ASA outlines chromite expansion

[miningmx.com] — ASA Metals, which is owned jointly by Sinosteel (60%) and Limpopo Economic Development Enterprise (40%), is to embark on a major expansion of its chrome mining and smelting operation at Dilokong, on the eastern rim of the Bushveld Igneous complex, just under 30 km from Steelpoort.

Dilokong was founded some 30 years ago as a Government training mine. ASA

Metals took control in 1997, and expanded the mining operation into a vertically integrated charge chrome production facility whose smelting furnaces produce around 115,000 tonnes charge chrome annually. Dilokong mine beneficiates around 420,000 t raw chromite to produce around 320,000 t chromite ore.

Mine and smelter production have both grown by more than 25% in the past two years.

A Sinosteel spokesperson stressed that, despite his company’s involvement, ASA targets international markets: only 30% of its historic production goes to China.

ASA has mining rights to more than 47 million tonnes (Mt) chromite resources. To exploit these it now plans to sink two new shafts and build a 1.2 Mtpa beneficiation plant, a 600,000 tpa pelletising and sintering plant, and other facilities.

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Several leading international mining consultancies, with wide experience in the chrome industry in SA, have been engaged to oversee various aspects of the design and development, including Tenova Pyromet, Metix and Outotec (the former Outokumpu Technology, which was recently hived off and listed separately on the Helsinki Stock Exchange).

ASA says it started talking to Eskom two years ago, and is one of the last projects to have received Eskom approval – which is not to say that Eskom will deliver! Current operations have been affected by the 10% power cutback, but the extent wasn’t quantified.

The new mine will create about 800 jobs, with another 200 in the smelter, which will take total employment to 2,400-2,500, making ASA a significant employer in a depressed area.

Company spokesmen wouldn’t disclose the cost of the project, saying this would be advantageous to its competitors. However, JSE-listed Merafe recently announced that it’s to pay R181m for a 20,5% stake in Xstrata’s Project Bokamoso, which is planning to develop a 1.2Mtpa chrome pelletising and sintering plant, also using Outokumpu technology.

That values the entire project at R900m. While it’s double the size of ASA’s project, there will be substantial economies of scale, and Bokamoso doesn’t appear to have a mining component. So on balance, ASA’s costs could be of a similar order of magnitude.