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Oct 29, 2010

Power connectivity rules have change

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The announcement last week by London-listed resources group Xstrata regarding a R4,9-billion expansion of the Lion ferrochrome plant, in Mpumalanga province, offers a foretaste of what it is going to take to develop energy-intensive projects in power-stressed South Africa.

It is also arguably indicative of just how difficult it is going to be for mining businesses to align themselves with government’s mineral beneficiation policy aspirations.

Unlike previous beneficiation projects, when electricity supply was a given and it was merely a matter of securing the best price, the Xstrata-Merafe chrome venture was forced to undertake various energy initiatives to unblock the expansion project – a 360 000 t/y smelter that will increase Xstrata-Merafe’s total ferrochrome capacity to more than 2,3-million tons a year.

Firstly, it had to prove that it was doing all it could to reduce its energy consumption. Much of this was achieved through the deployment of its proprietary Premus technology, which consumes about one-third less electricity than other available smelting technologies – an industry leading average of 2,2 MW/t to 2,4 MW/t. It also introduced pelletising, which has reportedly improved overall efficiency, and committed to a range of other energy-saving endeavours.

But in order to secure a supply agreement from Eskom, Xstrata will also augment this grid supply through own generation. The company is studying the exploitation of discard-coal opportunities at its Tweefontein mines, which could eventually deliver 600 MW. This generation capacity could be built using four off-the-shelf modules of 150 MW each.

In announcing the project, Xstrata Alloys CEO Peet Nienaber even argued that the project was aligned with South African’s draft integrated resource plan 2010, owing to its energy efficiency and the use of electricity to create sus- tainable jobs.

Before reaching this point, the project had been marking time, while a firm Eskom power allocation was being negotiated.

Things have certainly changed since the days of those first smelter agreements.

Edited by: Terence Creamer
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