Vedanta, the mining group controlled by Indian billionaire Anil Agarwal, aims to build a zinc smelter in the Northern Cape after the completion of phase two of its Gamsberg open-cast zinc mine, part of a R21bn investment commitment equivalent to about 13% of the province’s R166bn GDP.
The company’s plans to build a multibillion-rand smelter, a game-changer for South Africa’s beneficiation efforts, received a boost on Friday when President Cyril Ramaphosa pledged his administration’s support to get the smelter off the ground.
Ramaphosa’s public backing of Vedanta’s smelter plans will come in handy for the group as smelters in South Africa have been constrained by high energy costs, with Eskom this year granting several tariff discounts to mining majors such as Glencore and Merafe’s ferrochrome operations.
“We welcome Vedanta’s ambition to establish zinc smelting capacity in the Northern Cape. Such an investment would enable South Africa to move further along the zinc value chain, from producing concentrate to producing refined zinc metal,” the president said at the opening of phase two of Gamsberg, a project that cost R10bn.
“It would create new opportunities for industrial production, local procurement and employment. We recognise that an investment of this magnitude requires commercially viable electricity, reliable infrastructure and other enabling conditions.
“Government must work with Vedanta and other partners to address these requirements. Our objective must be to create the conditions in which further beneficiation investments become viable and competitive.”
Minister of electricity & energy Kgosientsho Ramokgopa, who also attended the launch of the second concentrator and increased Gamsberg’s capacity to half-a-million tonnes of zinc, said his department supports Vedanta’s smelter ambitions.
“We are going to make their dream of building a smelter possible because we are going to [agree with] each other in relation to the price [tariff],” he said.
South Africa’s electricity prices, which have surged more than 800%, have seen industrial demand plunge, with negotiated price agreements entered between Eskom and several industrial stalwarts failing to stop the bleed.
We are going to make their dream of building a smelter possible because we are going to ding each other in relation to the price [tariff].
— Kgosientsho Ramokgopa, Minister of electricity & energy
Gamsberg, which has a lifespan of 30 years, has about 655-million tonnes of ore reserves, containing about 34.3-million tonnes of metal.
Gamsberg is located about 20km east of Aggeneys, in the Khâi-Ma Local Municipality, Namakwa District, Northern Cape.
Vedanta owns 74% of the entity, with Exxaro owning the rest.
Black Mountain Mining holds Vedanta Zinc International’s (VZI) South African operations, the Deeps, Swartberg and Gamsberg mines. These mines form what is known as the Black Mountain Complex.
BMM has been in operation since 1979 and was acquired from Anglo American by Vedanta Resources in 2011.
Gamsberg was discovered more than 40 years ago and held undeveloped in the asset portfolios of various mining companies, but after the acquisition, Vedanta gave the project the go-ahead in 2014, and the first blast occurred in mid-2015, just eight months later.
VZI is chaired by Agarwal, said to be worth about $5.2bn (R85.7bn) by Forbes. Agarwal has over the years turned a tiny scrap metal business into London-headquartered Vedanta Resources.
The group in June completed a historic demerger of the group’s aluminium, power, oil and gas and iron and steel businesses into four new listed companies: Vedanta Aluminium Metal, Vedanta Power, Vedanta Oil and Gas and Vedanta Iron and Steel.
Vedanta Ltd continues as the group’s flagship listed entity anchored by Hindustan Zinc, the world’s largest integrated zinc producer and top silver producer.
Hindustan Zinc is chaired by Priya Agarwal-Hebbar, Agarwal’s daughter. She said the family was impressed by Ramaphosa’s vision to have the country export more finished, high-value products than raw materials.
Agarwal-Hebbar said plans for the development and construction of a smelter-refinery complex speak to Vedanta and the government’s commitment to local metal beneficiation.
“Over the last 15 years, Vedanta has invested R89bn in South Africa’s economy. And today, with an investment of an additional R10bn in Gamsberg phase two, we are taking another important step forward,” Agarwal-Hebbar said.
“This expansion takes our total zinc capacity to approximately 500,000 tonnes per annum. For me the most exciting part is what comes next. The world is entering a new resource age. From renewable energy to electric vehicles to AI, the technologies of tomorrow will all depend on metals and minerals. South Africa has those resources and the talent to play a leading role.
“Through VZI, we envision an integrated zinc business of about 1-million tonnes per annum, supported by future smelters, downstream manufacturing and the Namakwa special economic zone. If fully realised, this next chapter could create thousands of new jobs.”
The VZI CEO said South Africa’s mining was a sunrise industry, offering the company a clear growth path.
“We invested through a demanding period for the industry because we believe in this region’s potential. We want the benefits to stay in Namakwa, through local jobs, local suppliers and skills development,” said Kumar.
Business Day
Kabelo Khumalo
www.businessday.co.za
