R83bn West Coast projects could create jobs.

BILLIONS of rands are set to be pumped into the West Coast’s Saldanha Bay over the next 20 years, radically changing it into an industrial powerhouse and creating thousands of jobs.

Five major projects are on the cards for the town. They include developing the port economy, increasing its bulk export capacity, building a renewable energy plant, exploiting its oil and gas potential, and a massive housing project. The investment, mostly foreign, will be to the tune of a whopping R83 billion over 20 years and creating close to 40 000 jobs.

Saldanha Bay has the deepest and largest natural harbour in the southern hemisphere, making it ideal for industrial development.

This week the Saldanha Steel debacle highlighted the pressing need for new ways to diversify the town’s economy.

The government had to step in to help resolve the dispute between ArcelorMittal SA and Kumba Iron Ore over an interim pricing agreement. Although it is an interim agreement, it heads off Mittal’s threat to close its Saldanha Steel plant, shed up to 4 000 jobs, and curtail exports and domestic production, leading to higher local steel prices and curbed economic growth.

Follow up:

In an interview, the town’s municipal manager James Fortuin said Mittal Steel was a major contributor to the town’s economy, but they were looking for ways to expand further.

Consultant Peter Stuivenberg said feasibility studies were being done and these would be followed by environmental impact assessments. “If all goes according to plan, construction of the various projects should start in the middle of next year, or towards the end of the year.

“The projects involve major foreign investors and major oil and ship building companies. A renewable energy plant independent of Eskom will supply affordable electricity that is essential to industrial growth.

“We are working with the Port of Rotterdam for assistance in developing Saldanha’s port.”

The various projects include:
• A R45 billion industrial development zone with offices and an increased cargo capacity. During the construction phase there will be 5 000 jobs, and when it is up and running, 25 000 direct jobs will be created.

• A R11bl renewable energy plant that will produce 200MW of solar and 100MW of wind energy, two 360MW coal gas plants, creating 2 500 jobs during the construction period and 1 250 direct jobs.

• A R6.5bn lower to middle class housing project, with office parks, restaurants and shops. The solar city will include 6 000 “green” houses, run on renewable energy. It will create 7 500 jobs during the construction phase and 5 000 direct jobs.

• R500 million will be invested I creating two floating drydocks for maintaining and repairing vessels used in oil and gas exploration, in which 400 direct jobs will be created.

• A major oil company will invest R20bn in oil and gas exploration, including a facility for the repair and maintenance of oil rigs, creating 3 500 direct jobs and 2 000 jobs in the construction phase.

Provincial Minister of Finance, Economic Development and Tourism, Alan Winde, said: “Saldanha Steel plays a vital role in the economy of Saldanha Bay, both as an employer and driver of industry.

“We are pleased that Kumba and ArcelorMittal have ended their commercial dispute – the 4 000 employees at Saldanha can now move forward in their jobs with a sense of security.

“As the government, we will engage with Saldanha Steel and other key players to discuss the formation of an industrial development zone in the area. This long-term vision will drive significant revenue and employment creation in Saldanha Bay.”

He said the Saldanha Bay municipality had a gross geographical product of R4.68bn in 2008. The total GGP for the West Coast in 2008 was R14.068bn.

“Our primary concern is to grow the economy of the Western Cape, so that we create jobs. With its deep-water port, iron ore terminal and mega-smelters, Saldanha Bay has long been viewed as an area of major international significance in term of industrial potential. Several investors have expressed an interest in moving into the area.”

“As global fish stocks deplete, it is important that we encourage alternative forms of employment.”

(article from Weekend Argus - Saturday 24 July 2010)

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"Solar City" planned for Saldanha Bay

A Dutch property developer plans to build what he calls a "solar city" - a multi-billion rand, green housing project that will be self- sustaining and completely powered by renewable energy in Saldanha Bay.

He believes that it will be a world first.

Property investor Robert Baron owns three farms - a total of 1 600 hectares of land. He and several foreign investors plan to invest a whopping R6.5bn into the green housing project, which will include 6 000 houses for lower to middle-income groups and will have its own renewable power source from solar and wind energy.

It will also have office parks, restaurants and shops.

He said: "You can call me a modern Robin Hood. There is a dire need for housing for the lower and middle-income brackets."

Plans for the project have been nine years in the making.

He said with major industrial projects being proposed for the town, housing was needed to accompany economic growth. "Whoever gets the construction contract has to sign a clause saying they will use local labour and transfer vital skills to the communities. The construction phase will create 7 500 jobs and 5 000 direct jobs would be created in maintenance and running of the wind generators, sewerage water purification, plumbing and power generation."

Baron said that renewable energy and the use of recycling technologies were essential for running this green city. "Companies could use the power from the solar city when residents are at work. This way home owners would be able to use the power supply as leverage for better housing subsidies if they work for these companies, or they could renegotiate better interest rates on their home loans with these companies."

He said a feasibility study for the project would be done soon and then they would know the costs of the houses.

"While these costs will be kept as low as possible, investors will receive good returns from office blocks, restaurants and shops."

Source iolproperty.co.za

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Sishen to Saldanha. Transnet extends iron line shutdown

Transnet Freight Rail (TFR), Transnet's largest division by revenue, said on Monday that it has delayed the reopening of the export iron ore line, which was shut down after "extensive damage" following a derailment last week.

The freight train derailed near Vredenburg north of Saldanha in the Western Cape on Thursday July 22. It was en route from Kumba Iron Ore's (KIO) Sishen mine in the Northern Cape to the Saldanha Port.

