Africa’s biggest steelmaker, ArcelorMittal South Africa, is considering ways of securing sufficient power supplies to allow it to complete an expansion of its Newcastle plant in South Africa, including a new blast furnace to boost annual capacity.
While ArcelorMittal South Africa is committed to expanding the plant by 2011, it doesn’t know how it will supply the mill with power, CEO Nku Nyembezi-Heita says.
South Africa is short of power after the government delayed giving state electricity utility Eskom permission to expand for four years. Eskom has limited power for industrial users, including ArcelorMittal’s steel mills, to 90% of normal supply and insists shortages will remain until at least 2012.
The Vanderbijlpark-based company, 52% owned by ArcelorMittal, plans to install a new blast furnace at the plant in KwaZulu-Natal province to boost annual capacity to three million tonnes from two million tonnes. The mill produces steel used in construction, such as billets, bars and sections and a new blast furnace would provide increased industrial gas demand for gases such as oxygen, a significant element in steel production.
The company will also proceed with the construction of a power plant at its Vanderbijlpark mill, south of Johannesburg, regardless of whether it reaches agreement with Eskom on power prices, Nyembezi-Heita notes. If no agreement is reached, the power produced from waste gases from the steelmaking process will be used by the mill rather than sold to Eskom, she adds.
The company is also seeking to have arbitration proceedings between itself and Anglo American Kumba Iron Ore moved forward to the third quarter of this year, from the first quarter of 2009, Nyembezi-Heita says.
Kumba is a former unit of ArcelorMittal South Africa, a company once known as Iscor. ArcelorMittal says it has an agreement that will allow it to participate in Kumba’s expansion of its Sishen iron-ore mine in South Africa’s Northern Cape province.
Kumba doesn’t believe the agreement, which allows ArcelorMittal to buy iron-ore from existing mines at discounted prices, includes the right to take part in the expansion. ArcelorMittal South Africa may consider mining iron-ore itself, Nyembezi-Heita says.