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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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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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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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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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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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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Saldanha Bay. Shell start gas Exploration on the West Coast

Shell Upstream International has joined the hunt for deep-water oil and gas off South Africa's West Coast, but one of its priorities is to quell any hopes of quick riches.

The Dutch group sent executives this week to hold public consultation meetings in Cape Town and smaller centres like Lamberts Bay, Springbok and Port Nolloth.

"We are trying to keep expectations to a minimum," said Kim Bye Bruun, the Upstream unit's communication manager. "Nothing will be done on the ground for the next few years. This is a desktop study."

Shell won rights last November to explore a deep-water block the size of the Netherlands about 150km offshore, from Saldanha Bay to Port Nolloth.

If the desktop study, which could take three years, indicates areas of interest, seismic studies will be done. If those prove positive, test holes will be drilled.

It is a long process with no guarantee of results as shown by the Ibhubesi gas field closer inshore. Forest Exploration International found significant reserves there 10 years ago, but no gas has been piped ashore. In fact, no pipes have been laid to carry it.

Forest Exploration's commercial director, John Langhus, said it was impossible to say when the first gas would be delivered. "We can't predict that until we know what the demand for the gas is," he said.

"We're negotiating with parties about offtake of the gas. Once we get the critical level of commitments for the gas, then we can decide to move that forward."

Langhus said Forest saw the South African market as a big one, from electricity generation to industrial and residential use. "We're very optimistic about the growth of the market once it kicks off."

The problem is getting the market to kick off. Doug Kuni, managing director of the Independent Power Producers Association, said energy companies had yet to strike a deal with a South African buyer that would make it economical to start producing.

"All the exploration companies are spending dollars; they will require a dollar price for the gas. They will put it into a power station and produce electricity that will be paid for in rand. They don't want to take the currency risk."

Kuni said the energy companies wanted a Brent index in the pricing, but South African buyers were reluctant to commit. "Who knows where the price of oil will go?"

There had been more than 10 years of talks without a solution.

The minister of energy, Elizabeth Dipuo Peters, said in parliament this week that her department was in talks with a company to supply about 1500MW of electricity from a gas-fired power station on the West Coast, but she gave no details. "A memorandum of understanding will be signed once all the negotiations are finalised," she said.

Source timeslive.co.za

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Langebaan Lagoon could suffer massive environmental disaster

A "shocked and embarrassed" Public Works Minister, Geoff Doidge, says he was unaware his department was constructing a R100-million boat yard for the SANDF's Special Forces in Langebaan Lagoon without the necessary environmental approvals.

He has now asked his Water and Environmental Affairs counterpart, Buyelwa Sonjica, to set up a joint task team from their departments to undertake a "thorough" investigation.

Sonjica's officials are furious that Doidge's department reneged on its promise last year to stop work on the project, other than to stabilise the roof of the boat yard, until the required environmental authorisations were approved.

And the breaking of this commitment also caused Sonjica unwittingly to give an untrue answer to a parliamentary question by the DA in March.

Doidge's department has already paid a R93 000 fine for starting the project without doing the necessary environmental impact assessment and without authority to work in a protected area: the West Coast National Park.

Langebaan Lagoon is also proclaimed as a internationally important bird conservation site under the Ramsar Convention, which South Africa has signed.

"Green Scorpions" - environmental management inspectors - were told during a site visit last August that the project had been started without applying for environmental approval "as a result of time constraints". However, it has been on the cards since at least 2006.

After the inspectors' visit, Water and Environmental Affairs deputy director-general Joanne Yawitch sent Doidge's department a formal letter, notifying it of her intention to issue a compliance notice under the National Environmental Management Act because of the "unlawful" construction and contravention of "numerous provisions of the protected areas legislation".

The notice would have forced all work on the project to stop until environmental approvals were given.

But spokesman for Sonjica's department Albi Modise said it had decided not to issue a compliance notice because the public works department (DPW) had responded promptly with an appeal.