The 861-kilometre-long export iron ore line has the capacity to transport around 50 million tons of iron ore a year.

Sandile Simelane, spokesman for the TFR, said the division originally intended to open the line on Monday, but it now expected to open it at 6pm local time on Wednesday.

The derailment has delayed the movement of iron ore along the Sishen-Saldanha railway line. The TRF moves about 900 000 tons to one million tons a week on average.

Simelane said the unit and its customers are planning how they would recover from the delay.

At this stage, the TFR will only know the costs of the damage after its investigation into the derailment, Simelane said.

Two locomotives derailed along with 107 of the wagons in the rear portion of the train, which consists of over 300 wagons.

On Friday, the Railway Safety Regulator (RSR) said it had launched an investigation into the cause of the derailment.

"Two railway safety inspectors have been dispatched to the scene to conduct an on-site investigation," the RSR said.

The regulator said the derailment had resulted in "extensive damage" to rolling stock and infrastructure.

"There is no indication of the probable cause of the occurrence at this stage," the RSR said.

It said the line has been closed for clean up and repair operations.

The damaged line connects iron ore mines near Sishen in the Northern Cape with the port at Saldanha in the Western Cape. The line is dedicated to transporting iron ore and it does not carry passengers.

As part of its mandate, the RSR monitors and ensures safety compliance by conducting audits, inspections, safety assessments and occurrence investigations. - I-Net Bridge

News Source busrep.co.za

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Saldanha Bay. Kumba Iron Ore considering a Value share arrangement.

South Africa's iron-ore miner Kumba Iron Ore (KIO) has confirmed that it is considering a "conditional" value-sharing arrangement for the 6,25-million tons of iron-ore that it mines for ArcelorMittal South Africa (AMSA) and has previously supplied to the steel producer under a cost-plus 3% arrangement that flowed from the 2001 unbundling of Iscor.

The miner met with the Trade and Industry Minister Dr Rob Davies, Economic Development Minister Ebrahim Patel and Mineral Resources Minister Susan Shabangu on Monday, where the value-sharing concept may have been canvassed. However, Engineering News Online could not confirm that it was indeed discussed. The three Ministers were due to meet with the the leadership from AMSA on Tuesday.

Business Day reported that value-sharing proposal was premised on KIO winning its arbitration with AMSA and on the miner also securing rights to the 21,4% of the Sishen mine allegedly "lost" by AMSA, owing to its failure to convert those right under the prescripts of South Africa's minerals legislation.

KIO has requested a review of a decision by the Department of Mineral Resources (DMR) to grant prospecting rights over the property to a little-known black economic-empowerment (BEE) company, called Imperial Crown Trading. Further, it had kept its legal options open by lodging an application against the DMR's decision with the High Court.

Engineering News Online understands that the issue of the minerals rights was being treated as "sensitive" in the engagements between government and KIO, owing to the legal challenge. This was reportedly making it difficult for the participants to openly debate the matter.

Bloomberg quoted DMR DG Sandile Nogxina as saying that Shabangu would make a decision on disputed prospecting “within the next week".

In the meantime, government was continuing to pursue a so-called developmental outcome, which would be premised on a deal that ensured viable and cost-competitive steel production, as well as competitive steel pricing.

Government has indicated that it will use "all the tools" available to it to ensure that these outcomes are realised, and has even hinted to the imposition of export taxes on iron-ore, or the deployment of South Africa's minerals rights legislation to ensure that "developmental" pricing is sustained.

The fact that the intervention involves all three Ministers is seen as significant, owing to the fact that it signalled that government had finally reached internal alignment around its developmental goals.

Initially, the DMR, which held most of the power to influence the outcome, had been focused almost exclusively on extracting maximum BEE value from Sishen. In the process, close observers had said that it neglected other policy imperatives surrounding the highly strategic iron-ore rights.

Engineering News Online understands that a government task team could be established later in the week to take forward the technical aspects flowing from the discussions held between the Ministers and the leadership of KIO and AMSA.

Government continues to stress that the recent interim pricing agreement has failed to address a number of outstanding issues arising from the dispute between the two companies and that they would seek a more "permanent" solution that embraces "developmental" objectives.

Government was likely to continue to stress in its meetings with AMSA that any solution cannot lead to a repeat of the previous dispensation, whereby iron-ore pricing benefits were accrued, but never passed onto South African steel consumers.

Source engineeringnews.co.za

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Govt shifts iron-ore emphasis from corporate rights to national interest

The South African government moved on Thursday to further shift the emphasis in the ongoing dispute between Kumba Iron Ore (KIO) and ArcelorMittal South Africa (AMSA) beyond the realm of corporate and legal rights, to one that was also sensitive to South Africa's national interests.

The State's bid to influence the tone of the discussion began in earnest last Friday, when Trade and Industry Minister Dr Rob Davies made a public offer to mediate in the escalating conflict - this after AMSA threatened to shut capacity and retrench up to 4 000 of its 10 000 workers should KIO proceed with a pay-and-take pricing model as from August 1.

The strategy was further consolidated by Monday's "constructive engagement", which involved Davies, Mineral Resources Minister Susan Shabangu, Economic Development Minister Ebrahim Patel, as well as AMSA CEO Nonkululeko Nyembezi-Heita and KIO CEO Chris Griffith. After the Pretoria meeting, government said that all the participants had committed themselves to reaching an agreement that would "put the country first".

However, Engineering News Online understands that government and the governing African National Congress have, for some time, been considering ways to intervene, particularly owing to the fact that the dispute had the potential to undermine government policies in the area of minerals beneficiation and industrialisation.

