Hungry for Waterberg infrastructure

Developing coal miners in the Waterberg are not the only players dependent on rail and water infrastructure to start mining and moving product, writes Laura Cornish.

Fortunately, the schedule for iron ore and steel-driven company, Ferrum Crescent’s Moonlight project in the area fits in neatly with the proposed infrastructure upgrade and expansion time frame.

The necessity for rail, water, energy and transmission infrastructure has been identified by the government’sNational Development Plan as one of 18 strategic integrated projects (SIP 1) to “transform South Africa’s economic landscape” and unlock the northern mineral belt, the Waterberg region being the catalyst. South Africa’s future coal and energy demands are dependent on this project.

Rail capacity – first and foremost

It is a well-known fact that Lephalale’s Waterberg region will emerge as the next generation coal fields asMpumalanga’s coal resources approach depletion. The reality is that this is less than 10 years away. Coal, however, is not the only mineral in the Waterberg region – platinum and iron ore are ‘hot’ minerals within the area – further driving the necessity for the approval and construction of the SIP 1 project.

ASX/AIM/JSE-listed iron ore junior Ferrum Crescent is one such company keen to take its Moonlight magnetite iron ore Limpopo-based project up the value chain and into production. Strategically, its development path has been well thought out as it anticipates production start-up around the same time a number of new rail upgrades and expansions are completed and capacity constraints alleviated – scheduled for completion around 2018.

The company is aiming to reach production start-up in 2018. “And this is no small project for a junior,” saysFerrum Crescent’s COO, Vernon Harvey. “We need to complete a bankable feasibility study (BFS) and raise capital – about US$1 billion (R9.09 billion) for the development of the entire project. A pelletising plant located atThabazimbi is most suitable to our beneficiation needs, which will take about three years to complete. This means we need to start construction in 2015. If we achieve all our goals, our project will come on-stream around the time the necessary infrastructure is completed.”

The current active line from Lephalale (solely used by Exxaro’s Grootegeluk coal mine [1.5 Mtpa]) joinsThabazimbi where approximately 2 Mtpa of iron ore is transported to Vanderbijlpark (about 2 Mtpa). “This entire system is due for upgrade by Transnet to cope with future coal demands from Waterberg. The first upgrade, in various phases, will expand the rail line’s capacity to 23 Mtpa. The Phase 2 upgrade will entail an entirely new heavy haul line from Thabazimbi to Ermelo, which starts at 40 Mtpa. We are banking on acquiring capacity for rail transport of the product to be exported  through  Richard’s Bay from Transnet as iron ore capacity becomes available on the existing line. There is currently some  spare capacity on the existing line from Thabazimbi toRustenburg and beyond,” explains Harvey.

The Lothair/Swaziland rail line connection and upgrade will also take some capacity off the coal line to Richards Bay. The upgrades involve construction of bypassing loops and also electrification of line between Thabazimbiand Lephalale once Medupi power is available. The Richards Bay port is also being upgraded for additional iron ore capacity.

The Moonlight project

The Moonlight deposit (or farm) is not a new discovery, Harvey outlines. It was drilled by Iscor in the 1980′s and 1990′s and forms part of a larger property across two contiguous farms – Gouda Fontein and Julietta. Ferrum Crescent acquired its new order mining rights for all three farms in October 2012.

“Between 2008 and 2011, we undertook an infill drilling programme on the Moonlight farm and determinedIscor’s historical data to be accurate,” says Harvey, who describes the project as a “unique” magnetite banded iron ore deposit containing material capable of producing a high quality metallurgical pellet feed concentrate.

Its JORC code-compliant resource, 308 Mt, has an average grade of 26.9% (16% cut-off) iron. It comprises a coarse grain product that can be easily upgraded – to about 70% iron content. Coupled with its low phosphorous, silica and alumina content, the opencast project becomes increasingly attractive. There are several mineral zones at or near surface with a low strip ratio that equates to low mining cost benefits. Based on beneficiated grades and quantities, the project has a minimum 20-year lifespan.

Sidebar: The Moonlight mineral resource categories

• 172 Mt inferred at a grade of 25.3% iron
• 83 Mt indicated at a grade of 27.4% iron
• 52 Mt measured at a grade of 31.3% iron

For a junior company, Ferrum’s development plan for the project is substantial. “Our plan is to produce 6 Mtpa of direct reduction (DR) and possibly blast furnace grade pellets for use in the steelmaking industry. We already have a signed agreement with Switzerland-based Duferco SA for 4.5 Mtpa, with first rights to an additional 1.5 Mtpa if not sold domestically,” Harvey explains. Duferco is a leading private company in the trading, and end use of iron and steel products. This would require a large-scale opencast operation, mining approximately 42 Mtpa.

“Because the majority of our product is for export, we will require three trains every day, with 100 wagons each per day for 330 days of the year. This equates to 18 600 t of iron ore pellets transported to the port every day.”

Duferco suggested the production of DR pellets from this particular ore body type, which is suited for use in electric arc furnaces (as opposed to blast furnaces). This method of steelmaking is quickly becoming a preferred  modern ironmaking methodology. It is far more environment-friendly, requiring any local energy source instead of coal and is more cost effective.

Additional infrastructure necessities

A bankable feasibility study (BFS) is currently underway in respect of a dual water/slurry pipeline pelletising plant.

“We need 80 MW of power and a 240 km pipeline, which links to Thabazimbi – both we will have to invest in and build ourselves. For power, this entails a 132 kV power line connecting the site to Lephalale. Eskom has indicated it may be able to provide power in 2017.”

Italy’s steel giant Danieli, which ranks among the three largest suppliers of plant and equipment to the metals industry worldwide, is undertaking the process design for the BFS and will design and oversee the plant’s construction. According to Harvey, this will be the largest iron ore pelletising plant in South Africa once built and requires an international expert to facilitate its development.

The future

Moonlight is only the beginning of the road. The farms Gouda Fontein and Julietta, which along with Moonlightfarm are covered by the company’s granted New Order Mining Right, have yet to be properly explored, andFerrum Crescent has further applied for prospecting rights on an additional two contiguous properties – Good Hope and Karnemelksfontein. “From the results of historical drilling by Iscor in the 1980′s and 1990′s, it is known that there is large additional tonnage of iron ore mineralisation, and Ferrum commissioned a high resolution aeromagnetic survey of Moonlight and surroundings in 2012 which confirmed the potential for significant additional mineralisation. The company’s plan is to confirm these additional iron ore areas by drilling and other mine exploration once it is in production.  The existing JORC compliant mineral resources giveMoonlight in excess of 20 years’ production based on the 6 Mtpa profile,” Harvey concludes.

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