The Citizen (Gauteng)

Eskom seeks steel plant reopening

OPERATIONS: WILL CHANGE TO PROCESSING OF SCRAP

- Moneyweb

➳ If Nersa approves request, it may result in 260 new jobs, plus 357 for contractor­s.

Eskom has approached energy regulator Nersa for approval of a special pricing agreement that could lead to the reopening of the ArcelorMit­tal (Amsa) Saldanha steel plant on the Cape West Coast.

The nature of its operations will, however, change from the production of high quality ultra-thin hot rolled coil to processing local scrap metal.

The reopening may result in 260 new jobs for employees and an additional 357 for contractor­s.

Nersa’s approval is, however, only one of the hurdles Amsa will have to clear. The other essential requiremen­t is “tariff support” for rail and port logistics from Transnet, as well as a commitment to the required capacity and a reliable service, according to Amsa spokespers­on Tami Didiza.

Amsa requested this assistance from Transnet Freight Rail (TFR) in 2020 but received an unfavourab­le response.

TFR responded that it did not have the capacity to service the logistic requiremen­t of the steel mill and cannot offer a reduced tariff, Didiza said. The two parties are still trying to find a solution, but the timeline is unclear, he added.

Saldanha Steel closed in 2020 when it was unable to compete internatio­nally with other producers. Since then, the plant has been in care and maintenanc­e.

At the time the local chamber of commerce described the closure as a disaster for the West Coast economy as 900 people working for Saldanha Steel and its contractor­s lost their jobs.

Back to the drawing board

Having gone back to the drawing board, Amsa resolved it could use the plant for the processing of scrap metal, provided it gets the required concession­s from Eskom and Transnet – as well as support from the Saldanha Bay local municipali­ty and the Western Cape government.

Amsa’s request for a threeyear special pricing agreement has been processed by Eskom and now just needs Nersa’s approval to implement it.

Nersa has published the applicatio­n for public comment.

It is not clear how big a discount Eskom wants to give Saldanha Steel. The applicatio­n is, however, done in terms of a framework developed by the department of trade, industry and competitio­n that ensures Eskom covers at least its fixed cost.

According to Nersa’s discussion document, Eskom’s electricit­y sales to its most important energy intensive users has dropped since 2008 by 16 terawatt hours (TWh) to 74TWh.

A fully functionin­g Saldanha Steel will need 1.3TWh, but this recovery plan provides for demand of 700 gigawatt hours (GWh).

Amsa hopes to produce 600 000 tons of ultra-thin steel products and thereby create a further 3 222 indirect job opportunit­ies in the region.

A portion of the product will be exported, but some will be destined for neighbouri­ng Duferco Steel Processing for beneficiat­ion. This will also improve the sustainabi­lity of that plant, according to Eskom’s applicatio­n.

Meanwhile, Amsa said it was also working with the Western Cape government towards generating its own electricit­y.

According to the office of Western Cape finance and economic opportunit­ies MEC David Maynier, his department and the West Coast and Saldanha Bay municipali­ties have been working closely with Amsa via the West Coast Business Developmen­t Forum in recent years, looking at energy (mainly gas-to-power) and water (mainly the reuse of waste water) solutions.

The provincial government said the importance of rail transport as part of the solution for Amsa could require further assistance from both the economic and transport department­s.

 ?? Picture: Bloomberg ?? REQUIREMEN­T. ArcelorMit­tal needs ‘tariff support’ as well as commitment to providing a reliable rail and port logistics service from Transnet.
Picture: Bloomberg REQUIREMEN­T. ArcelorMit­tal needs ‘tariff support’ as well as commitment to providing a reliable rail and port logistics service from Transnet.

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