Ferrous Metals: business overview

Operating profit

2006

$1,360m

2007

$1,432m

EBITDA

2006

$1,560m

2007

$1,561m

  • Highest ever iron ore production in 2007 at 32.4 Mtpa
  • MMX Minas-Rio and Kumba expansions to lift Group iron ore production to 150 Mtpa by 2017
  • Iron ore price to remain firm through to 2009

Anglo Ferrous Metals’ primary business is iron ore. It holds a 63.4% shareholding in Kumba Iron Ore in South Africa and a 49% interest, acquired in mid-2007, in the MMX Minas-Rio project in Brazil. Other interests principally comprise manganese ore and alloy operations and carbon steel products.

Kumba was created as a pure-play iron ore company, listed on the Johannesburg Stock Exchange (JSE) following its unbundling from Kumba Resources in November 2006. The transaction also resulted in the formation of Exxaro, South Africa’s largest black economic empowerment (BEE) mining group.

In 2007, Kumba exported more than 70% of its 32.4 million tonnes of iron ore production, mostly to customers in Europe and Asia. The company currently operates two mines in South Africa – Sishen in the Northern Cape, which achieved a record output in 2007 of 29.7 million tonnes per annum (Mtpa), and Thabazimbi, in Limpopo, which produced 2.7 Mtpa.

Scaw Metals is a global group that manufactures a diverse range of steel products. With principal operations in southern Africa, Chile, Peru, Canada and Mexico, it produces rolled steel products, steel and iron castings, cast alloy iron and forged steel grinding media, and steel chain, wire rope and strand products. Scaw’s products serve the construction, railway, power generation, mining, cement, marine and offshore oil industries worldwide. In March 2007, Scaw’s South African operation completed a landmark empowerment transaction by including an employee trust and broad-based BEE consortium as owners in the company. Scaw is the first steel producer in South Africa to achieve a BEE rating.

Ferrous Metals also holds a 40% shareholding, with BHP Billiton having 60% and management control, in Samancor Manganese, the world’s largest integrated producer, by sales, of manganese ore and alloys. Samancor has plants in South Africa and Australia, the manganese operations in the latter consisting of Groote Eylandt Mining Company (GEMCO) and Tasmanian Electro Metallurgical Company (TEMCO).

Ferrous Metals has a 37% voting interest in JSE-listed Tongaat-Hulett, an agri-processing business which includes integrated components of land management, agriculture and property development. Through its sugar and starch operations in southern Africa, Tongaat-Hulett produces a range of refined carbohydrate products from sugar cane and maize. The company balances the operational requirement for cane supplies to its sugar operations with the transition to property development. The unbundling of Hulamin from Tongaat-Hulett, and its separate JSE listing, was completed in June 2007 together with the simultaneous injection of broad-based BEE ownership into both companies.

Hulamin, in which Ferrous Metals has a 38% voting interest, is Africa’s largest producer of aluminium rolled, extruded and other semi-fabricated and finished products, with its main operations situated in Pietermaritzburg, South Africa. As an independent niche producer of technically demanding and higher value products, Hulamin supplies customers spread among all the major aluminium consuming regions of the world.