Prospect of South Africa's iron ore export to China optimistic

Asian Metal: Thanks for taking our interview. Please give us a brief introduction of your company firstly.

Khanya: Rand Alchemy Merchant Company is located in South Africa Gauteng province and our main services are to raise funding for mining projects and find markets for the products which are produced by our miners. Currently we are in partnership with three mines, namely manganese in the Northern Cape province, chrome in the North West province and iron ore in Mpumalanga province. We currently also have a stake in the Bakubung iron ore mine in Mpumalanga province and most of the export commodity from the mine is destined for the European market. Our company has stockpiles of iron ore which are more than 40 million tons in quantity.

Asian Metal: What are the grades of your iron ore? Who are the target customers?

Khanya: The iron ore which is currently available is 56%min Fe and 80% Fe2O3, with 12.5% TiO2. We intend to find buyers or market in the People’s Republic of China.

Asian Metal: Can you introduce the reserves, advantages and disadvantages of iron ore in South Africa?

Khanya: South Africa is rich in iron ore resources, with a total reserve base of 2.3 billion tons. At present, it is the largest iron ore exporter from Africa to China. South African iron ore is mostly hematite, less impurities, good reducibility and average thermal strength. South African iron ore has some of the highest grades in the world (mostly above 55%min), and it is easy to access and extract. There are many mining companies which have huge stockpiles currently mined and ready for shipping. Some of the iron ore has titanium which is ideal for the aviation industry. The disadvantage of iron ore in South Africa is its high alkali metal content. Alkali metals (potassium and sodium) have harmful effects on the metallurgical properties of coke.

Asian Metal: Many mines in Africa are out of production due to the impact of COVID-19. Can you introduce the current production situation in South Africa?

Khanya: Fortunately, the South African mining industry was allowed to continue operations during the Covid-19 pandemic. With the mitigation of the epidemic, more than 95% of the mines have resumed operation. Most of our iron ore was already mined before the Covid-19 lockdowns were imposed on certain areas of the economy, therefore; our mined ore supplies are available for shipping and local beneficiation.

Asian Metal: China’s imports of iron ore reached the record high of 1.17 billion tonnes in 2020. How about South Africa’s iron ore exports in 2020?

Khanya: I’ve also learned that China imported a total of 1.17 billion tons of iron ore in 2020, an increase of 96.746 million tons, or 9.5% year on year. The South African mining industry exported just under 80 million tons of iron ore in 2020, among which 46 million tons were exported to China, up by 8.2% year on year. South Africa has been China's third largest source of iron ore imports in the year of 2020, second only to Australia and Brazil.

Asian Metal: Iron ore prices in the international market went up obviously from last year to the first half of this year. What is your prediction of the market outlook in Q4?

Khanya: Iron ore prices have soared last year. Taking the price of Australian iron ore fine 62%min (CNF China) for example, it witnessed a total increase of USD67/t or 73% in 2020 to about USD158/t. The price maintained the upward trend in the first several months of this year, and further climbed by about USD62.5/t or 40% from the beginning of 2021 to around USD220/t in July. Although prices dropped recently, we are expecting them to remain high and buoyant for the remainder of the year considering the stable demand from steel mills especially in China. Should we see an early recovery in the Eurozone, prices are expected to remain high during 2022.

Asian Metal: Do you have any plans to explore Chinese market in the future?

Khanya: We are currently having 40 million tons of iron ore magnetite fines 56%min Fe available, and specifically looking for some potential buyers in China. We also intend to establish sustainable working relationships with some Chinese mining and investment companies. There are huge quantities of unmined ores in South Africa. The platinum based metals reserves in the Limpopo province are much larger than those currently mined in the North West province. There are huge reserves of unmined titanium in the Eastern Cape province. This potential should be explored to develop the economy of South Africa.