Upload
informa-australia
View
313
Download
1
Embed Size (px)
Citation preview
SA Ferrous Mineral
Value Chains (MVCs)
Strategies
(beneficiation)
Iron Ore Beneficiation Africa
Paul Jourdan
Indaba Hotel, Joburg, March 2014
Note: This ppt is based on the DTI/IDC Ferrous MVC report (2013)
Mining: Concentration, smelting, refining => metal/alloy
Forward Linkages: Intermediate products => Manufacturing; Logistics;
other sectors (agriculture , forestry, fisheries, etc.)
Backward Linkages
Inputs: Capital goods Consumables
Services
Knowledge Linkages HRD: skills formation
R&D: tech development Geo-knowledge (survey)
Spatial Linkages: Infrastructure (transport,
power, ICT) and LED
Fiscal linkages: Resource rent capture &
deployment: long-term human & physical infrastructure
development
Knowledge linkages are a prerequisite for developing the
crucial back/forward beneficiation linkages!
Ferrous MVC and backward linkages for all MVCs
•“Continuous SOC engagement on supplier development and localisation
has led to embedding localisation policies and programmes at Eskom and
Transnet with high localisation thresholds
•An Intra-Departmental Task Team Report on Iron Ore and Steel adopted
by Cabinet, mandating the DMR, DTI and EDD to secure a developmental
steel price; amending the Competition Act, measures to restrict exports of
scrap metals and create competition in steel production
•The National Tooling Initiative created to increase and strengthen the
human capacity and competitiveness of the tooling industry. R200 million
provided by the NSF
•DTI instrumental in the opening of R1 bn Safal Steel metal coating plant
•National Foundry Technology Network established to facilitate the
development of the foundry industry through appropriate skills training,
technology transfer and diffusion of state-of-the-art technologies
•DTI facilitated an iron ore interim supply agreement in December 2012
between Sishen Iron Ore Company and AMSA”
IPAP Iron and Steel Value Chain (IDTT)
Cabinet signed off on proposals of the Inter-Departmental Task Team (IDTT)
on iron and steel. Work in progress includes :
– Finalisation of the Regulations, after public consultation, under the
provision of the International Trade Administration Act and Second Hand
Goods Act, to limit the unencumbered export of scrap metal and to
support domestic producers. Export of scrap closely associated with highly
deleterious cable and metal theft and masking of illegal export of precious
metals. Work led by EDD
– Amendments to the Competition Act, to limit the abuse of dominant
market position in key value chains especially iron and steel and plastics
and polymers and to lower the cost of strategic inputs into manufacturing.
Work led by EDD.
– Build competition in the iron and steel sector by the introduction of at
least one more steel producer. Work led by the IDC is advanced to
include a foreign investor; new technology and strong conditionality's to
ensure developmental ore prices are passed through as a competitive
advantage to manufacturing sector
•Haematite – iron oxide (Fe2O3), mainly mined from the
Transvaal Supergroup;
•Magnetite – iron oxide (Fe3O4), but often containing
economic amounts of titanium and vanadium, mainly
mined from the BC (Bushveld Complex);
•Ilmenite – Ti & Fe oxide (TiFeO3), mainly mined in HMS
(coastal sands), however this MVC will be covered in the
titanium MVC report;
•Chromite – Cr & Fe oxide (FeCr2O4), mined from the
BC;
•Manganese ores (kutnahorite and braunite) – the Mn
ores of the Kalahari Basin (Ghaap Group of the
Transvaal Supergroup,) contain roughly ~42% to 48% Mn
and ~ 15% Fe.
Steel
Steel/coke 2nd largest feedstock into global economy, after crude oil
Vehicles, cap goods, construction, metal products
•Mineral deposits have huge differences in
richness/grade (rents)
•Need competitive tender to get max VA
•Need to tender known assets against % VA
bid
•Only issue prospecting rights over ground
with no known resources
1. Competitive Tender to Maximise Ferrous Minerals VA
•Need to capture resource rents for
reinvestment in skills & infrastructure
•Resource Rent Tax (RRT) of 50% on ROI >
long-bond +7% (“normal ROI”)
•Reduce RRT rate against VA (e.g. 1% for
every 10% new VA
2. Mineral Rents (RRT-VA Offset)
•Need to reserve a portion of select “strategic”
resources for local VA at cost+
•Problem of retrospective application!
