Electricity shortage and high prices threaten smelting industry

Designer and supplier of high- capacity electric submerged-arc smelting furnaces and complete smelting plants Tenova Pyromet MD Chris Oertel tells Mining Weekly that increased electricity prices and a shortage in electricity supply in South Africa have hampered the country’s beneficiation industry, as numerous smelting projects have been put on hold.

The company, which forms part of the Tenova Mining & Minerals group, also provides consulting services and training for its clients and is actively involved in the production of ferroalloys, base metals, slag cleaning and alloy refining in the global smelting industry.

“Although the current economic climate has caused many smelting pro- jects to be put on hold, there are still several clients considering the feasibility of new projects. This is positive, as these projects will be ready to go ahead when the market is commercially viable,” says Oertel.

He notes that South Africa is also active in terms of existing producers looking to improve efficiencies, recover more energy and reduce operating costs.

“For example, clients with three small furnaces will currently consider the possibility of having one large furnace instead. It is becoming increasingly important to reduce operating costs.

“It is easier for companies to get board approval for funds to improve plant effi- ciencies than to get funds to build new plants,” states Oertel.

He notes that other countries are currently able to benefit from South Africa’s electricity shortage and its subsequent high prices.

“As a result of fewer new plants being built, the resulting gap in the market is being filled by countries such as China, Kazakhstan, India and the rest of South East Asia.

“China and India are also building larger, more sophisticated plants, up to three times the size of plants built there in the past,” Oertel notes.

He adds that the electricity constraint, coupled with high project prices, could present a challenge for the consulting engineering industry at large.

“Because some project prices are getting out of control, I see an emerging trend towards fixed prices – instead of hiring a consultant to run the project, clients will ask the company supplying the equipment to get involved in running the project at a fixed price, which is essentially what we do at Tenova Pyromet, as consulting is not our core business but a service we provide for our clients owing to our expertise,” he explains.

Seeking Solutions

Owing to the challenge of high electricity prices in the industry, Tenova Pyromet is working towards finding a solution to this problem by working with a host of other producers, especially national development finance institutions.

“We hope the solution will revive the smelting industry in South Africa through new technologies and prevent potential job losses and plant closures,” he says.

Going forward, he says, the company is also focused on doing more work globally through its offices worldwide.

“Russia and South East Asia are probably the most buoyant markets for new projects, looking forward. Commodities that will continue to grow in the future include ferrochrome, manganese, sili- cone metal, ferrosilicon, ferronickel and copper,” he concludes.