Manufactured capital

MATERIAL
ISSUES


  • Health and safety
  • Project execution
  • Pricing and the availability of electricity
  • Raw material availability
  • Business continuity and profitability
  • Investing in new technology to increase
    energy efficiency
  • Industrial action
  • Community issues



We enhance our manufactured capital by:

  • employing our infrastructure, technologies and processes to use our resources most efficiently
  • devising technology and management systems that reduce our waste and emissions

Manufactured capital in the mining context relates to the mining and smelting process and how it is conducted and the assets, which are being mined and beneficiated. It is important to an organisation's sustainability because its efficient use allows an organisation to be flexible and innovative and increases the speed at which it delivers.



Our operations


Our operations

Glencore-Merafe Chrome
Venture operations

  1. Rustenburg ferrochrome plant and Tswelopele pelletising and sintering plant
  2. Boshoek ferrochrome plant and Motswedi pelletising and sintering plant
  3. Boshoek mine
  4. Wonderkop ferrochrome plant and Bokamoso pelletising and sintering plant
  5. Waterval (east and west) and Marikana mines
  6. Kroondal mine
  7. Thorncliffe mine
  8. Lion ferrochrome plant
  9. Lydenburg ferrochrome plant
  10. Helena mine
  11. Magareng mine

KEY POINTS – 2017

  Merafe attributable ferrochrome production 395kt
(2016: 393kt)
     
  Mined chrome ore production up by
9%
     
    Excellent cost
performance
     
    Annual production records at the smelters
     
    Annual production records at the mines
     
    One fatality
(2016: one)
     
    Excellent
TRIFR performance
     
    No strikes
Overview

Attributable ferrochrome production of 395kt during 2017 was slightly more than during the previous year in spite of deliberate production reductions during the winter months as a result of weak market conditions in the second quarter.

A number of annual production records were achieved during 2017 including all time high production levels for the Venture, the Lion smelter and the Wonderkop smelter.

Annual production records were also achieved by the Tswelopele and Bokamoso pelletising and sintering plants at the Rustenburg and Wonderkop smelters. The record at the Tswelopele plant was remarkable since it is the first plant of its type in the world to achieve more than design capacity over a full-year period.

The good production performance did not only result in larger volumes but also resulted in excellent cost performances. Total unit production cost increases during 2017 was contained to 9% in spite of extreme increases in ore and reductant consumption prices of 15% and 31%. The electricity price increase of only 2.2% and reduced production during the high electricity tariff winter months assisted greatly. Higher volumes also contributed to the lower unit costs through fixed cost dilution.

Safety

The Venture continues to place maximum focus on safety. Unfortunately, despite this effort , we are sad to report that there was a fatal accident in the operations of the Venture during 2017 as referred to more fully in the report of the CEO and the report of the Chairperson.

A number of safety campaigns were launched since the onset of the Venture in 2004 as part of the ongoing efforts to improve on the safety performance. This was indeed achieved as evident in the graph below where the total recordable injury frequency rate (TRIFR) reduced to levels around 4 over the past few years. See Human capital of this report for a summary of the Venture's approach and performance in respect of safety and health for 2017.

TRIFR 2004 – 2017
TRIFR 2004 – 2017
Eskom

Our furnaces are fully dependent on a reliable and cost effective supply of electricity from Eskom. At present Eskom has entered a phase where it has an oversupply of electricity due mainly to reduced electricity demand in the country.

Lower electricity sales and large over-expenditures on their new build programme placed enormous pressure on Eskom's financial situation. The Regulator allowed a 2.2% tariff increase on 1 April 2017. Later in the year Eskom requested a further 19.9% increase according to a special one-year tariff application. The Regulator only allowed 5.23% of this request after vigorous public hearings where all sectors of society clearly voiced their objections against the increase. For further discussion on Eskom and pricing rates I refer you to the CEO's strategic review of this report.

The benefits to the Venture of investing into energy efficient projects like Lion phases 1&2, Bokamoso and Tswelopele has shown to be extremely significant and the benefits compared to other ferrochrome producers will increase with future electricity price increases.

Chrome ore production

The Chrome mines produced new record annual total with saleable chrome ore production at 8.8% more than the previous period.

Higher volumes were mainly due to fewer section 54 stoppages, better recoveries from the run of mine ore and less power interruptions.

UG2 production volumes in 2017 were 7.6% less than the previous year due to a lower offtake during the second quarter when prices were low.

From the Resources and Reserves Statement of this report it is clear that the Venture has more than sufficient ore available at the current rate of mining. If inferred reserves set out in the Mineral Resources and Reserves Statement are excluded, the total life of mine is still calculated at more than 30 years.

Dr Jurg Zaayman

General Manager
Merafe Chrome


Power and ore consumption efficiencies
Power and ore consumption efficiencies

The Glencore-Merafe Chrome Venture's operations

Ferrochrome plants Capacity Technology Mines
Western Limb (North West province)
Wonderkop 553 000
tpa FeCr
Bokamoso pelletising and sintering plant using Outotec technology Kroondal, Waterval and Marikana
6
furnaces
Conventional semi-enclosed furnaces
Rustenburg 430 000
tpa FeCr
Tswelopele pelletising and sintering plant using Outotec technology Kroondal, Waterval and Marikana
6
furnaces
Conventional semi-enclosed furnaces
Boshoek 240 000
tpa FeCr
Motswedi pelletising and sintering plant using Outotec technology Waterval, Kroondal and Boshoek
2
furnaces
Enclosed furnaces
Eastern Limb (Mpumalanga and Limpopo provinces)
Lydenburg 396 000
tpa FeCr
Premus - kilns Thorncliffe, Helena and Magareng
4
furnaces
Three enclosed furnaces and one semi-enclosed furnace
Lion Phase I 360 000
tpa FeCr
Premus - kilns Thorncliffe, Helena and Magareng
2
furnaces
Enclosed furnaces
Lion Phase II 360 000
tpa FeCr
Premus - kilns Thorncliffe, Helena and Magareng
2
furnaces
Enclosed furnaces

The Venture has access to various UG2 plants, in the Western Limb including EPL, Kanana, Kl, K2, K4 and Rowland, and Mototolo in the Eastern Limb.