Coega project boost for Eastern Cape

Posted On Thursday, 12 May 2011 02:00 Published by eProp Commercial Property News
Rate this item
(0 votes)

The Eastern Cape will get a R2,7bn a year boost with the construction of a R4,2bn manganese smelter in the Coega industrial development zone, but much of the benefit will be limited to the Nelson Mandela Bay metro area.

Daphne Mashile-NkosiThe provincial government estimated that the national economy will derive another R100m a year from the 320000 tons a year project, which would stimulate growth in energy , rail and harbour services for Port Elizabeth, Uitenhage and Despatch.

The proposed Coega smelter is part of an R11bn investment by state-backed empowered resources company Kalagadi Manganese, which is building an integrated mining, primary refining and beneficiating chain between Hotazel in the Northern Cape and a regional hub for SA’s critical automotive sector.

But the motor industry will not directly benefit from the development of the plant, expected to be completed in 2013. It is estimated that spending around the smelter will result in R7,3bn of direct, indirect and associated outputs in the province.

"A number of things that need to be finalised on the project side are now in place," Senzeni Mtetwa, financial economist at Kalagadi Manganese, said .

"From an economic point of view, the idea was to have a complete product for the market — with value added."

The high carbon ferromanganese to be produced by the proposed smelter is a primary ingredient for making structural steel, feeding into a 1,3-billion ton a year global market. The proposed venture dwarfs the 8-million ton a year capacity of ArcelorMittal SA , the South African unit of the giant global steel company.

About 70% of the lumpy ferromanganese product from the smelter will be sold into global export markets, leaving 30% to be sold as alloy to South African steel producers, of which ArcelorMittal SA makes up about 80%.

Rhynhardt Roodt, an analyst at Investec Asset Management, said yesterday it was difficult to understand how prices would be affected by Kalagadi’s output because demand would grow over time, the additional tonnage could be consumed quite easily.

He said prices were settled monthly, and were set between BHP Billiton and the Chinese. But these had been depressed because of oversupply and a large surplus stockpile in China, which equals that country’s annual consumption needs.

It costs about R320 a ton to rail basic ore, and almost double this amount using road transport. The rail link between the Sishen manganese deposit in the Northern Cape and Saldanha on the west coast is a dedicated iron-ore line, so SA exports about 2,3-million tons of its total 4-million tons in exports through the rail link between Hotazel, near Sishen, and Port Elizabeth.

Executive chairman of Kalagadi Manganese, Daphne Mashile-Nkosi, said she could not quantify the number and value of domestic and international customers for Kalagadi’s products, because the overall project is still in the development phase and there is no production yet. But she said ArcelorMittal would take 50% of all the company’s output for its mills around the world.

She said all South African steel companies would ultimately become customers.

Kalagadi’s off-take agreement with ArcelorMittal is pegged at 2007 market-related prices. According to Kalagadi technical director, David Wellbeloved, production of ore and sintered product from the Northern Cape would only come on stream toward the end of next year.

Until then all off-take and pricing agreements will be on hold



Last modified on Wednesday, 14 May 2014 20:06

Most Popular

How to make your offer stand out in a competitive property market

Jan 16, 2025
If you’re looking to purchase a home in a sought-after suburb or estate, securing the…

One of Cape Town’s most iconic historic properties is for sale for the first time in many years.

Jan 16, 2025
Trovato House
Priced at R45 million thro ugh Pam Golding Properties, Trovato House is an impressive…

Exemplar’s December retail trade exceeds expectations

Jan 26, 2025
Theku Mall Aerial
With the 2024 Festive Season behind us and Back-to-School season well underway,…

The Cultural Blueprint: How to Make Your Office Not Just Look Good, But Feel Right

Jan 16, 2025
Jess Moyer Cushman & Wakefield BROLL
When it comes to designing office spaces, one size definitely does not fit all –…

Somerset Mall Embarks on a Multimillion-Rand Expansion Project

Jan 26, 2025
Somerset Mall
Major retail destination set to launch a new era of retail and leisure by November 2025…

Please publish modules in offcanvas position.