Growth
	As noted by the chief executive, Kumba’s pipeline of growth opportunities is at an exciting stage of development, with FY2005 seeing the execution of several projects that have been investigated in recent years.
	IRON ORE
	Sishen Expansion Project A thorough review of Kumba’s assets in the Northern Cape was conducted in the second half of calendar 2003, against a background of rapid growth in demand for ore, new beneficiation technology, the marked appreciation in the value of the rand relative to the US dollar and concern about long-term increases in the stripping ratio at Sishen. This analysis led to a decision to investigate the potential to extract additional ore, some of a lower quality, from existing run-of-mine and previously stockpiled material. Following completion of a pre-feasibility study in December 2003, a feasibility study on the Sishen expansion project was completed in July 2004, and was followed by a comprehensive optimisation, redesign and risk mitigation process, which was completed and approved. Total cost of the study is some R30 million.
	This project will utilise current waste material and an average 10Mtpa new material to increase run-of-mine from the current 34Mtpa to 50Mtpa. The 16Mtpa feed to the new plant will be processed through a newly-built plant incorporating recent, but proven, jigging technology to produce about 10Mtpa of saleable ore with an average iron content of 64% compared with the 66% iron content of normal Sishen product. This in turn will result in a marked reduction in the current and long-term stripping ratio for the mine, as much of the material to be mined was previously treated as waste; indeed, some of this material has already been stockpiled in anticipation of the project proceeding. Total capital is estimated at R2,966 billion. The Sishen expansion project will begin delivery of product by mid-2007, ramping up to full capacity by the beginning of 2009. The current review of the life-of-mine plan indicates that the Sishen expansion project will enable the resource not currently planned for mining to be included in further reserve statements. The Sishen expansion project was approved by the Kumba board in February 2005.
	Pipeline of growth opportunities at an exciting stage of development, with several projects under way
	Drilling at the Sishen South project.   The pilot jig plant is an integral part of new infrastructure to be used in the Sishen expansion project.
	Sishen South Project This involves the development of a greenfields opencast operation on a group of iron ore bodies that lies some 70km south of Sishen mine, and immediately to the west of the current mining operations of Assmang’s Beeshoek project. The persistent strength of the rand has made many greenfields projects, including Sishen South, less attractive than previously, because of their sensitivity to fluctuations in rand denominated revenue relative to their initial investment cost. For this reason, the Sishen expansion project, detailed above, has taken precedence over Sishen South in terms of accessing new capacity along the export channel to Saldanha Bay. Nevertheless, Sishen South remains an attractive project: it is intended ultimately to produce some 9,0Mtpa of Sishen high-quality ore for export by 2010, for a capital cost of about R2,2 billion, although alternatives to commence with a smaller operation are at an advanced stage of evaluation. Potential to produce a 64% iron product as for the Sishen expansion project will increase resource utilisation and mine capacity. Timing of the development of Sishen South will be guided by availability of export channel capacity, via either Saldanha or Coega.
	Phoenix Project Phoenix is a project being evaluated at the Thabazimbi mine in Limpopo province, north of Rustenburg, and is exploring the potential to recover saleable high-grade ore from the low-grade banded ironstone formations that host the well-known, but depleting, ore bodies at the mine. A technological process has been developed successfully and is currently undergoing commercial feasibility study. If proven viable, Phoenix could produce 2 – 3Mtpa of ore that would eventually replace and even increase current production, all of which is delivered to Mittal on a cost-plus basis. A mutually-beneficial commercial agreement with Mittal will need to be negotiated for Kumba to participate in the development of Phoenix.
	Hope Downs Despite approval from the boards of both Kumba and its controlling shareholder to proceed with the development of Hope Downs, progress with the project was significantly delayed as a result of an objection raised by our Australian partner in the project, Hancock, to the change of control in Kumba that resulted from the acquisition of a 66,62% stake in the company by subsidiaries of the Anglo group. This dispute eventually led to arbitration, resolution of which only occurred in December 2004, a year after the objection was raised.
	Subsequently, arbitrators ruled that Hancock’s refusal to accept the change of control of Kumba was not unreasonable. In terms of the agreement between Kumba and Hancock, this gives Hancock the right to acquire Kumba’s interest in the project at an agreed price, or according to a value determined by an independent valuer. This process is under way, as is an appeal lodged by Kumba against the arbitration ruling.