"The decision not to issue the compliance notice was also based on the fact that DPW has a firm undertaking that work would only continue on the roof stabilisation and that other activities would cease pending the outcome of the appeal.

"The department recently became aware that DPW has reneged on their commitment... it appears as if the DPW has proceeded in direct contravention of its undertaking and failed to inform this department until recently.

"This is viewed in an extremely serious light and will be taken into account in determining enforcement action moving forward."

By John Yeld
Environment & Science Writer

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

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ArcelorMittal SA seeks quick end to row with kumba

The South African unit of ArcelorMittal, the world's largest steel maker, on Tuesday said it was cooperating with Kumba Iron Ore to expedite a prolonged dispute over iron-ore supply amicably.

ArcelorMittal South Africa also said steel prices were set to rise on recovery of global demand, restocking and a boom in South Africa's economy, particularly in the construction industry.

"We are co-operating (with Kumba) to take the matter to arbitration," Nonkululeko Nyembezi-Heita, CEO of ArcelorMittal South Africa, said at a meeting for shareholders.

She later declined to provide further details to Reuters.

Kumba, a unit of global miner Anglo American, terminated the preferential pricing deal with the steelmaker, claiming that the company had failed to renew its mining rights in Sishen mine as per South African mining laws.

Kumba supplies ArcelorMittal from the Sishen mine.

"We remain firmly optimistic that the supply agreement (with Kumba) is valid and we are taking necessary steps to protect our rights," Johnson Njeke, the unit's chairman said at the same meeting.

Nyembezi-Heita later told Reuters that the refusal by Zimbabwe President Robert Mugabe to allow ArcelorMittal to take over the country's Zisco Steel, was a lost opportunity to show foreign investors Harare was changing its policies.

"What Zisco would have offered us was a presence in a part of the world where we could service landlocked neighbouring states, plus participating in the rebuild of Zimbabwe as a country, obviously now we have lost that," she said.

"But we haven't lost the strategy and ambition for our Sub-Saharan footprint," Nyembezi-Heita said.

Nyembezi-Heita said ArcelorMittal South Africa planned to grow its market within Sub-Saharan Africa in countries like Zambia, Namibia, Botswana and also Ghana.

Nyembezi-Heita said the global economic climate had improved and that she saw this supporting prices.

"We are seeing prices being traded up and up. There is also restocking and a rebound in steel demand," Nyembezi-Heita said.

Edited by: Reuters

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Langebaan boatyard and jetty in deepwater with EAD

The National Department of Public Works (DPW) has been fined R93 000 by its Environmental Affairs Department counterpart for developing a R100 million boatyard and jetty in the sensitive Langebaan Lagoon without environmental approval.

In March, Environment Minister Buyelwa Sonjica told Parliament that the DPW had stopped construction of the project, which is being built for the SANDF's Special Forces task force at its Salamander base at the restricted tip of the western arm of the lagoon, pending a decision by her department on whether to grant environmental authorisation retrospectively.

But angry Langebaan residents say work on the site continued and had included dredging, with the dredged material - including fatty residues from the former whaling station on the site - being dumped elsewhere in the lagoon.

Much of the Langebaan Lagoon falls within the West Coast National Park, and it is a migratory waterbird site of international significance, protected under the Ramsar Convention to which South Africa is a signatory.

Jaco Kotze, chairman of the Langebaan Ratepayers' and Residents' Association, who was one of a small delegation taken on a site inspection recently, said Sonjica had misled Parliament with her reply.

"We are very dissatisfied... the operation is going on."

Kotze said members of his association had become aware of "a lot of activity" at the base last April. They found the DPW was breaking down an old asbestos boatyard and were told a new facility would be built on the same environmental "footprint" and that there would be three pylons in the sea with a gantry.

"Jimmy Walsh of the West Coast Biosphere Reserve told them, 'You guys are not above the law', and we insisted that they apply for a Section 24G in terms of Nema (retrospective authorisation under the National Environmental Management Act) and that all operations cease."

But when they checked again in January, they found a "huge" 12m structure was being built on the water's edge, concrete columns were being put into the seabed to support a jetty of about 120m, and the area had been dredged.

