ArcelorMittal plan rests on gas approval

ARCELORMITTAL is in talks to buy power from a planned 800MW gas-fired power station in Saldanha, should regulators grant the necessary approval for the project to go ahead in time.

The steelmaker, which has implemented several energy-efficiency projects at its Saldanha plant to reduce its reliance on Eskom and to cut costs, said the power station could be built within 18 months.

It would rely on compressed natural gas imported from Angola, said Reinet van Zyl, the business improvement manager at ArcelorMittal’s Saldanha plant.

The planned 800MW plant would require permission from South Africa’s port and energy regulators, and additional buyers would be needed, Van Zyl said.

ArcelorMittal Saldanha, which produces about 1.2 million tons of hot-rolled coil a year for the export market, requires 160MW at a cost of R750-million a year.

Van Zyl declined to name the Canadian company and its consortium members involved in the project, but said the equipment and technology were available.

ArcelorMittal hopes the project will get the go-ahead in time for a major shutdown at its Saldanha works in 2016, when it is planning to reline the refractory of its Corex and Midrex plants, a process that takes place on this scale only once in eight years.

The plant, which was built in the 1990s by Iscor to benefit from cheap iron ore and electricity, has suffered major losses, often because of the high cost of the imported pellets it requires and the low global prices fuelled by subsidised steel from major producers such as China.

The availability of a reliable, costeffective electricity source may also make it viable to produce pellets locally and increase beneficiation in South Africa, said Richard Holcroft, the general manager of the Saldanha works. Various initiatives had been implemented to improve its cost position, and it is now the second-lowest cost producer in the ArcelorMittal group, Holcroft said.

Van Zyl said more opportunities had been identified for cost-savings, but the steelmaker had limited capital available to implement these, while Eskom’s rebate programme was seemingly on hold.

Andrew Etzinger, an Eskom spokesman, said an announcement would be made next year.