ArcelorMittal may get SA rival soon

By Justin Brown

PERTH – Exploration for iron ore in South Africa to be conducted by Aquila Resources could pave the way for an outside steel producer, possibly from Japan, to challenge ArcelorMittal’s dominant domestic position. Toni Poli, the chief executive of the Australian-South African junior mining firm, said that Aquila’s exploration plans at Thabazimbi in Limpopo and near Sishen in the Northern Cape had attracted the attention of up to five steel producers, mainly from Japan. Poli declined to name the steel makers he had spoken to. The two largest steel producers in Japan are Nippon Steel and JFE. If Aquila discovered a substantial iron ore deposit of at least 1 billion tons in South Africa, then a foreign steel maker could build a steel mill in the country, he added. Aquila has established a local exploration team and plans to spend A$8 million (R48 million) on prospecting, mainly in the Thabazimbi area, during the 12 months to next June. “We are being quite aggressive,” Poli said. The company, which has three coal projects in Botswana, has A$170 million in cash available for project development. “The key is to see the development of one or more of these projects,” Poli said. Aquila has built two access roads to reach its exploration targets. It will drill its first exploration hole in Thabazimbi during October 2007. Poli would like to issue Aquila’s first resource statement for Thabazimbi by the middle of next year. Aquila decided to enter South Africa and explore for iron ore in mid-2005. The company has seven prospecting licences, three of which are located 5km from Kumba Iron Ore’s Thabazimbi mine. The other four are in the Northern Cape.