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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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