The project cost of the Kalagadi manganese project, in the Northern Cape province of South Africa, was escalating by about 2% a month, Kalahari Resources technical director David Wellbeloved said on Wednesday.

Speaking at a MetalBulletin conference, in Johannesburg, he said that the project’s capital cost, which stood at about R4,3-billion at the end of its prefeasibility study, had already increased by about 20%.

Wellbeloved added that the project schedule was now under review, due to the delivery times of equipment and long-lead items.

Kalahari Resources (80%) and the Industrial Development Corporation (20%) own Kalagadi Manganese, which hold project in a 50:50 joint venture with ArcelorMittal South Africa.

The project would consist of a manganese mine and a sinter plant near Hotazel, as well as a smelter to be constructed at the Coega Industrial Development Zone (IDZ).

Kalahari Resources was aiming to have all plants and the smelter completed by the end of the fourth quarter in 2010, while the mine shaft was expected to be completed by the second quarter of 2010.

The 320 000-t smelter to be constructed at the Coega IDZ would be situated in Zone 6, the metallurgical zone, and could possibly be expanded to handle 640 000 t of ore.

Meanwhile, Wellbeloved remained optimistic that there would be enough electricity available for the project by 2010.

He explained that it had signed an electricity supply document with Eskom for the 36 MW required by the mine.

Further, the 500-MW Dedisa substation that was currently being built by the Nelson Mandela Metropolitan municipality, and which would supply power to Coega, was part of Eskom’s planning for 2010.

“It is a factor and we are in constant negotiations. We feel confident that the power will be there with returned to service and open-cycle gas turbine (OCGT) [power stations],” he commented.

In addition, Wellbeloved added that while transporting ore from the Kalahari manganese fields, in the Northern Cape, currently took between 112 and 120 hours, the time could be reduced to 76 hours by 2014, in light of Transnet Freight Rail’s expansion plans.

SOUTH AFRICAN CONFIDENCE

Meanwhile, Samancor Chrome CEO Jurgen Schalamon stated that while South Africa was faced with electricity and logistics challenges, the country remained a reliable supplier of ferro-alloys in the future.

He noted that South Africa’s ferro-alloys production could not be substituted by the ore produced by other countries as South Africa was the largest producer of ferro-alloys in the world.

South Africa held about 80% of the world’s manganese reserve base.

Schalamon noted that Transnet was improving its logistics systems, which would assist in pushing more freight onto rail instead of road, if the logistics systems were efficient and reliable.

Currently only about 17% of overall freight in South Africa was transported by rail, while 83% was transported on road, which was more expensive and led to environmental issues.

Another logistics problem facing the country was that as the demand to export ore had increased, South African ports had not until recently been expanded.

Schalamon added that the Port of Maputo, in Mozambique, was becoming more and more appealing as an alternative port to export South African goods.

He also commented that ferro-alloy producers in the country would become more creative in terms of electricity generation, investing in cogeneration or even building its own power plants, should these prove viable.

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