Frustrations will slow zinc project
Government urged to step up and address hurdles
A key project held up as a success during President Cyril Ramaphosa’s investment drive, a $1.2bn zinc operation expansion by Vedanta, could be delayed if the government does not deal with a range of issues, such as logistics, says Deshnee Naidoo, CEO of its division Zinc International.
One of the key projects held up as a success by President Cyril Ramaphosa’s investment drive, a $1.2bn zinc operation expansion by Vedanta, could be delayed if the government does not actively step up efforts to address a range of issues, such as logistics.
The frustrations Vedanta is experiencing surfaced during an interview with Deshnee Naidoo, CEO of Vedanta’s Zinc International division, which is involved in a $1.6bn zinc mine, concentrator and possibly smelter and refinery project in SA, one of the cornerstone investments in Ramaphosa’s push for $100bn of capital projects in SA over five years.
“For the first time in a decade we have a president and presidency showing intent of getting it together, but as an industry, private and public, if we don’t quickly start putting the pieces together we are going to lose major opportunities here,” said Naidoo.
“It won’t detract me from my investment plans, but it’s going to take me longer. I’m going to have to work harder to make myself heard and to get the various partners to support this project,” she said.
“It’s not like I’m one of 30 mining companies rushing in to invest in SA. I’m one of one.”
Vedanta has completed the first of three phases, spending $400m on the Gamsberg mine and concentrator to deliver 250,000 tons a year of zinc in concentrate. By March, the project will be at 80% production and steady state from July. The $400m included power lines and water pipelines as well as housing, without any co-funding from the government.
Vedanta is working on plans for a second-phase expansion to 450,000 tons of zinc in concentrate at the cost of $350m. It is close to being started, while the final investment in a smelter and refining complex for $850m is in the early stages of a study that incorporates a host of complexities.
However, before launching the second phase, critical questions of which port can receive a million tons of concentrate for export and the logistics entailed in getting it there have yet to be answered.
Another equally pressing problem is housing, with the Northern Cape town of Aggeneys digging its heels in about the number of houses that are allowed to be built within its boundaries. “Our hands have been tied in building more houses in Aggeneys because the spatial development framework does not allow me to build them,” Naidoo said.
I’M GOING TO HAVE TO WORK HARDER TO MAKE MYSELF HEARD AND TO GET THE VARIOUS PARTNERS TO SUPPORT THIS PROJECT
Vedanta has only built 200 of the 500 it needs.
It is expected to build the others in Pofadder and Springbok also in the Northern Cape. For the second phase, a further 500 houses are needed. Vedanta cannot develop small and macro businesses in Aggeneys because of these restrictions.
“Project-wise the decision to go ahead with the mine and plant expansion in phase two is simple, but the enabling environment to make this community and town thrive is not in place. That’s where my work is going to be,” she said. “For us to make this work, these factors have to come together or I cannot make the decision to go ahead on phase two.”
The factors included housing, town development at Aggeneys, the logistics of moving 1-million tons of concentrate a year to a port and which port would be used.
Transnet is studying the development of a zinc corridor to an area just outside Port Nolloth, with rail and a new port development, said acting CEO Tau Morwe.
Saldanha, the major harbour on SA’s west coast, handles iron ore and manganese and is nearly operating at full capacity.