ArcelorMittal in Saldanha Bay could be facing iron ore supply problems.

Kumba Iron Ore appears to have dealt steel giant ArcelorMittal South Africa another body blow in the ongoing battle between the two companies.

The Mail & Guardian understands that Kumba has applied for a 21% share in the mining rights to the Sishen mine, which lie at the heart of the corporate bun fight.

The matter is being closely watched as it ultimately goes to the heart of steel pricing in the country and could affect manufacturing and jobs.

Neither company would comment, but they are understood to have entered arbitration to resolve the dispute. To add to ArcelorMittal’s woes an industry insider speculates that the government’s dissatisfaction with its steel pricing, as well as its lack of empowerment status, has left it with little sympathy in the corridors of power.

If Kumba is granted ownership of the minority portion of the rights, which ArcelorMittal held and failed to convert into new order mining rights, this could give Kumba the leverage it needs to force a better price for the 6.25-million tons of iron ore that it supplies to Arcelor-Mittal each year, according to analysts.

The rights have since reverted to the state. “The holder of the right was meant to apply for conversion before April 2009 and they [ArcelorMittal] failed to do so,” said Jeremy Michaels, a spokesperson for the department.

How Kumba’s application will be received is unclear. The department viewed the issue as a dispute between “two private companies”, said Michaels. DMR would not comment on any applications for the rights.

Under a contract negotiated through the unbundling of the state-owned Iscor in 2001 -- which resulted in the creation of what became Kumba Iron Ore, its ironore mining arm, and ArcelorMittal South Africa -- ArcelorMittal, because of its share of the mining rights in Sishen, would receive 6.25-million tonnes of ore from the Sishen mine at cost plus 3%.

The mining rights, viewed as undivided, are 79% owned by Kumba through its subsidiary the Sishen Iron Ore company, with the minority share or 21% lying with ArcelorMittal. ArcelorMittal paid R2.5-billion at the time for the rights to Sishen and the 6.25-million tonnes of ore a year at cost plus 3%

On February 26 ArcelorMittal suspended trading of its shares after Sishen notified the company on February 5 that it would no longer be supplying ArcelorMittal with ore at the preferential price, but rather at market-related prices.

It is understood that Kumba viewed ArcelorMittal’s failure to convert its share of the mining rights as an opportunity to amend the deal unilaterally. A prior arbitration ruling on a related matter is believed to have given it the impetus to do so.

In the development of the Sishen South project -- an extension of the Sishen mine -- ArcelorMittal had assumed a matching arrangement (cost plus 3%) on the output of Sishen South. Kumba disputed this.

The matter went to arbitration and late last year it was ruled that, because ArcelorMittal did not own the mining rights in this matter, it was not entitled to a similar deal.

But ArcelorMittal is understood to take a different view, which is that, on the division of the Sishen mining rights, Kumba, owning the majority share, would deal with the regulatory issues, including mining-rights applications and conversions. Mittal re-opened trading of its shares last week, with a reported 23% drop in the price.

The very sweet price granted to ArcelorMittal has been a sore point for the South African government.

On Iscor’s unbundling, facilitated by the department of trade and industry, under Alec Erwin, the price granted was, in part, aimed at locking in lower costs for the local steel industry and ensuring its competitiveness. But ArcelorMittal has been accused of not passing on the benefits of these prices to local customers.

Instead, it opted to benchmark its price against a basket of countries, which critics argue is closer to import prices and ensures Arcelor- Mittal retains extensive profits. Its pricing saw the company being dragged to the Competition Tribunal and slapped with just under R700-million in fines. But it challenged the ruling and subsequently settled with the complainants.

ArcelorMittal has long denied the accusations, citing rebates to customers that allow them to export competitively as one example of the support it provides to customers.

According to Matt Brenzel, portfolio manager at Cadiz Securities, a victory for Kumba might not affect local steel prices. Instead, a better price for Kumba would ideally affect only ArcelorMittal’s profit margins.

