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MEI Online: Plant Operation News: Africa: September 9th 2008


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:: Arcelor-Mittal to set up Smelter at Coega as Part of R3,3bn Deal

One of the world biggest and most successful emerging companies put its stamp of approval on the Coega industrial development zone yesterday by announcing that the Eastern Cape is to be an integral part of a new R3,3-billion South African investment project.

ArcelorMittal - the world‘s largest steel producer, which now owns what used to be Iscor in South Africa - said in Johannesburg that it would be developing a smelter complex at Coega.

The development is part of a wider plan after the giant company, which has more than 320000 employees in over 60 countries, concluded a deal with exploration firm Kalagadi Manganese to buy half of its shares and mine the ore in the Northern Cape. “The $432,5-million (R3,3-billion) deal will result in the establishment and implementation of a joint venture between empowerment company Kalahari Resources, the Industrial Development Corporation and ArcelorMittal," the steel producer said. “This will lead to the development of a manganese mine, beneficiation plant and sinter complex in the Northern Cape and a smelter complex in Coega."

The Eastern Cape facility will produce 320000 tons a year of ferromanganese alloy for use in the production of steel. The project is scheduled to be “on stream” by 2010, with the resource available for more than 20 years. The smelter will be built against the background of South Africa having pioneered new efficiencies using less power to produce the alloy. The mine will be in the Kuruman-Hotazel district of the Northern Cape. The region where it is situated, the Kalagadi Manganese Basin, was described by ArcelorMittal as “a world- renowned source of manganese ore containing 80% of the world‘s known manganese resources”.

No further information on transport and infrastructure plans was available from the companies yesterday, but the announcement is likely to increase the urgency of providing rail links into the IDZ and the port of Ngqura. Transnet port terminals chief operating officer Solly Letsoalo said in Port Elizabeth last week that work on the railway tracks into and inside the port area were progressing well in terms of meeting the deadline of opening the deepwater harbour next year. ArcelorMittal nominee director of Kalagadi, Nku N Nyembezi-Heita, described the mining and smelter plan as “an exciting greenfield project”. He said it would assist “previously disadvantaged communities resulting in employment opportunities in the Northern Cape and Coega areas”.

ArcelorMittal had revenues of $105,2-billion (R808-billion) and crude steel production of 116 million tons, representing around 10% of world steel output, in 2007.

In another potential boost for Coega yesterday, the Venezuelan National Oil Company was formally invited through a memorandum of understanding to invest in the $11-billion (R85-billion) PetroSA crude oil refinery for the IDZ. It was one of several undertakings signed during a visit by Venezuelan President Hugo Chavez.




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