An African Detroit in the making?

Author:DHILWAYO, DOMINIC
 
FREE EXCERPT

Two massive iron and steel projects, should they come to fruition, will transform the bleak economies of Northern and Eastern Cape in South Africa. Indeed, this could be the catalyst required for rapid expansion in Southern Africa's automotive industry. DOMINIC DHILWAYO

The ambitions of southern Africa's rapidly expanding iron and steel industry appears to know no bounds. In addition to the opening of the state of the art Saldanha Steel mill in the Western Cape in 1998, and advanced plans for the opening of two massive direct reduced iron plants in Mozambique in 2000, major players in the sector have now put together exciting new proposals. If implemented, they would see the establishment of a 2m tonne per year iron carbide plant at Sishen in the barren Northern Cape, which would feed 40% of its output to a 1.2m tonne per year steel plant in the Eastern Cape.

Both proposals are likely to garner considerable government support as they are situated in employment blackspots which, especially in the case of the Eastern Cape, have provided strong electoral support for the ANC.

The iron carbide plant would be sited near steel maker Iscor's Sishen iron ore mine and would involve the laying of a gas pipeline from Sasol's plants in the Orange Free State or from the Kudu gas fields off the Namibian coast. The existence of a gas supply in this unindustrialised part of South Africa could attract other industries to the area and it is this fact which could possibly see the provision of government support in the form of subsidies or infrastructures finance for the project.

The project developers are JCI who have been spurred by the success of their Beira Iron project in central Mozambique.

Output from the plant would have to be transported to the coast via the existing 1,000km Saldanha rail line, and then shipped to the Eastern Cape or taken overland by rail via De Aar. However, this line is plagued by unsuitable gradients and would have to be strengthened to take the greater tonnage. Some concern has been expressed by Iscor itself about the quality of the ore it would supply, but technology suppliers Denver, USA's Iron Carbide Holdings, feel that the problems can be overcome.

Shareholders could include JCI, Sasol and Iscor. Japan's Kawasaki Heavy Industries is looking to undertake the construction of the plant and could also take an equity stake. Cooperation will also be needed from Steinmuller, a German engineering company with a strong South African...

To continue reading

REQUEST YOUR TRIAL