Brenzel estimated that ArcelorMittal was receiving ore from Sishen at roughly R125/tonne. Compared with an export parity price of around R475/tonne ArcelorMittal stood to earn more than R2-billion a year from the deal.

He noted that if Kumba did get ArcelorMittal’s share of the rights, the company would achieve little besides room to negotiate for a better price.

In terms of off-take, ArcelorMittal was the only real customer that Kumba had for the ore, given the constraints on the rail line to transport ore to Saldanha Bay for export, he said. Aside from pricing issues Arcelor-Mittal’s failure to strike an empowerment deal is also seen as an irritation to some sectors of government.

ArcelorMittal is one of the largest suppliers of steel to a number of companies, including mining houses. Under the mining charter, companies are expected to procure goods from BEE-compliant suppliers.

One industry insider argued that, with ArcelorMittal being one of the largest suppliers of such a key input, it has meant the transformation performance of miners is looking increasingly bad.

ArcelorMittal had apparently planned to undertake a BEE deal but this was put on hold because of the financial crisis and the recession that followed.


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Source http://www.mg.co.za

Superloads At Saldanha Port

CONCARGO was commissioned by World Groupage Services (a sea freight and forwarding company) to handle the transportation of a bucket wheel reclaimer and two ore stackers from Saldanha Port to a mine in Postmasburg. The total distance is approximately 850 km.

The total shipment weighed in at 840 tons and measured 6 200 cubic meters. Sixty-three trucks were loaded totransport the equipment of which 42 are abnormal out-of-gauge loads, four of which were superloads up to 9.54 meters wide. These had to be loaded onto a mix of 100 ton lowbeds, step decks and extendable trailers. The balance of the loads was made up of tri-axles and superlinks truck tractor articulated vehicles.

The shipment arrived in Saldanha Port on 6 November from the Far East on a special charter vessel. It was the biggest project shipment ever handled by the Port so far.

The abnormal load project was no small task as it was subject to the issuing of permits by the Department of Transport and Public Works. The loads needed to be staggered in such a way to keep the disruption of general traffic flows to a minimum. Provincial traffic escorts were required to ensure the safety of other road users. The most challenging part of the route was Piekenierskloof Pass. Route surveys and traffic accommodation plans had to be carried out prior to the transportation of the larger loads, and in the case of the superloads, periodical closure of the roads were necessary.

Source http://www.cbn.co.za

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Transnet Port Terminals new management structure.

Transnet Port Terminals (TPT) would intensify its focus on total quality management (TQM) and human capital and development over the next two years, in order to achieve its goal of aligning the business with global standards, TPT CEO Tau Morwe said on Friday.

In a statement, TPT said that its new business model and management structure, unveiled this week, signalled a “dynamic approach” to the quality of its operations and a renewed focus on supply chain efficiencies.

“TPT realises that to improve, we have to continuously review our operations and processes and ensure effectiveness to service our customers’ needs,” commented Morwe.

To that end, it has appointed a dedicated GM for TQM and Continuous Improvement, Velile Dube, who would “endeavour to implement transformation and change management processes with the aim of converting customers’ operational requirements to tangible changes that are recognised across the organisation”.

Dube would also be responsible for the new Operations Excellence Centre, which will drive and sustain improvements across the terminals, said Morwe.

Further, the management of TPT’s four operational sectors had been recategorised from the previous container, bulk, break bulk and automotive categories.

Going forward, Zeph Ndlovu will head up the new Mineral Bulk sector, Victor Mkhize the Agricultural Bulk and roll on, roll off (RoRo) sector and Siyabulela Mhaluka the container sector.

Key account executives, namely Thembi Mbele for the Agricultural sector, Tracey Neat for the Mineral Bulk sector, Sidney Bird for the container sector, Gary Kleyn for the Break Bulk Liner Services sector and Beverly Masson for the Automotive sector, would be able to further assist customers.

