mtpa capacity export port at Saldanha Bay on the Atlantic Coast.
All production is exported.The project is owned by Sishen Iron Ore Company Proprietary Limited (SIOC). Kumba Iron Ore
Limited (Kumba), a company in the Anglo American plc group, manages the project and owns 73.9% of SIOC. The
balance is held by Exxaro Resources Limited (19.98%) and two other BEE. SIOC also operates the 38Mtpa Sishen Mine
75km to the north. Ore from Sishen and Kolomela is blended at the port for export.
Deposit Characteristics
The Northern Cape iron ore deposits developed by late Proterozoic weathering enrichment of early Proterozoic banded
iron formations (BIF) of the Asbestos Hills subgroup which overlie carbonate rocks of the Campbellrand sub group on the
western side of the Maremane Dome, an 80km long north south trending doubly plunging anticline. The regional scale late
Proterozoic Gamagara erosional unconformity cuts through the anticline and high grade haematite ore is best developed
where the unconformity and its associated weathering related supergene enrichment transects the complexly folded and
faulted BIF.The Kolomela ore system occurs at the southern edge of the Maremane Dome, blind under 30m of Tertiary
cover. Pre and post mineralization folding, faulting and karstification of the underlying carbonates have produced
disconnected ore bodies of complex shape and variable strike and dip. Mineral resources are defined at four sites
KOLOMELA
FEATURE ARTICLE – JUNE 2018
dispersed over an area of 7km by 6km. Average Ore Reserve grade is 64.3% Fe. Massive and laminated haematite are
the dominant ore types grading around 64% Fe and with a lump: fine ratio of 57:43.
Mining
Kolomela is a conventional open-pit operation, using drill and blast to extract ore and waste and truck and shovel to load
and haul. Mining is from two adjacent pits - Klipbankfontein, Leeuwfontein - and from Kapstevel North, 6km to the west.
Strip ratios for these pits range from 3.4 to 6.5 with a life of mine average of 4.5. Strip ratio has averaged 3.4 since
commissioning in 2009. The presence of two shallow aquifers requires dewatering ahead of mining. Kolomela Reserve
Life has deceased each year since 2014 and was reported as 14 years in 2017
Processing
Ore is processed in a simple dry crushing and screening plant. SIOC blends product from Sishen and Kolomela at port to
maintain specifications. It currently produces 7 lump and fines products grading 63.5% - 65.1% Fe, 3%-6% silica and 1.2-
1.8% alumina with a lump component >60%. SIOC commissioned a small scale dense media separation plant in 2016 to
treat lower grade B ore. Capacity is 0.7Mtpa and production 2017 was 0.5Mt.
The critical issue for Kolomela, SIOC and South Africa is mine life. Mineral Resources or Potential Mineral Resources at
Kapstevel South, east of Kapstevel North and Ploegfontein are significantly deeper than current mining areas.
Cost Curves
2018 Cash Cost Curve (US$/t)
Source: AME
Margin Curves
2018 Cash Margin Cost Curve (US$/t)
Source: AME
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