"We understand the need for this facility, but they cannot just carry on irrespective of the law," said Kotze.

Responding to questions in Parliament by the DA, Sonjica said her department had issued a notice of intention to issue a formal "compliance notice" to the DPW on September 17 last year, after establishing that no environmental authorisation had been obtained.

"Following the issuing of this notice, all associated activities, such as the dredging within the 100m high water mark of the sea, ceased. The only activity that is continuing on the site is the stabilisation of the roof structure."

In December, the DPW submitted a Section 24G application to rectify the illegal construction.

Albi Modise, chief director for communications in Sonjica's department, told the Cape Argus last week the DPW had paid the R93 000 fine in full on March 23 and that his department had not yet reached a decision on its application for retrospective approval.

The DPW was asked questions about this project by the Cape Argus last Tuesday. No response had been received by the time of going to press.

Source www.iolproperty.co.za

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Kumba Saldanha Bay, considers terminating supply to ArcelorMittal SA

South African iron-ore miner Kumba Iron Ore (KIO) on Tuesday effectively moved its ongoing dispute with ArcelorMittal South Africa (AMSA) from the realm of a pure dispute over pricing, into one that could now also affect supply, indicating to Engineering News Online that it could as "a last resort" terminate supply to Africa's largest steel producer.

In a note to shareholders, the JSE-listed miner said that, unless there was urgent resolution on an interim pricing and payment mechanism, the basis upon which it would continue to supply iron-ore to the steel producer could be affected.

KIO did not immediately indicate a timeframe for reaching such an agreement, but a spokesperson told Engineering News Online that the time period should not exceed eight weeks.

The miner also did not immediately elaborate on what options it was considering for the 6,25-million tons that its supplies yearly to AMSA from its 74%-held Sishen Iron Ore Company (SIOC). However, KIO stressed that it did indeed have "other options to sell the ore".

"We have an agreement with Transnet to deliver an extra four-million tons a year in 2010 and 2011 charging a 'super tariff'. We cannot discount the possibility that, if we cannot reach agreement, a last resort would be to terminate supply," the spokesperson toldEngineering News Online.

However, she also stressed that KIO did not believe it was in anyone's interests to stop supply "and we are attempting to do all in our power to avoid such an outcome".

"We have made extensive efforts to come to an agreement with AMSA and have been unable to do so," the spokesperson said.

In its statement to the stock exchange, KIO strongly denied that it had told AMSA that it would continue to invoice on the basis of cost-plus 3% until the dispute had been resolved, as had been stated by the steel producer in its own April 29, 2010, notice to that market.

AMSA also indicated in the same statement that it had raised a contingent liability reflecting the "price derived from an export-parity principle and the contractual cost-plus 3% price, in the event SIOC prevails in the arbitration".

"That statement is incorrect," KIO said.

Instead, the miner argued that its announcement of April 19, 2010, reflected the "true position": "Namely that SIOC required AMSA to accept its interim proposal that AMSA pay the contractual price (cost-plus 3%) to SIOC and the difference between that price and the interim price proposed by SIOC into escrow, or provide a suitable guarantee for its payment in the event of SIOC being successful in the arbitration".

KIO told Engineering News Online that the "contingent liability" would not suffice as a guarantee.

However, AMSA spokesperson Julian Gwillim said that the JSE-listed steel producer stood by its statement of April 29, 2010, and would not enter into negotiations with KIO on the merits of the dispute through the media.

The two companies have been in dispute over the future pricing of iron-ore flowing from the Sishen mine since February 5, when SIOC notified AMSA that it was cancelling a favourable supply deal, struck in 2001, on the basis that AMSA had failed to convert its 21,4% undivided share of the Northern Cape mine in line with the demands of the Mineral and Petroleum Resources Development Act.

SIOC began invoicing AMSA on commercial terms as from March, and AMSA CFO Kobus Verster revealed last week that the difference between the the old agreement and the new invoice was $100/t, with 350 000 t having been supplied during the month.

