In Twitter parlance, beneficiation is trending.

New fluorspar-explorer-turned-mine-developer and aspirant fluorochemicals producer SepFluor is the third South African mining company in as many months to nail its beneficiation colours firmly to its business mast (also see accompanying video).

The first was mining industry doyen and JSE-listed Pallinghurst chairperson Brian Gilbertson, who announced in April that the delisted platinum mining start-up – Platmin – was in the process of being repositioned as both a mining and a beneficiation Newco, which would have the strong backing of South Africa’s State-owned Industrial Development Corporation (IDC), which has more than R100-billion on its balance sheet and is intent on prioritising the meaningful adding of value to South Africa’s unique platinum endowment.

Then, in May, platinum major Anglo American Platinum launched the first of five fuel-cell-powered locomotive prototypes in a bid to drive the development of a whole new industrial sector in South Africa.

And now fledgling SepFluor is intent on extracting full economic value from South Africa’s rich fluorspar endowment through its proposed R900-million investment in a new fluorspar mine near Rust De Winter, 80 km north of Pretoria, and the simultaneous investment of R1.2-billion in a fluorochemicals hub 52 km away at Ekandustria in Bronkhorstspruit, Gauteng, close to the Mpumalanga border.

Renowned speciality chemicals company Lanxess’ of Germany, which sources some of its fluorspar from South Africa for its hydrogen-fluoride manufacturing facility in Leverkusen, is located within a sizeable chemicals hub that SepFluor executives visited as part of their global study of world facilities and markets.

SepFluor intends being fully involved across the complete spectrum of exploration, mine development and fluoro- chemicals production, creating 1 200 direct and indirect jobs.

Because the company will be investing in new infrastructure and employing at that level, it is eligible for a long-term tax reduction under Section 12 I of the Income Tax Act that will improve the return on its chemicals project.

The company is also likely to be able to apply for a carbon credit.

South Africa hosts the largest reserves of fluorspar at 41-million tons, followed by Mexico with 32-million tons and China with 21-million tons.

Some 10 000 t of fluorspar a year is sold to South Africa’s hydrogen fluoride manufacturer, Pelchem, which is a sub-sidiary of the State-owned Nuclear Energy Corporation of South Africa and metallurgical grade fluorspar is sold to local steelmakers.

Hydrogen fluoride is generally made from acid-grade fluorspar, the top 97.2% grade.

Between five-million tons and six- million tons of fluorspar a year is sold globally and South Africa last year produced 280 000 t.

Mining Weekly was part of a media contingent that visited SepFluor’s two project sites, the first being its three- deposit mine site located right next door to the long-established Vergenoeg fluorspar mine, and the second a large readily expandable industrial site close to Sasol’s nitrate plant.

Nedbank, which SepFluor has appointed as its lead banker, is in the process of raising the R2.1-billion, 60% as debt and 40% as equity, in local and inter- national markets ahead of SepFluor’s planned JSE listing in the first quarter of 2013.

SepFluor, which was has been unbundled out of the JSE-listed Sephaku Holdings, is currently held privately by 800 shareholders, more than 40% of them black. In terms of the unbundling arrangement, SepFluor is obliged to list on the JSE before March 28, 2013.

CEO Alan Smith tells Mining Weekly that developmental finance institutions are doing their due diligence on SepFluor’s projects ahead of taking investment decisions, against the background of the company being seen as a vehicle that will ensure that South Africa obtains fuller economic value from its fluorspar endowment.

Key motivators for the two linked projects, Smith says, are fluorspar’s elevation to being declared a strategic mineral by both the US and Europe.

SepFluor, which is chaired by Dr Lelau Mohuba, is also entering the fray at a time when the South African government is supporting fluorochemicals development through the beneficiation of locally mined fluorspar in view of South Africa having the largest reserve of fluorspar but only a tiny share of the fluorochemicals market.

Mohuba, a medical doctor who speaks very knowledgeably about fluorspar, has a firm grasp of the downstream chemical derivatives as well as the many fluorine-containing products that are available, even beyond downstreaming.

Mohuba tells Mining Weekly that many medicines contain fluorine, including antiretrovirals used to treat HIV and Aids.

Fluorspar-linked products are used in refrigeration, ceramics, chemicals, dental products and pharmaceuticals, as well as nuclear physics.

Construction of SepFluor’s proposed Nokeng mine and concentrator is expected to begin during the fourth quarter of this year, with first production scheduled for the second quarter of 2014. Nokeng’s current life-of-mine – based on exploitation of two of its three fluorspar deposits – is 19 years.

The upcoming opencast mine is expected to produce at between 130 000 t/y and 185 000 t/y of acid-grade fluorspar for the company’s own fluorochemical beneficiation hub and up to 30 000 t/y of metallurgical grade fluorspar for local and export steel markets.

The construction of the fluorochemicals hub on a site shown to the media will take place at the same time as the mine, with first production – initially of hydrogen fluoride, aluminium trifluoride and anhydrite – also in the second quarter of 2014.

The plan is for 42 000 t/y of hydrogen fluoride from the hub’s hydrogen fluoride facility to flow directly to its aluminium trifluoride facility for the manufacture of 60 000 t/y of aluminium trifluoride to be supplied to local and international aluminium smelters as power-lowering flux.