That opportunity arose when the tussle threatened to spill over beyond the steel industry at the very moment when government had reach internal alignment around its developmental goals in the area of steel pricing - a process that seemingly was given impetus by public disquiet over the Department of Mineral Resources (DMR) decision to grant prospecting rights at Sishen to a little-know, yet well-connected, resources company.

In a statement issued jointly by Davies, Shabangu and Patel on Thursday, government moved to reinforce its position, which was reportedly also canvassed at the Cabinet lekgotla, by noting that an interim pricing resolution between AMSA and KIO had not resolved "critical issues arising from the dispute".

Earlier in the day, KIO and AMSA announced that they had agreed to an interim pricing agreement, retrospective to March 1, 2010, that would endure until July 31, 2011, while dispute settlement processes were pursued.

AMSA would pay a fixed $50/t of iron-ore delivered to Saldanha Steel, and $70/t for iron-ore delivered to AMSA's inland plants. AMSA would be entitled to purchase a maximum of 520 000 t/m, with a maximum of 125 000 t/m for Saldanha Steel. Any additional tonnage would be procured at the prevailing spot price, based on export parity prices.

In its statement, government stressed that the 2001 unbundling of Iscor, while having been pursued under the now commercial contract, had also involved two core public developmental obligations:
- To ensure the viability and cost competitiveness of local steel production; and
- To ensure a competitive steel pricing regime to support the development and deepening of value-added manufactured products in downstream industries.

Such "developmental outcomes" were in the "national interest", government said, adding that they were also "critical to the success of the Industrial Policy Action Plan and a shift to a new more labour-absorbing growth path".

CONDITIONS & TAXES?

"Government will use all tools available to it to ensure that these outcomes are realised," Davies and Patel warned.

Engineering News Online understands that government will consider attaching conditions to the eventual granting the Sishen mineral rights, insisting that the iron-ore is used to support a competitive steel industry, which, in turn, passes these benefits on to steel consumers.

Also under consideration, is the imposition of export taxes on locally-mined iron-ore to further encourage beneficiation.

The Ministers said that a meeting would be held with stakeholders soon to assess the impact of the interim settlement on these long-term developmental objectives.

The Ministers would also seek to ensure that the settlement did not have a negative impact on the steel price in the short run and that in the long run the rents arising from South Africa's mineral resources are used to develop the economy.

SURCHARGE TO BE DROPPED?

Davies had already lodged a formal complaint with the Competition Commission over AMSA's recently-instituted iron-ore surcharge.

There were strong indications on Thursday that the controversial Sishen surcharge, which was implemented to part recovery the increase in iron-ore prices, would be withdrawn in the wake of the more hands-on approach being adopted by government.

An announcement was expected before the monthly price adjustments were announced, which are typically released to customers on the last working day of each calendar month.

No mention, however, was made about whether a second settlement might be in the offing between the Department of Mineral Resources (DMR) and KIO over the DMR's granting of AMSA's "lost" rights at Sishen to Imperial Crown Trading as "prospecting rights".

DMR is reviewing whether the award was made properly following a complaint lodged by KIO. But that company had also instituted separate legal proceedings against the department as a further safeguard.

The case, which involves some politically well connected South African business people, is being closely watched by the international resources industry, which is concerned that the DMR's actions, which some hold were unduly influenced, could impact the security of other mineral rights in the country.

Source engineeringnews.co.za

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New Saldanha Bay project brings good news

Several projects planned for Saldanha Bay over the next 20 years are set to turn the area into an industrial giant.

It is believed over R80 billion top be invested into boosting the region’s economy.

Some of the projects include increasing bulk export capacity and the introduction of a renewable energy plant.

Five major projects earmarked for Saldanha Bay over the next two decades could potentially see the region’s economy mushroom.

Major foreign investors and world companies hope to tap into the municipal area’s resources to transform it into an industrial juggernaut.

Saldanha Bay has the deepest natural harbour of the West Coast of Africa, a major draw card for investors.

The projects include the inclusion of an industrial zone with increased cargo capacity, a renewable plant made to produce some 660 megawatts in solar, wind and cold gas energy.

Thousands of jobs maybe created in the process, requiring a massive housing process.

Source eyewitnessnews.co.za

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Transnet to reopen Sishen–Saldanha line on Wednesday

JOHANNESBURG (miningweekly.com) – The Sishen–Saldanha railway line would be reopened on Wednesday evening, Transnet Freight Rail (TFR) spokesperson Sandile Simelane confirmed on Monday.

The railway line was closed on Thursday afternoon, after a train transporting iron-ore from Kumba Iron Ore’s Sishen mine to the port of Saldanha derailed near Vredenburg.

One diesel and one electric locomotive, along with 107 wagons in the rear portion of the train, had derailed.

Simelane said that the railway and the overhead cables had also suffered some damage in the incident.

The 861-km railway line is the second-largest railway line in terms of revenue generation and carried iron-ore from mines in the Sishen region, in the Northern Cape, to the port of Saldanha for exports.

Between 900 000 t and one-million tons of iron-ore was transported on the railway line each week, noted Simelane.

Source miningweekly.com

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In Langebaan a Skipper swims almost 4km for friend

A skipper swam 3.7km to get help for his friend when his boat capsized at a popular diving reef called Needles near Langebaan yesterday.

Robert Guthrie, 47, of Langebaan and his friend Deon Louw, of Hopefield, were spear-fishing when their open-decked boat capsized at about 1.30pm yesterday.

