Lack of SA electricity sends plant to China

Time of article published Oct 3, 2011

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Dineo Matomela

PLANS to shift the construction of a ferrochrome smelter from Rustenburg to China was a blow not only to local beneficiation but also to jobs and economic growth, minerals company Tharisa, industry players and analysts said on Friday.

Tharisa said the reason for the change was that Eskom could not provide the plant with sufficient power until 2018.

The Financial Mail recently reported that Tharisa had resorted to establishing a joint venture company, Tharisa Fujian Industries, and that it was at an advanced stage of building a ferrochrome smelter in China using chrome ore from its Rustenburg mine.

A Tharisa spokesman said: “Initially the intention was to build a smelter here in South Africa and in fact, a full feasibility study was completed.

“However, when we went to talk to Eskom, the indication was that the very earliest they would possibly be able to help us was 2018.”

Eskom spokeswoman Hilary Joffe could not comment specifically on Tharisa.

“Eskom seeks to support growth and investment and we do not turn down requests to connect new projects.

“However, in the case of new energy intensive projects, we ask them to phase in their projects so as to ensure that we do have the capacity available to provide them with a secure supply of electricity,” Joffe said.

Tharisa has entered into a strategic partnership for the smelter with Fujian Wuhang Stainless Steel, one of China’s largest privately-owned producers of stainless steel.

South Africa is the biggest supplier of ferrochrome, which is used in the production of stainless steel. South Africa holds 73 percent of all chrome ore reserves.

“China has increased its share of global ferrochrome production from 5 percent in 2001 to 25 percent in 2011, an increase of 500 percent in 10 years,” Mike Rossouw, the chairman of the Energy Intensive Users Group, said on Friday.

“The long-term view on market prices does not support expansion projects.

“The situation is exacerbated by the export of chrome ore to China,” said Emmy Leeka, the chief executive of Hernic Ferrochrome.

Rossouw said South Africa’s market share of global ferrochrome production was more than 50 percent in 2001, but it would be less than 40 percent in three years’ time if the current trend continued.

The government has been calling for the development of downstream, value-adding capacity through the development of mineral beneficiation projects to create jobs and boost economic development.

In February, Economic Development Minister Ebrahim Patel said South Africa was not beneficiating nearly enough minerals and the department was looking at how incentive schemes could work towards greater beneficiation.

Leeka said discussions should be held with the government on repositioning South Africa for beneficiation, which was affected by the supply of electricity and the export of chrome ore.

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