https://www.miningweekly.com

Tivani project nearing start of construction and mining

27th July 2012

By: Samantha Herbst

Creamer Media Deputy Editor

  

Font size: - +

The final pieces necessary to start construction and mining at the Tivani iron-ore, titanium and vanadium project, in Limpopo, are falling into place, states British Virgin Islands-registered Ferrox Holdings CEO David McAdam.

He is hopeful that the com- pany’s application for initial mining rights, which was handed over to the Department of Mineral Resources (DMR) in August, last year, will be approved towards the end of this year.

By this time, Ferrox expects to have raised part of the initial capital needed to develop Tivani. The project is expected to be developed in phases, with Phase 1 producing iron concentrate, at a cost of about $250-million.

As production is ramped up, an additional $200-million to $250-million in Phase 2 will be used to achieve full production of about 2.5-million tons of iron concentrate a year for domestic or export sales.

Ferrox also envisions beneficiation of the ore by smelting it into pig iron or steel and vanadium and titanium slag, and has currently budgeted $1.2-billion for Phase 3.

Ferrox also envisions the production of 500 000 t/y to 800 000 t/y of ilmenite concentrate.

Early in June, the company appointed global banking giant The Hongkong & Shanghai Banking Corporation Johannesburg branch (HSBC Africa) as the exclusive financial adviser to raise up to a total of $1.7-billion in support of the project.

McAdam describes the mandate as “a tremendous and positive establishment for Ferrox”, bringing the privately owned company one step closer to achieving full production at Tivani, as HSBC Africa supports the project with its worldwide resources.

In January, he announced the company’s plan to raise R150-million for additional working capital to start iron-ore production at Tivani.

Since then, Ferrox increased its existing credit facility to finance the ongoing operations while the company worked with HSBC Africa to put together the larger financing mandate.

McAdam is confident that raising the capital required for the various phases of the project, under the auspices of HSBC Africa, will be successful.

“The decision was made to stage financing in terms of when we would need the capital to support the DMR [regulatory] process and our capital expenditure process,” he explains, adding that the first $50-million, out of the total of $1.7-billion that will ultimately be raised, will be used to finalise the bankable feasibility studies on the project, the ongoing working capital requirements and strategic acquisitions.

“For us to spend a significant amount of money without DMR approval might not be the most prudent way to go about things,” he adds. “This is why HSBC Africa advised that the money be raised in tranches on an as-needed basis throughout the course of the project.

Why HSBC Africa?
Ferrox board chairperson Jeff Ahbe tells Mining Weekly that he, McAdam and Ferrox director John Drics have reviewed several banks over the years but chose HSBC Africa to guide them financially because of its keen interest in developing projects in Africa.

“It made sense for us to form a mandate with a bank that has an established presence in Africa,” states McAdam.

“[HSBC Africa] has a view of economic growth for the African continent, as well as South Africa, and aims to lend a globalised presence – perfect for a project of Tivani’s size and scope,” says Ahbe.

Drics agrees, adding that the choice to use HSBC Africa as a financial adviser was also taken because of the global bank’s interest in iron-ore investments.

“We are assuming that they’ve taken a view on future markets and need iron-ore to be inte- grated into the global economy, instead of the common short-term views expressed through market fluctuations, especially in recent years.

“It is clear to us that HSBC Africa is a long-term player, both locally and globally.”

Ahbe believes that HSBC Africa and Ferrox may involve other banks or investment groups in the future in a syndicated type of financial arrangement. Ahbe states that the company is continuing to talk to a number of potential strategic partners to create an integrated solution for beneficiation to benefit South Africa.

Project Progress
Ferrox plans to proceed with construction of Tivani’s iron-ore concentrator once it has received the initial mining rights from the DMR. Ferrox will then focus on the construction of additional facilities to support beneficiation processes, which will include a 1.5-million-ton-a-year iron and steel smelting facility worth $1.2-billion.

Ferrox is nearing the completion of all preproduction regulatory and nonregulatory matters. This will kick-start the construction of Tivani’s iron-ore concentrator, with initial production expected to start in 24 to 36 months, and full-scale production within a year after that.

The concentrator will reportedly have a capacity of 11-million tons a year of run-of-mine ore, producing 2.5-million tons of concentrate a year at full production.

The potential smelting facility, which is expected to run between 48 and 60 months after regulatory approval, is projected to produce 1.5-million tons a year of pig iron or steel, as well as titanium and vanadium slag.

The location of the smelter is yet to be determined, but is likely to be located close to existing infrastructure at Palabora, or possibly in Middelburg.

Ferrox is also evaluating the production of ilmenite concentrate for the production of titanium dioxide, says Ahbe.

“The value of titanium dioxide has almost doubled over the last two years, which makes it a significant resource embedded within the orebody. “Along with the vanadium content, we want to extract the full value of the body,” he says.

Vision for Limpopo
McAdam believes that Tivani will have a life-of-mine of at least 50 years, which will provide continuous employment for the duration of the project.

“A long-term employment opportunity such as Tivani provides ancillary support and benefits for the community. Understanding that this project is going to impact on that part of the country for a significant period makes us positive that it will benefit the entire province, and indeed South Africa, not just Ferrox or Tivani.

“We look forward to working with the people of South Africa to launch the project and watch it take shape to benefit the local and national economies for generations to come,”

he says.

An estimated 250 jobs will be created during the initial stage of the project, which includes only the people working directly on site. Taking suppliers into account would significantly increase the number.

Ahbe estimates that the trickle- down effect of a 250-strong staff complement will be multiplied by up to ten times in the initial phase alone.

Ferrox has not yet decided on suppliers for the Tivani project. McAdam says the company will start the tendering process once the DMR has approved its application. He does, however, add that Ferrox will prioritise localis- ation and black economic- empowerment compliance.

Meanwhile, Ferrox has signed a memorandum of understanding with South Africa’s former reserve bank governor and Labour Minister Tito Mboweni and his brother, chemical engineer Alto Mboweni’s company, Mboweni Brothers Investment Holdings (MBIH), which provides MBIH with the opportunity of investing in Ferrox and the Tivani project.

The Mboweni brothers have agreed to a 20% interest in Ferrox, or its indirectly owned local subsidiaries, for a consideration of $32-million.

“There are a number of regulations which have to be complied with and we believe they will be approved and successfully completed,” says Drics, adding that Ferrox hopes to finalise the document exchanges by the end of July.

Edited by Tracy Hancock
Creamer Media Contributing Editor

Comments

Showroom

Actom image
Actom

Your one-stop global energy-solution partner

VISIT SHOWROOM 
Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.11 0.15s - 96pq - 3rq
Subscribe Now