Leaving Louw perched on the hull of the boat, Guthrie, a member of the defence force, swam to the nearby Malgas Island raise the alarm.

But the NSRI's spokesperson Craig Lambinon said when Guthrie reached the island, he found no one there, so swam on to the mainland at Malgas to the naval base, where he alerted the duty officer, who raised the alarm.

The navy launched its harbour patrol boat while the NSRI Mykonos launched its rescue craft Gemini Rescuer.

Darius van Niekerk, Sea Rescue Mykonos station commander said when they arrived on the scene, Louw was still sitting on the upturned hull and was taken on board the navy patrol boat.

The NSRI and the navy personnel righted the craft and the NSRI towed it back to its base at Mykonos harbour.

"Neither of the two men was injured and, once safely ashore, they required no further assistance," he added.

Earlier, NSRI volunteers were called to a stricken I&J fishing trawler, St Blaize, which was drifting without power between Plettenberg Bay and St Francis Bay after fouling its propellers with a rope. It had a crew of 11 aboard.

Gary Ryder, Sea Rescue St Francis Bay station commander, said: "At approximately midday, sea rescue Plettenberg Bay was placed on alert to monitor the progress of the I&J fishing trawler.

"The vessel and her crew were in no immediate danger. The rope is believed to have fouled the propellers while they were fishing."

NSRI St Francis Bay volunteers and a diver launched the Spirit of St Francis II, and once the rescue boat reached the trawler, the diver went down and cleared the prop.

"The trawler then motored safely to St Francis Bay, escorted by our sea rescue boat, where damage will be assessed."

Source .iol.co.za

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Derailment Sees Transnet Shut Down Ore Line

Transnet announced Saturday that it was shutting down an ore rail one after the derailment of a train with ore onboard.

The line between the Sishen mine owned by Kumba Iron Ore and the Saldhana port would take the parastatal some time to clear. It is used by Kumba to export steel and ore to foreign markets.

Sandile Simelane of Transnet said : “we will need to conduct an enquiry to establish what happened. We will also need to clear the iron ore (from the rail track) before the line can be opened, but I can't tell when this is going to happen”.

Kumba was recently involved in an ugly dispute with ArcelorMittal over pricing for iron ore delivered by the mining group to them. The dispute ended this week after the intervention of government Minister Rob Davies.

Transnet transports about 44.7 million tons of ore annually.

Source newstime.co.za

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Derailment Sees Transnet Shut Down Ore Line

Transnet announced Saturday that it was shutting down an ore rail one after the derailment of a train with ore onboard.

The line between the Sishen mine owned by Kumba Iron Ore and the Saldhana port would take the parastatal some time to clear. It is used by Kumba to export steel and ore to foreign markets.

Sandile Simelane of Transnet said : “we will need to conduct an enquiry to establish what happened. We will also need to clear the iron ore (from the rail track) before the line can be opened, but I can't tell when this is going to happen”.

Kumba was recently involved in an ugly dispute with ArcelorMittal over pricing for iron ore delivered by the mining group to them. The dispute ended this week after the intervention of government Minister Rob Davies.

Transnet transports about 44.7 million tons of ore annually.

Source newstime.co.za

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Derailment Sees Transnet Shut Down Ore Line

Transnet announced Saturday that it was shutting down an ore rail one after the derailment of a train with ore onboard.

The line between the Sishen mine owned by Kumba Iron Ore and the Saldhana port would take the parastatal some time to clear. It is used by Kumba to export steel and ore to foreign markets.

Sandile Simelane of Transnet said : “we will need to conduct an enquiry to establish what happened. We will also need to clear the iron ore (from the rail track) before the line can be opened, but I can't tell when this is going to happen”.

Kumba was recently involved in an ugly dispute with ArcelorMittal over pricing for iron ore delivered by the mining group to them. The dispute ended this week after the intervention of government Minister Rob Davies.

Transnet transports about 44.7 million tons of ore annually.

Source newstime.co.za

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Minister moves to save Saldanha Steel plant

Minister of Trade and Industry Rob Davies was meeting ArcelorMittal and Kumba today to try to ward off a threat to close Saldanha Steel with thousands of jobs at stake.

His spokesperson, Sidwell Moloantoa Medupe, confirmed that Davies had requested the meeting after Kumba's announcement on Friday that it would stop supplying iron ore to ArcelorMittal SA steel plants unless it agreed to new terms and conditions.

ArcelorMittal said it would have to shut Saldanha Steel with the immediate loss of 4 000 jobs.

Kumba, a unit of Anglo American, said on Friday that it would make the steelmaker pay for ore in advance from next month after ArcelorMittal rejected proposed new pricing systems.

ArcelorMittal said: "(We have) no alternative but to immediately initiate plans for the immediate closure of the Saldanha plant, for the curtailment of all exports, and for a material reduction in domestic market production."

ArcelorMittal said the Kumba proposals would severely harm its profitability and it could not agree to them on an interim basis or otherwise.

Saldanha produces 1.2-million tons of steel a year.

In February, Kumba, the world's 10th largest iron ore producer, terminated the long-term deal under which it sold ore to ArcelorMittal at a discount and said it would charge market rates from March.

The Department of Trade and Industry has offered to mediate between the two.

"The DTI will be assessing all options available to ensure that in the event of a failure of the parties to reach a responsible settlement, the economy does not suffer negative consequences," said Medupe.

The provincial government also said it was watching the matter closely.

Tammy Evans, the spokeswoman for Economic Development and Tourism MEC Alan Winde, said it would assist where it could.

"We hope that the two parties can resolve this commercial dispute swiftly," she said.

