Davies confirms plans for Chinese steel project in Limpopo

26th September 2014

By: Terence Creamer

Creamer Media Editor

  

Font size: - +

Trade and Industry Minister Dr Rob Davies confirmed this month that Hebei Iron & Steel Group, of China, was set to partner with the State-owned Industrial Develop-ment Corporation (IDC) on the development of steelmaking capacity, based on the raw material available near Phalaborwa, in South Africa’s Limpopo province.

In a response to an Engineering News question posed at a briefing held following the release of the Department of Trade and Industry’s (DTI’s) 2013/14 annual report to Parliament, Davies indicated that the project would initially seek to produce three-million tons a year.

Earlier Hebei and the IDC signed a memoran-dum of understanding outlining the Chinese steel group’s intention to take a 51% stake in the steel mill, which could begin production by late 2017. Construction on the project was scheduled to begin in 2015.

The expectation was for the plant, which would also be part-financed by the China-Africa Development Fund, to produce five-million tons of mostly construction steel by 2019.

Hebei already owned iron-ore and copper mining assets in South Africa, having participated in a consortium established to buy Rio Tinto’s 57.7% interest in Palabora Mining Company for $373-million.

For its part, the IDC, which was also part of that consortium, was keen to add value to the large stockpile of iron-bearing magnetite material on surface at the Palabora mine.

The development finance institution already owned 33% of Iron Mineral Beneficiation Services (IMBS), which was planning to process the material into scrap-replacement material for use by steelmakers.

IMBS is developing the Masonini iron benefici- ation plant, in Phalaborwa, to initially produce 50 000 t/y of low-cost metallic iron in granulate form, which could be used in electric steelmaking. It was not immediately clear whether this feedstock would be used in the proposed Hebei plant.

Davies said the magnetite dumps could yield smaller-scale steel plants, but that such mills would be supportive of government’s ambition to increase competition in the South African iron and steel sector – rivalry that the DTI hoped would also help lower domestic prices.

Davies and Economic Development Minister Ebrahim Patel recently expressed unhappiness with the way steel prices were being set in the domestic market. The Ministers had also indicated that, while they were open to seeking a resolution with local producers, they might also seek redress through the Competition Act. The DTI and South Africa’s largest steel producer, ArcelorMittal South Africa (AMSA), have been at loggerheads over pricing for a number of years, with government still intent on extracting a ‘developmental price’ in return for a favourable iron-ore pricing arrangement reached at the time of the unbundling of Iscor into separate mining and steel companies in 2001. AMSA CEO Paul O’Flaherty said the company had noted recent developments in the steel industry, including the shareholder change at Evraz Highveld Steel & Vanadium, and news of a possible new steel investment. “We will continue to watch these developments with interest. However, as we have said previously, our immediate focus is to completely turn our performance around by producing to capacity at the lowest possible cost and ensuring we satisfy our customers’ demands as regards quality and on-time delivery,” O’Flaherty said. The Wall Street Journal reported that China, which is home to 43% of the world’s steel production, was pushing steelmakers to consolidate and that Hebei had come under pressure for “contributing to excessive industrial capacity and environmental pollution”. “Locating steel plants overseas would conform with government’s encouragement for State-owned companies to venture more aggressively abroad, which includes Chinese moves in recent years to cultivate a strategic relationship with African nations,” the newspaper wrote.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION