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Jun 15, 2012

15/06/2012 (On-The-Air)

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Every Friday morning, SAfm’s AMLive’s radio anchor Xolani Gwala speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:

Gwala: Billions of rands are expected to be generated from the iron in an old waste dump in Limpopo province.

Creamer: Mining goes on for decades and you see these dumps develop and you think that there is value in there. In this case it is at Palabora Mining Company, managed by the big Rio Tinto company.

They have got a mountain of magnetite there and they have been trying to turn it into account for a long time, because it has got 58% iron. Along has come this entrepreneurial company, Iron Mineral Beneficiation Services (IMBS), and it appears that they are cracking the code.

They are already spending R120-million on a prototype plant, but they are so convinced of their process that they are already negotiation for another R800-million plant. So they will take this material off the dump and put it through their process and miraculously this process is self energising.

They thought it would need electricity, but it doesn't need electricity, except for your electric motors and instrumentation and so forth. It is the off-gasses from the process that provides the energy that they need to turn the waste into a briquetted metal, metallic iron.

They are calling it super-scrap and scrap is a very valuable commodity. Ferrous scrap in the world is being used more and more and it is selling at about $400 a ton. They believe they can make this super-scrap, this metallic iron at below $200 a ton. That is a fantastic margin for them.

They have already created a lot of interest. The State-owned Industrial Development Corporation is now backing them formally. But one saw internationally that there was a lot of interest. So the Russians came out, Severstal, and they have taken 33%.

They’ve also said that they have a massive big infrastructure in the world, they are into steel making, because this goes into steel making, so let us take the intellectual rights and let us take this out into the world. They have already got a deal going in Canada where there might be an announcement on 2-million-tons-a-year plant. The big thing is that you can take the process to the dump and its self-energising so you don’t have to say where is the electricity coming in.

Then you can uplift the value of this dump material to something that can sell at $400 a ton, which changes the whole transport picture, the transport economics become very favourable. IMBS, backed by the Ghana born Sir Sam Jonah, who has got Jonah Capital, a private equity company in Johannesburg and he has got 40% of this and the Russians 33%.

Gwala: Wow, that is fascinating indeed and beneficiation is what its talking about.

The Defence Force of Finland is buying more armoured cars from South Africa.

Creamer: It is amazing how defence forces around the world like our mine protected armoured cars, they just keep buying these. When you think that we are building these armoured cars in Gauteng, the key factory in Benoni, its quite mind-boggling. Here the Finnish Defence Force has now placed its third order of batches of 25 of these armoured and mine-protected vehicles.

They are produced by Land Systems South Africa, which is 75% owned by BAE Group, but there is a 25% black-economic empowerment ownership here. So you’ve got now 74 of these vehicles going to the Finnish Defence Force.

The Swedish Defence Force has already ordered 200 of these. The Irish Defence Force has ordered 27. It is all about protecting people who are engaging in peace keeping roles, giving them an armoured car so that you help protect the men and women in uniform.

They say that the South African vehicles consistently deliver superior levels of protection, not only from landmines, but from all sorts of improvised bombs that get thrown at these people. It is a cost effective solution for them with a lot of flexibility. They can reconfigure mission specific weapons for them as well. So it is a feather in the South African cap.

Gwala: Eskom is confident that it will be able to spend at a rate of R65-billion a year for the next six years.

Creamer: Eskom had this big R450-billion investment programme, but they were unable to spend their full budget in the last two years. You’ve got to have capacity to do that, you have got to get rid of the project delivery uncertainties and understand the cashflow. They are now quite confident that leading up to 2018 they will be able to spend at a tempo of R65-billion a year. We see that they have just reached a milestone at the big Medupi power station

. A wonderful big powerstation rising out of the African Bush there and that is the boiler testing. It is quite a fleet and is probably the biggest infrastructural investment since the Democratic Government came into power. It is amazing the spin-off into the local community, because this Lephalale area in the Limpopo employees 17 000 people, most of those people coming from the area.

The mine employs another 2 400 people most of them coming from the area. Not to talk of the factories around that are building parts and systems for this big Medupi power station. It is going to be the fourth biggest coal-fired power station in the world. It is going to have a 60% South African content.

We haven’t built a power station for 20 years so we have got to catch up on all that intellectual memory, which they are doing. So to get a 60% overall South African content is not bad. In some of the products like the air-cooled condensers there is a 90% South African content. Factories are also starting to benefit from that, but if you look at Lephalale it has doubled in size.

There is R700-million worth of contracts gone into that local community. Just on the smaller side of it when you think of the meals, 17 000 meals coming in a day is a nice business for the catering community in that area. But, also the houses that have been built. Eskom has spent R2,3-billion on housing alone and Exxaro has also spent on its housing.

So we can see that this programme goes on now to 2018. Medupi is followed by Kusile, which is in Mpumalanga, and then also the pumped-storage scheme in the Drakensberg, the Ingula project coming through this set of built programmes by Eskom. Eskom confident that it can sustain a pace of expenditure of R65-billion a year going forward to 2018.

Gwala: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly, he’ll be back with us at the same time next week.


 

Edited by: Creamer Media Reporter

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