	Meanwhile, Kumba continues to honour its obligation to work with Hancock to prepare the Hope Downs’ project for development as soon as possible.
	Faleme The Faleme deposit, located in the extreme south-eastern corner of Senegal, is owned by a governmental development company, Miferso. Kumba concluded an agreement with Miferso in July 2004 in terms of which the two parties will explore the potential to create an export-oriented iron ore mine at Faleme. It is envisaged that up to 12Mtpa of high-grade ore will be mined over a 20-year period and transported to a new terminal to be built on the Atlantic coast south of the capital, Dakar, for sale mainly into the European market.
	The principal constraint to the development of the project will be infrastructure: construction of over 300km of new railway line will be required to join the existing line linking Dakar to Bamako in neighbouring Mali; 430km of the existing line will need to be upgraded; and a terminal would have to be built at the port of Bargny. A preliminary estimate of the capital required for the project is US$950 million, comprising US$306 million for the mine and port-handling facilities; US$537 million for provision of rail and rolling stock; and US$107 million for the deep-water terminal. In terms of the agreement, Kumba has the option to acquire an 80% interest in the mine, the development of which would be its responsibility, while Miferso would be responsible for the development of the associated infrastructure, with assistance from international funding agencies. A pre-feasibility study, currently in progress, is due for completion by June 2005 and, if positive, will lead to a full bankable feasibility study, covering all aspects of the project. Construction could commence by mid-2008, with commissioning by mid-2011.
	COAL
	Grootegeluk 6 Phase 1 (GG6/1) In August 2004, Kumba’s board approved the development of a new plant module at the GG2 plant at Grootegeluk mine to treat and beneficiate coal previously sent untreated to the adjacent Matimba power station. The new plant, GG6/1, will extract a fraction of semi-soft coking coal from the run-of-mine material and supply 530ktpa to the coking plants being refurbished by Mittal at its Newcastle facility. GG6/1 is now under construction and due for commissioning in July 2006 at a capital cost of R323 million.
	Grootegeluk’s beneficiated coal stockpiles and the plant area, with the pit in the background. Grootegeluk 6 Phase 1 is one of Kumba’s growth prospects.
	Grootegeluk Char/Formed Coke A feasibility study on the possibility of producing char and formed coke from benches 11 and 13 in the Grootegeluk pit is continuing. The feasibility study to produce char for the ferroalloy industry will be completed by March 2005 and, if successful, could lead to construction commencing in January 2007. It is envisaged that production from the char plant will start at 80ktpa and ramp up to 240ktpa by 2009. The preliminary capital estimate for the plant is R85 million. Test work to confirm the quality of formed coke will be done as part of a feasibility study to be completed by December 2005.
	Waterberg coalfield is the future of South Africa’s coal industry
	Waterberg Development The largest reserves of coal in South Africa lie in this area. A pre-feasibility study on the possible expansion of Grootegeluk mine to supply an additional 6Mtpa of power station coal to an expanded Matimba power station is under way. The study investigates both options of power station expansion, namely pulverised fuel and fluidised bed combustion. The study will be completed by March 2005 and, if successful, will move into a feasibility phase to be completed by March 2006. Production from the expanded facility could commence by early 2008.
	Leeuwpan Jig In August 2004, the Kumba board approved the Leeuwpan jig project. The jig plant will add an additional 1Mtpa of power station coal to the Leeuwpan product portfolio. This product will be railed under a supply contract to Eskom’s Majuba power station and will be commissioned in August 2005, at a capital cost of R90 million.
	Inyanda Coal Mine Inyanda Coal is a joint venture between Kumba Coal and Eyesizwe Coal. Inyanda Coal is currently preparing to construct a new 1Mtpa export thermal coal mine near Witbank. The project has been approved by both the Kumba and Eyesizwe Coal boards, subject to Richards Bay Phase V expansion. Commissioning of the mine will take place 18 months after final approvals have been obtained.
	South Dunes Coal Terminal Kumba Coal is a 42% shareholder in the RBCT Phase V expansion through the South Dunes Coal Terminal vehicle. The approval of Transnet to proceed with this project is awaited and is long outstanding. Construction of the facility will span a period of 27 months and will give Kumba Coal a 2,5Mtpa export allocation.