•At least then:
•Need to stipulate local competitive pricing
(EPP) with EPP on-obligation on all local VA
customers
3. State “Access” to Minerals Resources for >VA
•Need to raise crude ore export tariffs and lower VA
products tariffs (income neutral)
•Need to apply to all state utilities (SOEs): rail, road,
power, ports & finance on mineral exports
4. State Utility Tariffs to Enhance VA
NPA Proposed Future Tariff Structure
TNPA‟s Port tariffs proposal:
discount >VA
Mineral Percentage
Precious Metals 60%
Ferrous Metals 19%
Energy Minerals 15%
Base Metals 3%
Industrials* 2%
Precious Stones 1%
Total 100%
Proportion of SA’s Minerals by Value
•Kalahari Basin (Kathu, ~3Gt, Transvaal Supergroup) •Bushveld Complex magnetites (~25Gt, with Ti & V) •Zandrivierspoort (~500Mt, Polokwane Greenstone Belt) •Cascades (~1Gt, Mozaan Group of Pongola Supergroup) •Rooiwater (>100Mt (Fe/Ti), Rooiwater Complex – edge of the Murchison Greenstone Belt) •Moonlight (~300Mt, Beit Bridge Complex in the Limpopo Belt) •Delft (~300Mt, Mozaan Group of Pongola Supergroup) •Phalaborwa (300Mt stockpile, Phalaborwa carbonatite pipe) •De Loskop (~300Mt, Polokwane Greenstone Belt) •Kraaipan (~200Mt, Kraaipan Greenstone Belt) •Kromdraai (~180Mt, Lebowa Granite Suite of the BC) •Penge/Thabazimbi (~100Mt, Chuniespoort Group of Transvaal Supergroup)
SA Iron ore Production 2002-2011 (Mt)
Iron Ore Mining in SA, 2008
SA Steel sales, local Consumption, Exports & Imports
No growth
since „74!
Plus stainless steel (Columbus 1Mtpa) in Middleburg
Entity Flat Steel Products Long Steel Products
AMSA 80% 52%
Evraz Highveld 20% (incl exports) 15%
SCAW - 15%
Cape Gate - 12%
Cisco - 6%
Current Producers Market Share
Steel Market Share 2010
Impact of state infrastructure spend on steel consumption
Source IDC 2012
Domestic Steel Consumption
Steel flows in South Africa in 2008
Source IDC 2012
Forecast Regional Steel Demand- 2020
0
100
200
300
400
500
600
700
800
900
1000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
SADC GDP (PPP - million of international dollars)
Source IDC 2012
Forecast Regional Steel Demand- 2020
Monopoly pricing (IPP) of steel severely curtails
manufacturing jobs
0
100
200
300
400
500
600
700
Import
parity
price
Tra
nsp
ort
to
Gaute
ng
5%
hassel fa
cto
r
Offlo
adin
g a
nd
adm
in
Import
duty
Sh
ipp
ing
to D
urb
an
Wharf
age,
com
mis
sio
n a
nd…
Import
dutie
s
Sh
ipp
ing
to e
xport
destin
ation
Tra
nsp
ort
(t
oD
urb
an)
Ex-w
ork
s e
xport
price
Hot rolled coil steel prices, US$/t
Value received on
exports (EPP)
Value received on
local sales (IPP)
Amount that local
customers pay
above exports World export price
Transport costs might be as high as 47%
of the cost of importing flat steel!
Between March 2004 and March 2013 the SA price for
HRC was 41% above the price in China and 15% above
the price in both South Korea and Taiwan.
Coastal (“steel-for-ore” deals)
•E.Cape Integrated Plant based
•Richards Bay Integrated Plant (Cascades)
•MISP
Inland (primarily domestic & regional markets)
•Scaw Expansion for long products (IDC
•Middleburg Plant for flats (Masorini-IDC
•HS&V expansion for flats (alternative Masorini
•Kathu Integrated Plant based
•BC high Ti magnetites (steel mill & pigment plant)
Possible new
plants