Meanwhile, the provincial cabinet has approved the drawing up of a feasibility study for an industrial development zone (IDZ) in Saldanha Bay.

The provincial government believes that with its deep-water port, iron ore terminal and mega-smelters, Saldanha Bay is an area of major international significance in terms of industrial potential.

Winde said that between 1999 and 2008, Wesgro (the investment and trade promotion agency for the Western Cape) had been approached by several proponents of large-scale projects.

These included aluminium smelters, titanium processing plants, large-scale chemical plants and steel processing.

"But the lack of co-ordination and planning by the municipality and provincial government has mitigated against any of these opportunities being able to be developed," said Winde.

A pre-feasibility study towards the end of 2008 covered IDZ profiling and development zone location, Saldanha's economic profile, the local market profile, an industrial market analysis and a physical environment assessment.

A draft of the study was completed in September, and the report and the task team agreed on five potential clusters:

Oil and gas servicing;

Minerals processing;

Renewable energy production and manufacture;

Steel processing; and

Ship repair.

Winde said key issues included the need for an overall environmental management framework to determine the critical limits to development, the requirements of additional bulk water and the need to upgrade power distribution lines.

The report identified 3 000 hectares that could form the IDZ.

The feasibility study is expected to be completed by next March.

Source .iol.co.za

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A review of spoilt brat Arcelor's rights is in order

It seems that the lighter ArcelorMittal South Africa's legal case becomes, the louder are its threats. Its latest - to close its Saldanha Steel plant and stop all steel exports - smacks of the sort of churlish behaviour one would expect of a spoilt child. And spoilt child is pretty much the status that ArcelorMittal SA has enjoyed for most of its stay in South Africa.

The extent of the current mess may be a reflection of the desperate situation the government found itself in with Iscor in the mid-1990s and in particular with Iscor's plant in Saldanha Bay. Despite the injection of oodles of funds by the Industrial Development Corporation (IDC) and Iscor, Saldanha just kept leaking money.

The decision to split Iscor into two parts - comprising steel manufacturing and iron ore mining - was crucial to the steel group's prospects. The decision that Iscor would access cheap iron ore from the Sishen iron ore mine was also critical to Iscor's initial prospects and specifically to the Saldanha mill.

Legend has it that the government was also keen to prise control of the group out of Afrikaner hands, which may have seemed reasonable at the time given Iscor's profit record. And so we all ended up with an international group, ArcelorMittal SA, getting cheap access to the country's dominant steel group and to a seemingly unending supply of cheap iron ore. The new owner charges maximum prices in its determination to ensure an efficient operation. The benefits of these efficiencies are passed directly to its shareholders.

Right now what is most puzzling is ArcelorMittal SA's explanation that it did not renew the iron ore rights because it believed that was Kumba's responsibility. Given the importance of the rights this seems an inappropriately relaxed stance by the steel maker.

And given the talk of closing Saldanha, perhaps it is time to review the divestiture suggestions mentioned by the competition authorities a few years back.

Source busrep.co.za

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ArcelorMittal to close Saldanha steel plant

Within hours of Anglo American-controlled Kumba Iron Ore (KIO) dropping the bombshell that it wanted payment in advance for higher interim iron-ore prices, South Africa's largest steelmaker ArcelorMittal (AMSA) announced that it was taking immediate steps to close its Saldanha export steel works and to cut domestic steel production drastically, which puts 3 000 to 4 000 jobs at risk, and which leaves the South African government "gravely concerned".

After five months of barren negotiations between JSE-listed KIO and AMSA – which chose not to take up a government mediation offer – the saga took a new turn at the weekend when KIO insisted that AMSA, from August 1, pays KIO subsidiary, Sishen Iron Ore Company (SIOC), in advance for iron-ore supplies, and settles outstanding debts brought about by the higher interim iron-ore prices that KIO has been unilaterally imposing.

South Africa's Department of Trade and Industry called on both parties – "as a matter of urgency" – to resolve the dispute in a manner that did not lead to negative economic circumstances for the country and said it continued to be available to mediate.

A meeting between Trade and Industry Minister Dr Rob Davies, KIO and AMSA is reported by Bloomberg News to be on the cards.

But AMSA said that, although supplies of 2,5-million tons of iron-ore a year would continue from SIOC's Thabazimbi iron-ore mine at the cost-plus-3% price, and that scrap metal feedstock would also continue to be supplied, those inputs would be insufficient to meet current sales orders and future steel demand.

As a consequence, AMSA CEO Nonkululeko Nvembezi-Heita said that AMSA had initiated plans for:

• the immediate closure of AMSA's Saldanha export steel plant at the coast;
• the curtailment of all exports; and
• a drastic reduction in steel production for South Arica's domestic market, resulting in market allocations.

A spokesperson told Engineering News Online that AMSA, which employs 10 000 people, had already begun communicating the looming job losses with labour unions.

Nyembezi-Heita said: "I'm profoundly disturbed with Kumba's decision as it will have a wider impact on the economy of South Africa. It will result in definite job losses in our business and the downstream industries. At this stage, I am expecting that about 3 000 to 4 000 jobs will be affected."

SIOC had earlier requested AMSA to pay into an escrow account the difference between the disputed "cost-plus-3%" portion of the price and the market price, but AMSA did not take up the offer.

AMSA did, however, impose a R600/t steel surcharge to cover the higher price from May 1.

KIO made a second July 15-deadline discounted-price offer to AMSA, which the steelmaker again did not take up.