Meanwhile, Lita Mcwabeni has been appointed as GM of Strategy at TPT, and would be responsible for forward planning of future capacity developments aligned to demand forecasts, best practice benchmarking of TPT operations and liaison with key stakeholders regarding policy issues and government liaison.

Further, the Richards Bay Dry Bulk Terminal and the Richards Bay Multipurpose Terminal, would now be operated under a single management team to improve synergies. Ben Khonyane has been appointed as Terminal Executive for the Richards Bay terminals.

The former Business Unit Executive (BUE) at the Durban Container Terminal, Moshe Motlohi, has been appointed to Terminal Executive for the Cape Town terminals, which would now comprise both the Cape Town Container Terminal and the Cape Town Multipurpose Terminal.

New management for the Durban Container terminal would be appointed in the near future, while the Durban Car terminal operation would be integrated into the Durban Point terminal as a RoRo operation.

Operations at the Agriport and Maydon Wharf Terminals will remain unchanged but would now be led by Johann Botha.

The Ngqura Container terminal would remain under the leadership of Hector Danisa, and would be developed as a standalone facility.

Ntomboxolo ‘Nikki’ Mbengashe would manage the Port Elizabeth terminal as the BUE, while Adil Rodgers has been appointed as the BUE for the Saldanha Iron Ore terminal.

Other changes, Morwe added, would include a more aggressive approach to the safety of assets, cargo, terminal users and employees.

TPT would also implement a reformed planning regime in all port terminals nationally, to ensure the best possible berth utilisation, while taking into account sailing time for vessels that call at more than one terminal in South Africa.

“We will continue to build on the partnership approach to customers and constantly engage, be attentive and respond to their requirements as part of our key strategic thrusts,” he emphasised.

Edited by: Mariaan Webb of the Engineering News

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Transnet considering investment on the West Coast.

State freight logistics group Transnet, in consultation with manganese exporters, expects to decide within the "next four to five months" whether to develop a new export channel through the deepwater harbour at Saldanha Bay, on South Africa's West Coast, or to proceed with an alternative model involving ports on the country's eastern seaboard.

Acting CEO Chris Wells tells Engineering News Online that the group is also interrogating several possible private-sector participation (PSP) models for the two alternatives, both of which would involve "significant investment".

He refuses to be drawn, however, on the amount of capital that could be involved, or on the nature of the partnerships being investigated, saying only that the PSP model is integral the plan and is being canvassed with the miners as the studies progress.

For their part, the miners involved (BHP Billiton, African Rainbow Minerals and Assore) have indicated previously that they would prefer to "go west", and convert the high-performance Sishen-Saldanha line into a dual commodity channel for iron-ore and manganese.

That said, they have supported Transnet's investigations into both a western corridor, as well as an eastern corridor involving the harbours of Port Elizabeth, Ngqura and Durban. Still, the miners feel that greater efficiencies would be possible on a channel that is dedicated to bulk commodities, rather than one that will also have to cater for general freight.

Currently, the Sishen-Saldanha heavy-haul line is dedicated to iron-ore exports, and has emerged as Transnet Freight Rail's (TFR's) top performing corridor during 2009.

In the six months to September 30, export tons increased by 32,7% to 21,1-million tons in line with contractual commitments TFR has with Anglo American's Kumba Iron Ore and Assmang, the joint venture between African Rainbow Mineral and Assore.

The manganese miners would like to have access to this channel so as to boost exports from the Kalahari manganese field to some 12-million tons a year, from the current position of around five-million tons yearly, most of which is currently moved through the depth- and land-constrained harbour at Port Elizabeth.

The Port Elizabeth channel has a theoretical capacity of six-million tons yearly, but it is unlikely that this nameplate will ever be achieved, owing to a number of constraints, especially relating to stockpiles.

"The big issue is that there is demand from the industry for a 12-million ton business, which is a massive ramp-up," Well explains.

Under the current configuration, the yearly peak is expected to be about seven-million tons, with Port Elizabeth probably only able to handle 4,5-million tons and with Durban in a position to handle up to 2,5-million tons.

