6 February 2008
A new South African company aims to break the domestic steel monopoly by using a locally developed, trademarked process to convert tailings from iron ore mining into high-quality iron ore units.
The Industrial Development Corporation (IDC) has provided Iron Mineral Beneficiation Services (IMBS) with about R100-million to set up a commercial project in Nigel in Gauteng province to make iron ore using the trademarked Finesmelt process.
The two companies said the Finesmelt process is able to produce high-quality iron ore units using low-grade superfine iron ore, which is generated as a by-product of iron ore mining.
IDC mining and beneficiation strategic business unit head Abel Malinga told reporters in Cape Town on Tuesday that the project would begin in the first quarter of 2009 while a second project was planned to begin towards the end of the year.
Malinga explained that the IDC’s support for IBMS in this groundbreaking venture was in keeping with the country’s industrial policy, and as such the IDC was also a 33% equity partner in the company.
The nature of the South African steel market, he said, was keeping steel prices high and retarding the development of downstream steel-users, in particular the construction and mining industries.
Malinga explained that the local market was widely seen as monopolistic, dominated as it is by a single steel company, ArcelorMittal. With the construction of new iron production plants, the prices of iron and steel would become more competitive and boost economic development in the country, he said.
The cheaper, high-quality iron ore would offer alternative competitive pricing to downstream end-users in South Africa, the IDC said, and would add substantial value to locally sourced raw materials.
Malinga said the Finesmelt beneficiation technology was attractive because it fitted perfectly with the IDC’s mandate to promote innovation in South African industry as well as entrepreneurial development.
The first project, in Nigel, is expected to produce 48 000 tons of hot-briquetted iron and 24 000 tons of ferrochrome yearly. The larger-scale production plant in the Northern Cape will have a minimum capacity of 500 000 tons of iron units per year.
The uniqueness of the Finesmelt process, which took four years to develop, is that it produces high-quality iron from low-grade superfine iron ore and non-coking coal, and does so in a manner described as environmentally friendly, said IMBS chief executive John Beachy Head.
Apart from promoting black economic empowerment – the iron-producing projects will prove highly beneficial to smaller players in the market – the two IMBS projects are expected to create around 1 800 jobs.
Eventually, said Malinga, a steel mill is envisaged to come on stream in eight years’ time – at a cost of R2.8-billion. The mill will produce three million tons of steel in a project that will be of strategic importance for the country.
“With the growth of electric arc furnaces and the current high price of scrap [iron], supply of alternative iron units is critical if we are to grow a competitive steel industry in South Africa,” Beachy Head said.
He said the Finesmelt process is able to deliver iron units at 33% below average costs, and intends becoming the largest producer of high-quality iron feedstock to the steel industry.
Beach Head pointed out that there are millions of tons of the low-grade superfine iron ore by-product lying in disused heaps around the world, all of which could be turned into high-grade iron briquettes using the company’s technology.
He added that creating the high-quality iron produced a lot of energy, and as such the company was looking at co-generation of electricity, which was in line with recent calls by the government for heavy industry to engage in co-generation.