Slide 1: Site Visit to Lion Smelter
SITE VISIT TO LION SMELTER 29 September 2011
Slide 2: Legal Notice / Disclaimer
Legal Notice / Disclaimer This presentation is published solely for informational purposes and does not constitute investment, legal, tax or other advice nor is it to be relied upon in making an investment decision. Information contained herein has been taken from sources considered by Merafe Resour
Slide 3: Agenda
Agenda 1. The Day 2. Operational Overview 3. Lion I Proven successes 4. Lion II 5. Sustainable Development 3
Slide 4: The Day
1. The Day 2. Operational Overview 3. Lion I Proven successes 4. Lion II 5. Sustainable Development 4
Slide 5: The Day
The Day 1. Presentation and Safety Video (9:45am) 2. Lion Ferrochrome Plant Visit (10:30am) 3. Lunch (1:00pm) 4. Depart to Lanseria (2:30pm) 5
Slide 6: Operational Overview
1. The Day 2. Operational Overview 3. Lion I Proven Successes 4. Lion II 5. Sustainable Development 6
Slide 7: Geographical Distribution Provides Competitive Advantage
Geographical Distribution Provides Competitive Advantage Chrome ore - 9 mines, 245 million tonnes of mineral resources, 6 UG2 plants and long‐term supply agreements with major SA platinum producers 10 500 Ferrochrome employees New Project‐ Lion II - 20 furnaces ‐ 1.979 million tonnes installed ferro
Slide 8: Recipe for Producing Ferrochrome
Recipe for Producing Ferrochrome Chrome ore 2.1 – 3.1 t Reductants 0.4 – 0.8 t Electricity 2.4 – 4.2 MWh Furnace Ferrochrome Water 1.0t 2.5m³/t FeCr Transport (Internal) 1.25t Slag Fixed Costs (Primarily Salaries) 8
Slide 9: Lion I Proven Successes
1. The Day 2. Operational Overview 3. Lion I Proven successes 4. Lion II 5. Sustainable Development 9
Slide 10: Recap of Lion I Project
Recap of Lion I Project Largest single‐phased ferrochrome expansion in the world Description : 360ktpa Greenfield ferrochrome production Rationale : Lowest cost (opex & capex) ferrochrome expansion Capex : R1,7billion including the Helena mine Technology : Premus Location : Steelpoort, Limpopo Provi
Slide 11: Lion I - The Construction Phase
Lion I‐ The Construction Phase • 8,700 tonnes steel • 60,000 cubic meters concrete • 29 kilometers pipe work • 2,800 contractors on site (peak) • 6 million man‐hours • LTIFR of 1.33 • One Project Management Team
Slide 12: Lion I & II addresses the key challenges facing the SA Ferrochrome industry
Lion I & II addresses the key challenges facing the SA Ferrochrome industry Escalating energy costs Lowest specific energy consumption ca. 37% better than nearest rival Increased fine ore 750,000 tonnes pelletising capacity Skills shortages In‐house training centre established Lagging logistics Prox
Slide 13: Premus….Our Competitive Advantage
Premus….Our Competitive Advantage • Key source of competitiveness • Xstrata proprietary technology • Difficult to emulate and/or retrofit • High‐skill level required for operation 13
Slide 14: Lion II uses significantly less electricity compared to other smelting technologies
Lion II uses significantly less electricity compared to other available smelting technologies Xstrata‐Merafe Venture anticipated the changes in the South African electricity tariffs and invested in efficiencies. Specific Energy Consumption (MWh/T) Venture cost per tonne 5 4.8 4.5 4.1 240ktpa 4 553kt
Slide 15: Venture Average Electrical Energy Efficiencies
Venture Average Electrical Energy Efficiencies 4.5 Conventional Semi - Closed - 13 Furnaces 3.99 Bokamoso Sinter Plant 4 2007 – ZAR 800 Million 3.66 3.46 3.47 Tswelopele Sinter Plant 3.5 2012 – ZAR 900 Million 3.29 3.3 3.19 3.19 MWh / tonne 3.15 3.08 3.05 2.99 3 Lion I – Two Large Furnaces Premus 20
Slide 16: Premus delivers competitive chrome recovery and coke consumption
Premus delivers competitive chrome recovery and coke consumption 95 Chrome Recovery Coke Consumption 90 90 88 70% 85 60% 60% 60% 80 50% 77 Consumption/t 40% 75 30% 20% 20% 70 68 10% 65 0 0% Convent ional Out okumpu DC Arc Premus C onventional Outokumpu DC Arc Premus
Slide 17: The process
The process SCREENING RAW MATERIALS PELLETIZING BENTONITE DRYING MILLING ANTHRACITE ORE HOT GAS MIXING BATCHING Hot HotGGas as COAL ROASTING LUMP MILLING REDUCTANTS USABLE OFF GAS CHAR, COKE, ANTHRACITE PRE-HEATING FLUXES BATCHING GAS SCRUBBING Complicated Hot loading GRANULATION system SLAG LUMPY C
Slide 18: Lion II
1. The Day 2. Operational Overview 3. Lion I Proven Successes 4. Lion II 5. Sustainable Development 18
Slide 19: Merafe approved a 20.5% participation in Project Lion Phase II
Merafe approved a 20.5% participation in Project Lion Phase II ‐ 360,000 tonnes of ferrochrome capacity Overview • Construction and commissioning of a 360 000 tonne per annum capacity ferrochrome smelter in Steelpoort, Limpopo Province • The project will increase the Venture’s total ferrochrome capa
Slide 20: Lion II - Key considerations motivating the project
Lion II‐ Key considerations motivating the project Benefits of Premus: •Lowest production cost relative to other smelting technologies •Lowest energy consumption •Minimum reliance on expensive coke •Superior chrome recovery •Premium product quality (low silicon and sizing) •30% less solid waste (sla
Slide 21: Job Creation
Job Creation The Lion complex will create 2,197 direct jobs, 6,880 indirect jobs and will impact some 36,000 people in the region Total Jobs Created Dependents Total People Affected Local Steelpoort Area 1,598 4,795 6,394 Other SA Employees 63 188 250 Suppliers – Other SA 2,052 6,156 8,208 Total 3,7
Slide 22: Lion II construction phase is on track
Lion II construction phase is on track Lion II Lion I Artist’s impression of Lion I and Lion II Activity 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 Key tenders Detail Design Excavation Place Long Lead Items Orders Civil Construction Steel Construction Installation Commissioning 1st line
Slide 23: Sustainable Development
1. The Day 2. Operational Overview 3. Lion I Proven Successes 4. Lion II 5. Sustainable Development 23
Slide 24: Sustainable development
Sustainable development In addition to job creation, low energy consumption and less solid waste, there are benefits to the surrounding communities Community Wellness Enterprise Development Wellness Centre Lydenburg Craft & Needlework Nkoleng Poultry Steelpoort Business Park Welding Centre HCT campa
Slide 25: Questions?
ee MERAFE Questions ?