Now KIO, headed by CEO Chris Griffith, said that its SIOC would only load trains destined for AMSA's plants on condition that payment - based on its second discounted-price proposal - was made on a "pay-and-take" basis. The discounted price SIOC offered was $50/t for AMSA's Saldanha coastal steel plant and $80/t for its inland Vanderbijl and Newcastle steel plants.

That would apply from August 1, from which date AMSA would have to prepay at least 48 hours in advance.

By that date, AMSA would also have to have paid up the accumulated amounts due for the iron-ore delivered between March 1 and July 15 at a higher interim price.

AMSA said that, while the $50/t would have been sufficient to keep the Saldanha plant at a financial break-even point, the $80/t would result in the possible closure of its inland steel works.

The $50/t amounted to a 69% increase over the cost-plus-3% iron-ore price and the $80/t price an increase of 171%.

Nyembezi-Heita added that steel prices had declined by $100/t since AMSA's interim pricing negotiations had begun with KIO in March.

South Africa's Department of Trade and Industry said in a media release that it was "gravely concerned" about the KIO announcement and that the dispute between KIO and AMSA should not result in iron-ore previously processed locally being exported in unbeneficiated form.

The department also did not want to see any disruption of local steel production nor did it want the dispute to result in the domestic steel price rising above internationally uncompetitive levels.

During the negotiation period, SIOC has continued to deliver iron-ore to AMSA, but the steelmaker has not paid the invoiced price reflecting the higher interim price, but has instead continued only to remit the cost-plus-3% price.

SIOC delivered 337 402 t of iron-ore to AMSA's Saldanha plant and 1 115 180 t of iron-ore to AMSA's inland plants from March 1 to June 30.

"There is considerable commercial risk to SIOC and its shareholders if it continues to supply iron-ore to AMSA without an agreement on the terms of supply," KIO said in a Stock Exchange News Service announcement.

KIO notified AMSA in February that it was no longer entitled to receive 6,25-million tons a year of Sishen iron-ore at the cost-plus-3% arrangement because of AMSA failing to convert its old-order mining rights to new-order mining rights.

KIO attempted to acquire AMSA's former rights, but these were awarded instead to Imperial Crown Trading, which KIO is contesting in the North Gauteng High Court.

The cost-plus-3% agreement has been in place since 2001 based on AMSA's now-forfeited ownership of an undivided 21,4% interest mineral rights at the Sishen mine, which KIO contends became inoperative from May 1, 2009 – a matter which has been referred to arbitration.

However, AMSA has yet to file its answering papers to SIOC's statement of claim.

An AMSA spokesperson told Engineering News Online that the filing of its answering papers was now imminent and that the company's arbitrator had been appointed.

Pending the outcome of the arbitration, SIOC has invoiced AMSA at the higher interim price price and AMSA has charged South African steel consumers R600/t more for steel.

Meanwhile, South Africa's Competition Commission is giving "priority attention" to dealing with AMSA's unilateral imposition of the R600-plus surcharge on every ton of steel sold domestically.

A preliminary investigation is under way into the possibility that the surcharge may constitute an abuse of dominance.

Edited by: Creamer Media Reporter
Source engineeringnews.co.za

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ArcelorMittal to close Saldanha steel plant

Within hours of Anglo American-controlled Kumba Iron Ore (KIO) dropping the bombshell that it wanted payment in advance for higher interim iron-ore prices, South Africa's largest steelmaker ArcelorMittal (AMSA) announced that it was taking immediate steps to close its Saldanha export steel works and to cut domestic steel production drastically, which puts 3 000 to 4 000 jobs at risk, and which leaves the South African government "gravely concerned".

After five months of barren negotiations between JSE-listed KIO and AMSA – which chose not to take up a government mediation offer – the saga took a new turn at the weekend when KIO insisted that AMSA, from August 1, pays KIO subsidiary, Sishen Iron Ore Company (SIOC), in advance for iron-ore supplies, and settles outstanding debts brought about by the higher interim iron-ore prices that KIO has been unilaterally imposing.

South Africa's Department of Trade and Industry called on both parties – "as a matter of urgency" – to resolve the dispute in a manner that did not lead to negative economic circumstances for the country and said it continued to be available to mediate.

A meeting between Trade and Industry Minister Dr Rob Davies, KIO and AMSA is reported by Bloomberg News to be on the cards.

But AMSA said that, although supplies of 2,5-million tons of iron-ore a year would continue from SIOC's Thabazimbi iron-ore mine at the cost-plus-3% price, and that scrap metal feedstock would also continue to be supplied, those inputs would be insufficient to meet current sales orders and future steel demand.

As a consequence, AMSA CEO Nonkululeko Nvembezi-Heita said that AMSA had initiated plans for:

• the immediate closure of AMSA's Saldanha export steel plant at the coast;
• the curtailment of all exports; and
• a drastic reduction in steel production for South Arica's domestic market, resulting in market allocations.

A spokesperson told Engineering News Online that AMSA, which employs 10 000 people, had already begun communicating the looming job losses with labour unions.

Nyembezi-Heita said: "I'm profoundly disturbed with Kumba's decision as it will have a wider impact on the economy of South Africa. It will result in definite job losses in our business and the downstream industries. At this stage, I am expecting that about 3 000 to 4 000 jobs will be affected."

SIOC had earlier requested AMSA to pay into an escrow account the difference between the disputed "cost-plus-3%" portion of the price and the market price, but AMSA did not take up the offer.

AMSA did, however, impose a R600/t steel surcharge to cover the higher price from May 1.

KIO made a second July 15-deadline discounted-price offer to AMSA, which the steelmaker again did not take up.