AMSA has also started charging South African steel consumers a controversial R600/t-plus surcharge as from May 1, 2010, in a bid to partially offset the impact of the rise in iron-ore costs. The proceeds would be recorded as a liability in the group's financial accounts and would be returned to consumers should AMSA prevail in its arbitration dispute with KIO.

The Department of Trade and Industry has lodged a complaint of abuse of dominance over the surcharge with the Competition Commission, while consumers are up in arms over what appears to be an attempt by AMSA to recoup costs associated with its own corporate misjudgement.

AMSA has also confirmed with Engineering News Online that it will increase steel prices by between 2% and 17% as from June 1, 2010 - news that was greeted with anger by steel consumers.

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

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Steel prices increase Saldanha Steel will benefit, but not the consumer.

JSE-listed steel producer ArcelorMittal South Africa (AMSA) confirmed to Engineering News Online on Monday that the price of flat and long steel for delivery from June 1, 2010, would increase by between 2% and 17%, depending on product type – news of the increase was met with anger by steel consumers.

The June increases would be over and above the R600/t surcharge instituted from May 1, 2010, as part of a bid by AMSA to mitigate against the impact of a possible surge in iron-ore costs, precipitated by the cancellation of a favourable supply agreement with Kumba Iron Ore's (KIO's) Sishen Iron Ore Company (SIOC).

SIOC cancelled a long standing cost-plus 3% deal in February, citing AMSA's failure to convert a 21,4% undivided share of the mineral rights at the Sishen iron-ore mine, in Northern Cape province, as is required by South African mining legislation, as the reason for the decision.

The matter is currently the subject of a corporate dispute, which should go before an arbitration panel later this year, but which, in AMSA's view, could take up to 18 months to resolve.

In the interim, AMSA is being invoiced on commercial terms, but is only paying at the cost-plus 3% level. It is placing the proceeds of the surcharge into an escrow account, marked as a contingent liability in its accounts, pending the outcome of the arbitration process.

AMSA has confirmed that the difference between the cost-plus 3% invoice and the commercial invoice received in March was a whopping $100/t on the 350 000 t received from SIOC in March.

Should AMS prevail in its dispute with KIO, it has promised to reimburse consumers. But it is unclear how far down the supply chain such a reimbursement could feasibly reach, owing to the fact that many end consumers buy their steel from traders, or merchants.

The Department of Trade and Industry (DTI), which referred AMSA to the Competition Commission when the surcharge was announced, claiming that it amounted to abuse of dominance, has also questioned how the proposed reimbursement could feasibly be implemented.

The June increases, which were communicated to customers over the weekend, were also the first "base" price rises on domestic carbon steel this year, with prices having been rolled over since December 2009.

In fact, the steel group cut prices in November, having increased prices between July and October, when international selling prices began recovering from their precipitous recession-linked declines of late 2008 and early 2009. Prior to July, the price of some steel products sold domestically fell by as much as 60% from the record levels achieved during the first half of 2008.

In the flat-steel segment, plate prices were set to increase fastest from June, at around 17%, while galvanised steel would increase by a more modest 4%. Prices in the more competitive long-steel environment would rise by between 2% and 4%, depending on product type.

AMSA insisted on Monday that it was continuing to set domestic selling prices on the same basket formula that it had been using since moving away from import-parity pricing earlier in the decade.

Prices are set after analysing domestic prices in four markets (the US, Germany, Brazil and China) and adjusting these to its expectations for the South African currency for the forthcoming month - the weaker the currency outlook, the higher the steel price. The South African currency was one of the best performing in the world during 2009, and showed continued resilience during the first quarter of 2010.

DOWNSTREAM ANGER

Downstream steel users were equally outraged by the surcharge and by the prospect of the base price increasing in June.

Africa Cellular Towers (ACTOWERS) GM for the powerlines division Nick van der Meschttold Engineering News Online that the increases would place untenable pressure on the company's manufacturing unit.