	Moranbah South In December 2004, Kumba concluded an agreement with Anglo Coal Australia to jointly explore the potential to develop a greenfields hard coking coal mine on the adjacent properties of Moranbah South and Grosvenor South, located near the village of Moranbah in the central Bowen Basin coalfield of Queensland, Australia. As part of its contribution to the project, Anglo Coal Australia will fund the additional exploration and feasibility work needed to take it to approval status, although Kumba will retain a right to 50% participation in the venture and an obligation to contribute to funding its development. The deposit contains substantial resources of high-grade coking coal, which will probably require extraction by a combination of open-pit and underground mining.
	HEAVY MINERALS
	Fairbreeze is located south of Ticor SA’s existing Hillendale mine near Richards Bay in KwaZulu-Natal. Fairbreeze is designed to supplement output from Hillendale as the latter’s grades decline in future. Like Hillendale, Fairbreeze will incorporate hydraulic mining, with heavy mineral concentrate being treated at Ticor SA’s Empangeni mineral separation plant.
	Detailed engineering for the Fairbreeze mine commenced in July 2004 with completion scheduled for mid-2005. The three main consultants responsible for the design of the plant, residue dam and infrastructure have been appointed. Ongoing work will involve updating the engineering specifications, value engineering and evaluating the options for water supply. Production is scheduled to commence in 2007.
	Toliara Sands Project comprises the Ranobe deposit and further prospective tenement holdings located north of the port of Toliara in south-west Madagascar.
	An option agreement with Madagascar Resources NL (MRNL), a junior Australian exploration company, was signed by Ticor Limited in November 2003 and simultaneously a “back-to-back” agreement was signed between Kumba and Ticor, giving Kumba a 60% stake in the project. This agreement provides Ticor and Kumba with the option to purchase MRNL’s interest in the Toliara Sands project after completion of an exploration programme and bankable feasibility study.
	An option fee of US$2 million has been paid to MRNL, giving Ticor and Kumba exclusive rights to the Toliara Sands project. Ticor and Kumba will fund exploration, pre-feasibility and (if justified and approved) feasibility studies.
	The pre-feasibility study is currently being conducted to evaluate the project to assess its suitability as feedstock supplier. Indications are that the resource contains smelter quality ilmenite sufficient to supply the existing two furnaces at Empangeni for 33 years or to underwrite a smelter expansion when market conditions improve. Additionally, the resource contains significant zircon and rutile byproduct credits and indications of high-grade ilmenite suitable for synthetic rutile processing.
	BASE METALS
	Chifeng Kumba Hongye Zinc Refinery Commissioning of the second 25ktpa module at the refinery in Inner Mongolia Autonomous Region of China was completed successfully in early 2004 and ramp up to 95% of full capacity has been achieved, within budget and ahead of schedule. Details of the expansion, in which Kumba has a 60% stake, giving it an effective interest of 28% in total, are contained in the operations report. Current development work includes an analysis of zinc concentrate availability in Inner Mongolia.
	Rosh Pinah Exploration The dramatic increase in zinc concentrate production that has been achieved at the Rosh Pinah mine in southern Namibia during the last year (from 108ktpa to 124ktpa) has necessitated an acceleration of the exploration programme to define new resources there to replace those being depleted more rapidly than before. Several successes have been achieved, but more will be needed if the mine’s life is to be extended beyond its present estimate of five years. An intensified exploration programme is under way with this objective in mind.
	Democratic Republic of Congo projects Kumba has long been associated with two projects in the Democratic Republic of Congo (DRC): the Kamoto copper/cobalt mine and the Kipushi zinc/silver/lead mine, both located in south-eastern Katanga province and previously mined by the state mining company, Gécamines. As with many other projects in the DRC, Kumba’s ability to make progress with either of these projects has been severely hampered by the reluctance of important constituencies within the DRC to embrace the mining code developed in 2002 by the government in conjunction with the World Bank. While the company retains an interest in the properties, no work has been conducted there during the last year.
	ALLOYSTREAM™
	Formerly referred to as Ifcon™, AlloyStream™ is a process technology developed and patented by Kumba in terms of which fine metalliferous ore is converted directly to the metal using cheaper reductants and less electric power than conventional technology, and with lower environmental impact. During the last year, the process has been tested specifically in the production of ferromanganese, using a purposebuilt, sub-commercial scale furnace at Kumba’s pilot plant facility in Pretoria. The results of these trials have been sufficiently promising that discussions have commenced with various participants in the industry with a view to conducting feedstock specific feasibility studies for a commercial scale plant.
	Construction of the Leeuwpan jig plant which will enable production of a further 1Mtpa of power station coal.
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