Lamergyre’s steel alloy plant to create sustainable jobs, economic activity
ENGINEERING NEWS / 26 AUGUST 2019 - 13.41 / SIMONE LIEDTKE
The establishment of Lamergyre Alloy’s vertically and horizontally integrated alloy and stainless steel plant and downstream value-adding processing infrastructure is expected to create new and sustainable jobs in both the mining and steel industries.
It is also expected to contribute to sustainable economic activity in South Africa, while, simultaneously, uplifting the Eastern Cape economy
The proposed greenfield plant will have the capacity to produce up to 6.5-million tonnes a year of new stainless and alloy steels.
The plant is likely to be established in Section 11 of the Coega Special Economic Zone (SEZ), in Port Elizabeth, and is one of ten projects in a pipeline of investments worth R287-billion, according to the Coega Development Corporation.
The plant’s base value is about R193.5-billion, Lamergyre treasury and financial director Wayne MacPhail tells Engineering News Online. The core project – including the energy package, bulk storage, materials handling facilities and local infrastructure contributions – will come in at about $12.9-billion, he adds.
However, before the project can proceed, Lamergyre needs to invest about $120-million in the prefeasibility and bankable feasibility studies for the project. These are expected to be completed in 2020.
Through these studies, CEO Dr Johan Kruger says Lamergyre expects to have its proof of concept numbers largely confirmed, with an internal rate of return in the mid-to-high twenty percentiles.
Following completion of the studies, plant construction is expected to start in 2021, with all three construction phases to be completed from 2024 to 2026.
Phase 1’s objective will be to produce 2.5-million tonnes a year of stainless steel and 1.5-million tonnes a year of alloy steel, while Phase 2 will focus on increasing the stainless steel output to 4.5-million tonnes a year and Phase 3 increasing the capacity to five-million tonnes a year.
The plant will be fully operational by 2026 and reach full capacity in 2027.
Once the plant is in full swing, Lamergyre will own the source of its raw materials by partnering and cross shareholding with local mining houses, while also working with the mining engineers to improve productivity, and fund new technology to ensure cost reduction and the delivery of concentrates.
Looking at mass, Lamergyre COO and engineering director Stephen Rust tells Engineering News Online that local iron-ore, chromite, manganese and coal inputs would amount to 90% of the weight of the finished austenitic stainless steel.
Nickel, most of which will be imported from elsewhere, including in Africa, meanwhile, forms more than 10% of the finished material cost.
However, in the context of the macro project, Lamergyre has signed a cooperation agreement with Direct Nickel (DNI) for the development of processing technology, which will allow the stainless steel plant to access the nickel in adequate quantities for its stainless steel production.
The agreement focuses on the identification of suitable laterite ore resources, the development and testing of those resources for suitability to the DNI process and the construction of DNI process plants, which will deliver a supply of mixed hydroxide products and haematite to Lamergyre’s plant and steel mill.
The companies will work together on the testing and feasibility studies for each resource and will seek to involve local partners throughout the process.
“The agreement with DNI represents an important step in the vertical integration of the commodity supply chain into the Lamergyre stainless and alloy steel process,” Kruger comments, adding that this will enable Lamergyre to “reap the blessing of price and operational stability from the integration of processes within the chain”.
As a result, Lamergyre will likely be installing extensive manufacturing works in the Coega SEZ, Rust says.
Additionally, the plant will also need to import the bulk of its molybdenum requirements.
Overall, however, about 10% by volume of the finished authentic stainless steel will be made out of imported ores and materials, Rust adds.
Once the plant is in production, downstream added value production will be developed and Lamergyre Alloys has allocated about 20%, or between one-million and 1.3-million tonnes a year, to this activity initially.
It is part of the company’s philosophy to, over time, increase this, with the final objective to process all of the steel produced at the steel plant into engineering products, components and encourage downstream manufacture in the household and consumer industries, such as the domestic appliance industry, for global and local distribution.
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