Name of the Project
Scaw Metals hot-strip steel mill.

Location
Scaw Metals’ Union Junction complex in Ekurhuleni, in Gauteng, South Africa.

Project Owner/s
Barnes Group acquired Scaw Metals in 2018.

Project Description
The project entails the construction of a state-of-the-art hot-strip steel mill.

The investment will increase Scaw’s steelmaking capacity from about 500 000 t/y to 650 000 t/y.

Scaw has previously produced only long steel products, but the investment under way will position it to produce long and flat products, with a 50:50 mix currently envisaged.

In addition, ArcelorMittal South Africa’s mothballing of the Saldanha Steel mill, in the Western Cape, has resulted in the closure of significant local capacity to produce thin-gauge hot rolled coil (HRC), on which some domestic rerollers previously relied.

Scaw will build a new flat-steel complex on the brownfield site, in Gauteng, for narrow- and medium-width HRC, at gauges of between 1.2 mm and 8 mm.

The project entails the revamping of Scaw’s existing melt shop, which includes a new-generation electric arc furnace.

The melt shop will be supplied using a combination of scrap and direct reduced iron (DRI), produced using the mill’s existing kilns on site.

Potential Job Creation
The project is expected to generate a further 300 direct permanent jobs at Scaw and the Barnes Group, which already employs about 5 000 people.

Capital Expenditure
R3-billion.

The project is fully funded, with Scaw Metals financing 25% of the project from internal cash resources, and 75% funded using a club loan jointly arranged by Absa and Investec. The banks, along with the State-owned Industrial Development Corporation, will contribute equally to the loan.

Planned Start/End Date
The mill is scheduled for commissioning in December 2023.

Latest Developments
Scaw has three kilns to produce DRI, not all of which have been restarted, and Barnes has reported that investigations are advancing – using initial Anglo concepts – into the prospect of fitting two of the kilns with cogeneration plants to produce about 60 MW.

No final investment decision has been made, but Barnes believes that the project is likely to be developed in the next two years, owing to South Africa’s electricity crisis and steeply increasing tariffs, which has improved the economics of cogenerated electricity.

At 60 MW, Scaw expects to meet about 60% of its requirements and buffer itself against Eskom’s load-curtailment requirements.

In addition, the new facility is significantly more energy efficient than existing plants, which will help to reduce electricity consumption for every ton of steel produced, even if Scaw’s overall power requirement stays flat.

Meanwhile, priority is being given to the steel project where civil works are well under way, with the Enza Construction and Trencon Construction teams on site. Construction-related employment is expected to peak in 2023 at about 1 200 workers.

Barnes has reported that the project remains on track for the commissioning of the continuous caster by the end of 2023 and for the hot-strip mill to begin ramping up to full production by April 2024.

Key Contracts, Suppliers and Consultants
ECS Associates (project management); Enza Construction and Trencon Construction (construction contract); Danieli (steel mill technology. The contract includes several components, including a medium-slab continuous caster and semicontinuous hot-strip mill, a reheating furnace and a brownfield water-treatment plant).

Contact Details for Project Information
Scaw Metals public affairs and communications, Dudu Ndlovu, tel +27 11 621 1524 or email d.ndlovu@scaw.co.za.