Now KIO, headed by CEO Chris Griffith, said that its SIOC would only load trains destined for AMSA's plants on condition that payment - based on its second discounted-price proposal - was made on a "pay-and-take" basis. The discounted price SIOC offered was $50/t for AMSA's Saldanha coastal steel plant and $80/t for its inland Vanderbijl and Newcastle steel plants.

That would apply from August 1, from which date AMSA would have to prepay at least 48 hours in advance.

By that date, AMSA would also have to have paid up the accumulated amounts due for the iron-ore delivered between March 1 and July 15 at a higher interim price.

AMSA said that, while the $50/t would have been sufficient to keep the Saldanha plant at a financial break-even point, the $80/t would result in the possible closure of its inland steel works.

The $50/t amounted to a 69% increase over the cost-plus-3% iron-ore price and the $80/t price an increase of 171%.

Nyembezi-Heita added that steel prices had declined by $100/t since AMSA's interim pricing negotiations had begun with KIO in March.

South Africa's Department of Trade and Industry said in a media release that it was "gravely concerned" about the KIO announcement and that the dispute between KIO and AMSA should not result in iron-ore previously processed locally being exported in unbeneficiated form.

The department also did not want to see any disruption of local steel production nor did it want the dispute to result in the domestic steel price rising above internationally uncompetitive levels.

During the negotiation period, SIOC has continued to deliver iron-ore to AMSA, but the steelmaker has not paid the invoiced price reflecting the higher interim price, but has instead continued only to remit the cost-plus-3% price.

SIOC delivered 337 402 t of iron-ore to AMSA's Saldanha plant and 1 115 180 t of iron-ore to AMSA's inland plants from March 1 to June 30.

"There is considerable commercial risk to SIOC and its shareholders if it continues to supply iron-ore to AMSA without an agreement on the terms of supply," KIO said in a Stock Exchange News Service announcement.

KIO notified AMSA in February that it was no longer entitled to receive 6,25-million tons a year of Sishen iron-ore at the cost-plus-3% arrangement because of AMSA failing to convert its old-order mining rights to new-order mining rights.

KIO attempted to acquire AMSA's former rights, but these were awarded instead to Imperial Crown Trading, which KIO is contesting in the North Gauteng High Court.

The cost-plus-3% agreement has been in place since 2001 based on AMSA's now-forfeited ownership of an undivided 21,4% interest mineral rights at the Sishen mine, which KIO contends became inoperative from May 1, 2009 – a matter which has been referred to arbitration.

However, AMSA has yet to file its answering papers to SIOC's statement of claim.

An AMSA spokesperson told Engineering News Online that the filing of its answering papers was now imminent and that the company's arbitrator had been appointed.

Pending the outcome of the arbitration, SIOC has invoiced AMSA at the higher interim price price and AMSA has charged South African steel consumers R600/t more for steel.

Meanwhile, South Africa's Competition Commission is giving "priority attention" to dealing with AMSA's unilateral imposition of the R600-plus surcharge on every ton of steel sold domestically.

A preliminary investigation is under way into the possibility that the surcharge may constitute an abuse of dominance.

Edited by: Creamer Media Reporter
Source engineeringnews.co.za

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Parts for nuclear reactor to be stored in Saldanha Bay

The government has pulled the plug on its ambitious nuclear energy programme after pumping more than R9-billion into it over more than 11 years.

In a letter dated July 5, Public Enterprises Minister Barbara Hogan told the National Union of Mineworkers (NUM): "The minister of finance has clearly stated that there will be no further funding for the company, and I would like to reiterate that this position has not changed.

"It is clear that the remainder of the cash on hand is to be utilised solely for the winding down of the company as well as the preservation of the intellectual property."

One objective was to design, license and build a prototype nuclear reactor plant, which, if successful, would have paved the way for building small power plants to help meet SA's needs.

The company operates as an independent entity governed by an agreement between founding investors Eskom, the Industrial Development Corporation (IDC) and US nuclear giant Westinghouse.

It has spent R5-billion on projects since 1994, including R2.7-billion on a demonstration power plant, which was to have been built at the Western Cape's Koeberg nuclear power station, but was later scrapped. In the process, the company wasted R268-million on the manufacture of a major component of the demonstration power plant, a 2000-ton reactor pressure vessel.

The vessel, which is due to leave the Spanish port of Santander next Sunday, will be stored at Saldanha Bay for R10000 a month as the company can no longer afford the R1.4-million it will cost to transport it to Pretoria.

Business Times was told that the company decided to have the component shipped to SA as it would have been liable for R34-million in VAT had it remained in Spain. Nuclear experts were unanimous this week that the vessel would have to be scrapped as the PBMR company changed the original design of the demonstration power plant last year to 200MW from 400MW. The vessel can function in a 400MW power plant only.

Although the part is unfinished, as the contract for its construction was cancelled last year, PBMR was forced to pay the Spanish builder R268-million for the incomplete product. The original contract price was R317-million.

Payments to companies that made parts for the demonstration power plant include:

• R503.2-million to Japan's Mitsubishi Heavy Industries for a helium turbine for the power plant;
• R256.8-million to German company SGL Carbon for manufacturing carbon reflector blocks; and
• R256-million for graphite for the demonstration power plant.

The company also spent millions of rands manufacturing coated uranium oxide particles encapsulated in graphite fuel spheres, which were sent to Russia for testing.

However, staff say the financial cut-off did not stop the company recently giving golden handshakes of R1.8-million each to some of its general managers.

