Pula Steel, the crown jewel of BCL�s Polaris II
Onalenna Kelebeile | Friday October 23, 2015 15:36
This was a confirmation of the company’s intent to dispel the sundown outlook that haunted BCL for many years.
Polaris 11 is a corporate strategy that aims to expand BCL’s portfolio by leveraging the company’s technical capacity in mineral extraction and processing, with one of the anchor pillars being the development of iron production circuit.
The company acquired a 50.5 percent shareholding in Pula Steel, which was a start-up company and had other perceived benefits such as improved revenue base on account of acquiring the majority shareholding.
In the initial plan, Pula Steel was constructed with an opening production capacity of 80 tonnes of billet per day. However, there was a change of scope during project implementation, which included variations in the intended 80 tonnes output to 240 tonnes billet per day.
BCL mine’s managing director, Daniel Mahupela has said during the official opening this week that as a result, some elements were brought forward and affected a number of components and processes of the plant such as major modification in the power configurations from the initial 5.5 MVA to 15 MVA. This also stretched the initial targeted commercial date to October this year.
The changes in the cost of power connections from P5 million to about P25 million and above P50 million for phase 11 is the main reason that the cost of the project escalated.
The plant’s capacity and configuration had to be adjusted in line with increased costs of installing power. The increased plant size basically put phase one and two in one, hence the delays to commission the project.
The delays also resulted in US Dollar to Pula exchange losses.
Mahupela said the change in approach to deliver the project led to increased capital required to P130 million against the P40 million that was initially planned.
The BCL board of directors also approved additional investment of up to P53 million early this year as a result of the change in scope to ensure that Pula Steel is delivered.
Pula Steel phase one project has created 250 jobs and is expected to create more than 1000 jobs in the second phase. Mahupela said steel was a basic commodity that was required by any developing economy and that due to increased economic activity and development projects in the SADC region, demand surpasses supply.
“Africa is the next continent to drive the world economy and demand for steel in the continent will continue to grow,” he said. “Therefore, Pula Steel is strategically placed.”
BCL mine is also carrying out exploration for iron ore around Ikongwe in Mahalapye area and at Barolong farms.
Mahupela said metallurgical test-work is being carried out to determine the sustainability of these ores for the production of sponge iron.
“We have been offered options in the African Copper iron ore deposits which we will evaluate for the future.
The work we are carrying out in the iron ore space is not just to ensure feed sustainability for Pula Steel, but feed for metallurgical complex that will significantly change the country’s position as a major exporter of iron products in the sub continent,” he added.
At present, Botswana steel import bill stands at P775 million annually, but the establishment of the Pula Steel is expected to reduce the need for imports.
“We want to fill this import gap and produce steel domestically,” he said. “BCL and SPEDU will work together to grow the SPEDU region into an industrial and minerals processing centre that will attract other investors. SPEDU region is now a special economic zone and this can only remain viable if we remain steadfast in staying ahead of our competitors,” Vice president Mokgweetsi Masisi said when officially launching the plant this week.
Through the Polaris 11 strategy, the mine will expand and sustain the nickel production circuit, develop a copper production circuit, iron production circuit, coal production and beneficiation circuit, chemicals and by-products as well as to develop precious metals and other minerals circuit.
As part of the strategy, BCL has completed the acquisition of the Tati Nickel mine and a 50 percent stake in Nkomati mine in South Africa while the mine has also acquired a coal exploration licence.
A coal power plant study is ongoing with a Canadian company and a scoping study for a captive coal fired power station has been completed.
This will inform BCL on options regarding future energy requirements. BCL has also signed contracts with partners to explore for gold in two projects in Zimbabwe while exploration for diamonds in the western part of the country is ongoing.
The establishment of Pula Steel is also expected to create an opportunity for other investors to consider investing in potential downstream projects such as production of nuts, bolts, screws and nails.
Pula Steel is the first integrated steel plant in Botswana, which will process scrap metal into an intermediate product called billet and will further process billet into different types of steel products.