 JOHANNESBURG (miningweekly.com) – Finnish company Ruukki plans to start a feasibility study for a proposed 250-MW power plant to provide its Mogale Alloys venture in South Africa with reliable electricity supply, by the fourth quarter of this year.
Ruukki, which bought the Mogale Alloys business in 2009, on Wednesday announced that it had entered into two framework agreements with Metallurgical Group Corporation (MCC) for the construction of the proposed power plant, as well as for the construction of two direct current (DC) chrome furnaces.
CEO Alwyn Smit noted that the signing of the agreements was a major step towards the company's objective of expanding its South African production capacity.
MCC would be the engineering, procurement and construction contractor for the power plant project and would also undertake the feasibility study, which was aimed at determining the most appropriate electricity generation technology.
Ruukki was currently considering using coal gasification combined cycle, conventional coal-fired or fluidised bed boiler technologies. The final decision would, however, also be dependent on the limited water supply in South Africa, the company stated.
"We believe that owning a power plant is critical for our growth plans, as it will ensure a consistent supply of power to our furnaces at a competitive rate," said Smit.
Once the study was completed by the second quarter of next year, the parties would negotiate to sign a formal contract for the project.
Further, MCC would also be the procurement and construction contractor for the construction of two 60-MVA, single electrode submerged arc DC furnaces.
Design and detailed engineering for the furnaces would be completed by the fourth quarter of this year, after which Ruukki would renegotiate the framework agreement to convert it to a formal contract by the end of June 2011.
A site selection process for the furnaces would also be completed by the end of this year.
In June, Ruukki South Africa Minerals business CEO Dr Danko Konchar told Mining Weekly Online that each of the two new furnaces would require power of 70 MW to operate, while the existing furnaces at Mogale Alloys required a combined 100 MW to operate.
At the time, he said that Ruukki expected the construction of the furnaces and the power plant to be completed by 2012 or 2013.
The existing furnaces at Mogale Alloys were also being retrofitted to improve their productivity by between 15% and 20%.
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