Last year, the company's 11 executives were paid a combined R18-million in salaries and other benefits. Other big payments since 1994 include:

• R2-billion to mostly overseas consultants;
• R115.9-million for building rental;
• R707.9-million for the construction of a pilot fuel plant; and
• R172-million for overheads.

Hogan recently turned down a rescue plan proposed by the NUM that included a request for a R262-million government bail-out until March next year. In a detailed submission to Hogan, the union called on the auditor-general's office to conduct a forensic investigation into the company's financial affairs.

The union also called on the government to suspend the company's board and executive officers. It said some engineers and scientists were "inappropriately qualified" for nuclear reactor engineering applications.

"The actions of certain individuals can be treated as sabotage for changing the design almost every second year. It seemed as if they did not want to see the reactor built."

Union general secretary Frans Baleni deplored the company's "wasteful expenditure. The closure is marked by serious allegations of corruption and unethical conduct. We would be pleased if it can be investigated thoroughly," he said.

A nuclear expert employed at PBMR blamed the board and executives for the company's failure. "The technology in terms of electricity production was good, but the only problem was that it was not well managed. Nothing was ever achieved by the company. It was a waste of taxpayers' money."

Eskom said in a short statement that it was a minority investor, and referred queries to PBMR.

PBMR's acting chief executive Alex Tsela declined to comment, referring all questions to the company's corporate communications department, which could not be reached for comment.

The chairman, Alistair Ruiters, could not be reached for comment either.

Source timeslive.co.za

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Langebaan and Struisbaai fishers granted permits

Langebaan and Struisbaai fishers granted permits

Published in: Legalbrief Today Date: Tue 06 July 2010 Category: In Court Issue No: 2596 Artisanal net fishers from the Langebaan and Struisbaai areas have been granted permits to fish by the Department of Agriculture, Forestry and Fisheries after a protracted court battle, says a Cape Times report. Judge Nathan Erasmus said an order had been made by agreement between the parties to give permits to 41 fishers, who could demonstrate historical dependence and reliance on net fishing. Said Erasmus: 'This order will stand pending the promulgation, implementation and rights allocation in terms of a new policy framework that would accommodate traditional artisanal net fishers in an effective and comprehensive manner...' The parties would report progress about the finalisation of the policy, including the draft, which was to be circulated by 31 July. The report notes the fishers applied to the High Court after the department had failed to provide relief packages after the original application to the court in December 2004. According to court papers, that application was instituted to counter 'unfair discrimination' against artisanal fishers when they were not included in the Marine Living Resources Act.

Green Scorpions coming to Langebaan

A knock on the door by the Green Scorpions was probably the last thing the owners of a dozen Melkbosstrand seafront properties were expecting.

But they are all alleged to have infringed environmental regulations by illegally extending the footprint of their properties into the proclaimed public open space on the adjoining coastal dune, and to have caused some degree of ecological damage to the sensitive dune vegetation as a result.

While a few of these encroachments are just one or two metres, others involve big swathes of manicured lawn and substantial landscaped gardens extending 20m or more into the coastal dune. In some places, irrigation systems, wooden and stone pathways, and even a children's jungle gym and a trampoline were installed well beyond the properties' cadastral boundaries.

One resident has put up a "no entry" sign along an illegal wooden boardwalk leading through the dune between the beach and his house, while large amounts of lawn clippings, dead palm fronds and other garden refuse have been dumped into the dune vegetation.

On Thursday, a joint task team of the province's Green Scorpions - environmental management inspectors - and colleagues from the City of Cape Town's environmental resource management unit visited 12 sea-fronting properties in Harold Ashwell Boulevard, where alleged contraventions of the National Environmental Management Act (Nema) regulations had been identified from aerial photographs and other sources.

"Listed activities" in the coastal zone for which special environmental authorisation is required include construction or earth-moving activities within 100m of the high-water mark, and preventing the free movement of sand by planting vegetation and/or removing or damaging indigenous vegetation of more than 10m2, also within 100m of the sea.

Thursday's "ground truthing" inspection, after the initial identification of a possible transgression, was the second step in the legal process of having the affected areas restored to public open space, and rehabilitated.

Now the department will send the property owners "pre-directive" warning letters, pointing out the alleged offences and inviting them to respond.

Then, should any owner not respond appropriately to that warning, he or she will be issued with a formal compliance notice. And if that notice is ignored, the province can levy a fine as high as R5 million, team leader Achmad Bassier explained.

There were similar problems along the whole of the province's coastline, including at places like Paradise Beach in Langebaan and at Clifton, he said.

"Some residents are not aware that what they're doing requires authorisation, and so our visits are a bit of a surprise to them.

But as environmental inspectors we have a mandate, it's our work. And we do also create environmental awareness," he said.

The city's coastal management specialist, Mr Darryl Colenbrander, said it was important to address transgressions of this nature early.

"Actions that these residents have taken create a problem for us because it's an encroachment into public open space and can cause coastal erosion that ends up as a problem on the city's doorstep, so we need to address this now.

"And part of the problem is the incremental growth (into public space) that is quite hard to keep track of. That's why we need a handle on this."

While several of the 12 properties visited on Thursday were unoccupied or had visitors staying there, Bassier said he was satisfied that they had been able to make contact, and were prepared to send formal warning letters.

Dale Wakefield, one of the Green Scorpions, said one of the residents who had been at home had been very upset by the visit, and had insisted that the family had built their property 17 years ago, long before the Nema regulations had come into effect.

"I suspect we're going to be thrown this curved ball at every house. But the cadastral boundaries are defined, and they are encroaching into public open space," he said.

Source iol.co.za

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