So, to reach the 12-million target, there are only two alternatives: to develop a terminal at the new deepwater harbour at Ngqura and continue using Durban for the overflow; or transform the bulk terminal at Saldahna into a dual commodity facility for iron-ore and manganese.

The iron-ore channel was in the process of being ramped up from 47-million tons to 60-million tons, but significant levels of capital will be required to go beyond that level.

"To move to 80-million tons, which the iron-ore industry wants, will require massive investment into new infrastructure and rolling stock," Wells outlines, adding that any move towards the 100-million ton level once mooted, "looks prohibitively expensive".

However, a combined 90-million ton channel, with 78-million tons for iron-ore and 12-million tons for manganese, "looks full of potential"- this is reportedly because there would be a greater sharing of risk, especially at the port, than would be the case if only one commodity was involved.

"Either way, the investment would be significant, and while we could probably cater for it on our balance sheet, we would probably look at some kind of PSP with the miners," Wells concludes.

Story by Terance Creamer of the Engineering News

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Tormin Project , West Coast, South Africa

In December 2008, MRC was granted mining rights for the Tormin heavy minerals project, on the West Coast of South Africa. Final processing plant design and engineering are now taking place.

“The company has commenced procedures to appoint an engi- neering group to update the existing feasibility study. Based on a positive outcome to this phase of the work, the company will let a tender for a turnkey project to produce zircon and rutile concentrate,” says Caruso in his statement to shareholders.

“On the current schedule, the plant should be operational by the end of calendar 2010,” Caruso adds.

Modernization of Saldanha Bay facilities ups Sea Harvest capacity to 80,000 tons.

This story was written back in October 1994

Saldanha Bay, a protected inlet some 150 kilometers north of Cape Town, is home to Sea Harvest Corporation Limited. For more than a quarter of a century its fleet has docked there to unload South African hake (Merluccius capensis) and other species caught in the cold, nutrient-rich waters of the West Coast Benguela current ecosystem.

Indeed, the company's core center of activities and corporate head office are situated at Saldanha Harbour, where a factory operates from a deepwater quay built on reclaimed land. Here the trawlers are able to tie up directly alongside the plant to become a virtual part of the production line.

In 1993 a five-year building and modernization project was completed, entirely replacing the original factory and increasing work space to about 20,000 cubic meters. The premises now incorporate state-of-the-art processing systems and equipment operating in an air-conditioned, highly hygienic environment. The production facility is directly linked to the main holding warehouse, which allows for immediate temperature-controlled transfer of finished products to coldstores. With capacity of 6,000 tons, it too is on the quayside and is thus able to receive product directly from freezer-equipped factory ships.

The fish is caught and landed by a flotilla of 16 deep-sea fresh fish trawlers, seven inshore fresh fish vessels, and two factory-freezer-ships. The freezer-equipped vessels process and pack their catch to be market-ready while still on the fishing grounds.

Sea Harvest strives to remain in the forefront of the regional trawling industry through operating efficiently and cost-effectively, by development of new technology and processes, and by engaging in differentiated marketing programs. It employs more than 3,000 people and has the capacity to catch and process about 80,000 tons of fish per annum.

The company's primary focus is on natural hake, fillets and portions, as well as coated fillets, portions and snacks. Products are supplied to retail, foodservice and bulk customers. All processing is done to meet client requirements, and as such the line of items packed is wide and varied. Fish may be whole or filleted, deep-or shallow-skinned, deboned and de-fatted, or further processed into cuts such as steaks, loins and loin fillets. Customized fish block specifications also form part of the range.

The South African firm (fax: 02281-43555) consistently invests in the development of new products that appeal to changing consumer needs and address shifting trends. And methods of improving existing lines and processes are constantly under review.

"Our quality assurance program starts from the moment a net is lowered into the water," said Denis Handley. "Experience has taught that no amount of care in the factory can undo damage done by poor handling at sea."