JOHANNESBURG (miningweekly.com) – South Africa’s major iron-ore producer and marketer Kumba Iron Ore is fast-tracking solar power permitting and looking to wind energy, it is discussing the use of green hydrogen with particularly European customers, and it foresees relatively strong iron-ore prices continuing in the short term as well as good premium prospects for its lump ore, which makes up two-thirds of Kumba production.

On the company’s renewable energy generation plans, new Kumba CEO Mpumi Zikalala said in response to Mining Weekly during a media briefing: “We’re currently busy with the permitting phase of our 60 MW to 80 MW plant.

“We also form part of the broader Anglo American renewable energy strategy, which will look at a more holistic approach that will also include wind power generation within the renewables space.

“With our initial phase of the 60 MW to 80 MW power, we are investigating whether we will require storage. That’s work in progress but certainly we are fast-tracking the work around permitting and will come back with more information within the overall ambit of Anglo American,” said Zikalala.

On prospects for the involvement of renewable energy-linked green hydrogen, Zikalala drew attention to the reference of President Cyril Ramaphosa in this month’s State of the Nation Address to green hydrogen and the Northern Cape province, where Kumba is based.

“The president spoke about green hydrogen from a Northern Cape province perspective, and we will be watching that space very closely.

“Certainly, when it comes to our customers and their plans, they are looking at utilising green hydrogen as they work through their strategy from a Scope 3 emissions perspective,” said Zikalala.

Expanding on green hydrogen and liaison with customers, Kumba marketing and seaborne logistics executive head Timo Smit revealed that Kumba is working with its customers, particularly in Europe, to see what mix would be ideal for them to feed into directly reduced iron (DRI) steelmaking, which is linked to the use of green hydrogen. DRI is produced by direct reduction of iron-ore using carbon monoxide and hydrogen.

On customer requirements, Smit said in response to Mining Weekly: “Most of them are pretty far advanced.”

He spoke of Salzgitter, which is one of the largest steel producers in Europe with an annual output of seven-million tonnes, planning to convert its steelmaking over time from blast furnace steelmaking to DRI, based on green hydrogen.

“We’re part of those investigations and looking into what is required for our ore to be feedstock in DRI steelmaking,” added Smit.

CENTRALISED IRON-ORE PURCHASING PLATFORM

On China seeking to centralise the way in which iron-ore is priced, Smit said there had been a number of steps in the past week by the Chinese National Development and Reform Commission (NDRC) to try and limit speculation in iron-ore and price volatility.

Last week the NDRC met with international traders on iron-ore trading activity and stock levels in ports in China. That was followed up by another meeting with Chinese steel mills and traders in a bid to limit price volatility.

Another meeting took place this week with port authorities investigating what can be done to limit inventory levels at ports.

The latest news to come through is that the NDRC is investigating a centralised purchasing platform in an attempt to reduce volatility.

“I think the impact is going to be relatively small. It would impact volatility but I don’t think it’s going to impact average price levels, which should be reflective of fundamental supply and demand. We might see an impact in volatility, which frankly wouldn’t be bad but on the overall average price levels I think the impact is going to be quite limited.

“These developments are very, very fresh. It’s a moving space, so we will see what else is done in the weeks ahead. What we have seen so far is that whenever an announcement was made and a step was taken by the NDRC, the very next day the market would react quite strongly to that and we would see the price fall quite significantly, only to be followed by a bounce-back the day afterwards, so that to me is indicating that the underlying demand is still pretty strong, even though in the very short term we’ve seen a response to the steps taken by the NDRC,” said Smit.

He is of the view that iron-ore prices will remain strong in the short term, on the basis of steel stocks being relatively low.

“In the short term we are still looking at a relatively strong price. The same is also true for the lump premium, which is very important to us because two-thirds of our production consists of lump. In the short term we see a very supportive environment for the lump premium. That’s huge because the met coal price is still high but likely to come under pressure, and when met coal comes down lump should be going up, and that’s good for us,” Smit added in response to journalist questions.