South Africa in Talks on Steel Plant to Compete With Arcelor

Industrial Development Corp., a South African state lender, is in talks with potential partners on proposals to build a steel plant to compete with ArcelorMittal South Africa Ltd. (ACL) and Evraz Highveld Steel and Vanadium Ltd.

The project would have capacity of 2.5 million metric tons a year and use technology to cut output costs, Dave Cousins, the IDC executive for mining and beneficiation, told a Cape Town conference without naming the parties involved in the talks.

Most South African steel is produced using blast furnaces requiring imported hard coking coal and high-grade iron ore. The IDC has studied other technology, as prices for coking coal have outstripped those for steel, and will focus on low-cost output to meet an expected tripling in demand by 2020, Cousins said.

The IDC studied titanium blast furnaces and rotary hearth furnaces, both able to use lower-grade iron ore and locally produced coal, he said, without stating which is preferred.

“We have a solution, and we are engaging with partners,” Cousins said. “There is room for additional steel capacity.”

The IDC estimates South African capacity of 9.3 million tons a year compared with consumption of 5.4 million tons.

To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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