JOHANNESBURG (miningweekly.com) – Anglo American group company Kumba Iron Ore is investing R11.2-billion worth of capital in its "exciting" waste-to-premium-product project that has a three-year payback.

Enabled by the modular build approach that has been adopted, 37% of Kumba’s overall ultrahigh dense media separation (UHDMS) project has been completed, with 90% of the engineering work already done.

Slightly higher 2026 unit cost of between R530/t and R560/t is being guided to reflect lower production later in the year, when the main UHDMS tie-in is implemented, new Kumba CFO Xolani Mbambo reported during the Johannesburg Stock Exchange’s full-year 2025 results presentation on Thursday, February 19.

The project, with excellent earnings before interest, taxes, depreciation and amortisation (Ebitda) credentials, turns material previously binned into saleable, premium-fetching product.

“The economics around the project speak for themselves. Ebitda margins above 50% and an internal rate of return of more than 30% means that payback from full production is just three years,” Kumba CEO Mpumi Zikalala pointed out during the presentation covered by Mining Weekly.

“But for me, what matters most is the long-term benefit. UHDMS gives Sishen meaningful life extension and strategic flexibility for years to come, fundamentally delivering long-term, sustainable value for all our stakeholders,” Zikalala added.

Previously, the UHDMS project was paused for engineering design uplift but as things stand now all major procurement has been completed with main tie-in scheduled for August.

During main tie-in execution, use will be made of stockpiled material to keep sales going and keep sales guidance intact.

Zikalala spoke of the UHDMS project remaining “one of the most exciting projects in our pipeline. The technology not only enables us to increase the volume of premium grade products; it also allows us to use low-grade material more effectively, cutting waste and improving our overall cost efficiencies, and we are reducing our cutoff grade from 48% to 40% and the economics around the project speak for themselves.”

“Capex for this project will be phased in line with implementation sequence,” Mbambo pointed out.

STRENGTH OF MINERAL ENDOWMENT

Right now, Kumba has 764-million tons of mineral resources, 471-million tons of which were already confirmed from the company’s 2024 resource cycle.

“We've now added another 293-million tons, two-thirds at Sishen and a third at Kolomela, which really shows that our exploration programme is doing exactly what it's meant to do,” said Zikalala.

“We’re not slowing down. Our exploration teams are actively expanding our understanding of the orebody and building options for the future.

“As I've said before, the Northern Cape province is a very interesting province when it comes to iron-ore. At the same time, our mine planning engineers are enhancing pit designs to optimise the extraction of the orebody.

“Our ore reserves now stand at around 802-million tons, and since 2022, we've added 175-million tons before depletion.

“That's a big step forward and speaks to the long-term resilience of our business. We've just added another year to both Sishen and Kolomela, taking their life of mine to 2041.

“Our ambition is to, however, increase life-of-mine, and we are working towards a value accretive pathway to improve or increase or extend Kumba life-of-mine,” said Zikalala.

In addition to the UHDMS project at Sishen, two important resource areas are being advanced at Kolomela, where they are making use of Kolomela’s existing infrastructure, which will keep capital costs down and speed up future development timelines.

In 2026, Kumba expects total production of between 31-million tons and 33-million tons, reflecting the main UHDMS project tie-in. The same number was guided last year, with 22-million tons from Sishen and 10-million tons from Kolomela.

Sales guidance of between 35-million and 37-million tons involves planned supplementing of production with finished stock.

The unit cost guidance rise from $40/t to $45/t is purely an exchange rate translation effect.

Capital expenditure in 2026 is expected to be between R13.2-billion and R14.2-billion for the full year.