SepFluor anticipates having a cost advantage in potentially supplying some of the 28 000 t/y of aluminium trifluoride used by BHP Billiton’s Southern African Hillside and Mozal smelters.

A further 18 000 t/y will be available for metal pickling and for further downstream fluorochemicals initiatives, which could also be accommodated within the hub.

The plan is for the hydrogen fluoride facility to also produce 216 000 t/y of anhydrite for cement and fertiliser applications.

Future growth for SepFluor is expected to flow from both development of its other three mining projects – two in Limpopo province and one in Gauteng – all of which are at exploration stage, and expansion of the beneficiation hub.

Current design of the hydrogen fluoride facility allows for an increase in production of 30 000 t/y.

The Vergenoeg mine, which shares a boundary with SepFluor’s Nokeng, is owned by Minersa, of Spain.

South Africa’s Witkop and Buffalo fluorspar mines are owned by Fluormin, of the UK, and the Doornhoek mine is owned by ENRC, of Kazakhstan

The company’s four fluorspar deposits are Nokeng/Wilton, Wallmannsthal, Kruidfontein and Welgevonden/Welgelegen, the last-mentioned including copper and tin besides fluorspar.

Mining will take place at Nokeng at a rate of 600 000 t/y run-of-mine and because the high-grade Plattekop deposit will be mined first, the operation kicks off at 185 000 t of fluorspar a year, which is the same output as the seasoned Vergenoeg.

It will then move into the lower-grade Outwash Fan deposit, when output will drop to 130 000 t/y.

The cost of production in the initial years will be $100/t for a product that sells at many times that figure.

But, instead of selling the product, it will take most of it downstream and convert it into added-value products that sell in a market that is worth $112-billion a year as opposed to the raw fluorspar market that is worth a far smaller $2-billion a year.

The feasibility studies indicate that SepFluor’s business plan is a profitable one and the company is now in the process of raising funding for both the mining and processing infrastructure and the downstream chemicals beneficiation plant and may not capital-raise at all when it lists on the JSE.

In the absence of adequate rail capacity to transport fluorspar to the ports for export, the programme to add value in South Africa immediately lowers the risk of the project exponentially.

The company is, however, looking for an offtake arrangement from a fluorspar user for the 50 000 t/y that will be surplus to its needs in the initial years.

Smith, formerly of Anglo American, began his mining career in coal mining before moving to diamonds, gold, base metals and industrial minerals.

After leaving Anglo, he decided to enter the junior mining space, first in diamonds at Schmidtsdrift, in the Northern Cape, and then in tin and tantalum with Kivu Resources in the Democratic Republic of Congo.

After leaving Kivu, he joined forces with Sephaku-linked Rudolph de Bruin and David Twist, who are both currently nonexecutive directors of SepFluor.

In June 2010, he was appointed CEO of Incubex to manage the unbundling of the fluorspar assets out of Sephaku.

With him at SepFluor as anchor fluorspar knowledge executive is Loek van den Heever, who was born on a farm, which hosted a fluorspar mine, and who has held positions at both Buffalo Fluorspar and Witkop Fluorspar.

SepFluor CFO is Neil Crafford-Lazarus, formerly of Platmin, Wes Wessels is business development manager and Shibe Matjiu is social development manager.

In virtually every speech from a public podium, Mining Ministers are requesting industry to embark on minerals beneficiation.

While SepFluor was unveiling its plan to the media, Mineral Resources Minister Susan Shabangu was delivering her Budget Vote speech to the National Council of Provinces, in which she said that considerable work still needed to be done by government to ensure that the mining industry embraced the concept of beneficiating South Africa’s metals and minerals.

At the same presentation, Mineral Resources Deputy Minister Godfrey Oliphant said that South Africa’s national interest called for a systematic minerals beneficiation drive, which was in line with government’s new industrial-isation priorities.

“We cannot continue to mine and export ore and other raw materials for processing elsewhere, as this severely limits the benefits we can derive from the exploitation of our resources,” Oliphant said.

He said that broader notions of beneficiation had to be adopted if South Africa’s socioeconomic needs were to be met.

He added that the history of socio- economic development in resource-rich countries such as the US, Brazil, Australia, China and Russia demonstrated clearly that industrialisation and mineral beneficiation were inseparable.

The country’s minerals endowment, he said, presented clear industrialisation opportunities and he called for a higher degree of coordination across the private and public sectors it order to meet the country’s beneficiation goal.

Department of Trade and Industry (DTI) director-general Lionel October told Mining Weekly in January that a DTI team was working with participants to determine the economic viability of establishing a central platinum hub.

The South African government is hoping that its new Special Economic Zones Bill will create the framework for the development of new industrial nodes outside the traditional industrial heartlands.

SepFluor’s business case for bene- ficiation is based on fluorspar selling at US45c/kg, compared with hydrogen fluoride selling at US$2/kg, fluorine at US$15/kg and fluorochemical products at US$30/kg.

The economic fundamentals fully supported the move towards downstream beneficiation, the company assured the media.