Universal Mining and Chemical Industries Limited, a Zambian railway and steel company may invest more than USD 130 million in the development of two iron ore mines and construction of a railway line within two major towns in the Southern African country and offset transport costs as well as contribute to mineral production.
According to the company, Universal Mining and Chemical Industries Limited’s projections, two iron ore mines and a railway line will be constructed between Mumbwa in central Zambia and the capital, Lusaka.
Mr Julius Kaoma Technical director said that the railway line is expected to address transport infrastructure hitches while one mine would be in Mumbwa and another in Nampundwe. The USD 130 million investments would be spread over the next 3 years. The planned investment would be for a feasibility study, geological investigation and the development of the mine in Mumbwa District.
Mr Kaoma said that we have planned to build a railway line from Lusaka to Mumbwa and we will also develop a mine in Mumbwa. The railway line will facilitate easy transportation of our mine products. The railway line will be cheaper than road transportation. It will be easy for us to move our products between Lusaka and Mumbwa and ease pressure on the roads.
He said that the mine in Mumbwa would have the capacity of 250 million tonnes of iron ore per year. The company plans to invest more than USD 30 million to develop a mine at Sanje Hills in Kafue District this year and the investment of more than USD 30 million would include the construction of the road network resettlement program and development of the mine.
Mr Kaoma said that we have started the construction of the road and we are working with the Government and in the second half of the year, we have to resettle the people living in the surrounding areas because of the development of the mine. The mine would have a capacity of 10 million tonnes of high grade iron ore per year and the project would generate employment of 600 people.
Universal Mining and Chemical Industries runs a steel plant in Kafue whose production capacity is 100,000 tonnes per year. Iron Ore is the main component in steel. The financing, according to Mr Kaoma would involve undertaking two feasibility studies to construct a railway line from Lusaka to Mumbwa district and develop an iron ore project in Mumbwa. Feasibility studies, geological investigations and explorations expected to start soon.
He said that the USD 100 million will be used on feasibility studies, geological investigations and exploration works for both the railway line and the Mumbwa based Nambala Sonkwe deposit iron ore projects. The railway line will ease transportation of iron ore and steel from the respective sites to the markets. The development of the mines will create between 600 and 650 jobs for the local people.
On exports from Kafue steel plant, Dr Kaoma said that it is difficult to determine how much the company is anticipating in earnings this year since the company’s steel prices are lower than what is fetching on the international market.
The company pegged the price of steel between USD 600 per tonne and USD 650 per tonne because it wants to have an impact on the international market and establish itself. The plant is designed to produce over 100,000 tonnes of steel per year but is currently producing between 36,000 tonnes and 40,000 tonnes.
Mr Kaoma said that we are increasing production stage by stage because this is what the market can absorb. Of the 36,000 tonnes half is for the local market while the balance is for the export market. UMCIL exports mainly within the region namely; Malawi, Zimbabwe, Mozambique Botswana, Rwanda, Burundi and recently had inquiries from Tanzania.
He said that the demand for steel is mainly detected by infrastructure development in a given country adding that with the recovery in economies, steel prices have risen sharply on the international market. The price of steel has increased after the global economic meltdown and this is likely to influence UMCIL to increase production levels.
(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)