He said that it had reached a point where it was cheaper to import finished product from India and China than to source the steel, which comprised some 70% of the cost of the final product, locally. The company designs, manufactures and installs towers for the cellular industry, as well as for the power transmission and distribution market.

He said it was also unclear whether it would be able to pass on the surcharge to its customers, owing to the uncertainty as to whether the surcharge could be reflected in the cost price adjustment (CPA) index complied by the Steel and Engineering Federation of South Africa. "If it's not in the CPA index, then we are going to lose money automatically," Van der Mescht said.

A steel trader canvassed by Engineering News Online said that there was also uncertainty as to whether the surcharge would be maintained at R600/t, or whether it too was subject to adjustment, along with the spot iron-ore price.

Another steel consumer told Engineering News Online that there could be no justification for the surcharge, owing to the fact that it was an attempt by AMSA to recover the costs brought about by its own "corporate neglect" in failing to convert its Sishen mineral rights.

Speaking on condition of anonymity, the consumer argued that promised of the surcharge reimbursement was "entirely unsatisfactory", as the proceeds would, in most cases, flow to the merchants rather than to the end-consumer.

Van der Mescht added that ACTOWERS did not believe "for one second" that it would recoup the cost of the surcharge, adding that the immediate cash flow effect on its manufacturing unit was devastating. He said that its facility had the capacity to convert 3 000 t/m of steel, but that it was currently operating well below that level.

AMSA said last week that it was in the "process of evaluating various alternative options to determine the most appropriate mechanism to implement such a refund in consultation with its customers for the benefit of the steel industry in South Africa".

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

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West Coast town Elands Bay is under threat from toxic waste.

Wavescape users have been urgently requested to fight a mining company's application to prospect for minerals inland from Elands Bay, a move expected to bring catastrophic environmental damage to the area.

The proposal by Bongani Minerals is believed to be a precursor to destructive open cast tungston mining in a water catchment area that feeds into Verlorenvlei, one of few freshwater coastal lakes in South Africa. The rivermouth of the vlei is located at the base of the surfing point at Elands.

Members of the Verlorensvlei Coalition, who oppose the move, say that Bongani Minerals had tried to get mining rights on a farm in the Moutonshoek Valley. However, the application was withdrawn after an assessment indicated that the toxicity of the processed tungsten would have a negative impact on the vlei, the point and in turn the tourism industry.

However, according to the Verlorensvlei Coalition who oppose the mining bid, Bongani Minerals has instead lodged a Prospecting Right application with the Department of Mineral Resources (DMR). According to the coalition, this would take five years, cost R23 million, and be a precursor to devastating mining operations.

The coalition says that mining on farmland is madness given possible food and water safety issues, not least the potentially devastating effect it could have on the eco-system of the vlei. Minning for tungsten is a destructive process and could effect up to 4,000 sq kms of the area.

"For the people who live in the district the true issue is about the threat to their way of life, food security, provision of water, air quality and the potential for massive environmental degradation throughout the Verloren Valley from Piketberg to the Atlantic Ocean.

"The rains which fall on the Piketberg feed the Krom Antonies River which has sustained farming in the fertile Moutonshoek Valley for 300 years. The Piket-bo-berg and the valley produce export fruit, nuts, olives, potatoes, proteas and world class horses and provide work and a livelihood for hundreds of local people. The Krom Antonies River feeds the Verloren River which runs past Redelinghuys on its way to the sea. This water constitutes 60% by volume of that received by the Verlorenvlei which forms an estuary at Elands Bay and functions as a nursery for the local fishing and crayfishing industries.

"The quality and flow of water reaching the Verlorenvlei and thus the sea is at high risk of contamination by tungsten which becomes unstable during the mining process and has a strong affiliation for water. The fledgling tourist industry in the district, based on burgeoning guest houses, nature reserves and the famous left hand break at Elands Bay, may cease to exist."

The coalition has urged Wavescape users to object. Visit their website or go straight to this page on their website to voice your urgent objection.

The deadline is the end of the month, so time is tight. Do it now!

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

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