CAPE TOWN (miningweekly.com) – Diversified major BHP Billiton is investing in two projects in South Africa.

BHP Billiton South Africa chairperson Dr Xolani Mkhwanazi, who addressed the Investing in African Mining Indaba in Cape Town, reports that the company is undertaking a geophysical survey to assess the hydrocarbon potential of two areas offshore of South Africa’s West Coast and, in a totally separate project, is also building one of the biggest furnaces in the world at the Metalloys operation in Meyerton to increase the company’s manganese beneficiating capacity.

“It’s often alleged that we want to leave South Africa but nothing is further from the truth,” says Mkhwanazi.

The company is the holder of petroleum exploration rights on South Africa’s West Coast, north-west of Cape Town, which will be the port of mobilisation, demobilisation and resupply for support vessels.

Metalloys is one of the largest alloy plants in the world and is backed by 80% of the world’s high-grade manganese reserves in South Africa’s Kalahari basin.

The new furnace has been built with such energy efficiency that it will not be consuming more electricity than before the project.

Execution is expected in the next six to nine months.

“It’s an opportunity to highlight that we support government’s beneficiation strategy and downstream investments goal,” Mkhwanazi adds.

The so-called M14 furnace will also contribute additional carbon monoxide gas to the onsite power generation plant, for additional power output, thus raising the energy self-sufficiency level from the current base and reducing the site's carbon footprint.

BHP Billiton has been keen to carry out an exploration drilling programme offshore of South Africa's West Coast for some time, but has had to await fiscal and regulatory certainty.

The huge group is a long-standing producer of aluminium in South Africa, where it also mines manganese and energy coal.

Its two aluminium operations in South Africa are the Hillside smelter, which was commissioned in 1994, and the Bayside smelter, which was commissioned in 1971. Its Mozal aluminium smelter in neighbouring Mozambique was commissioned in 2001.

Together, the smelters employ more than 3 200 people and a further 2 800 contractors.

It is estimated that an additional 33 000 people are indirectly employed in supplying and services to the smelters.

The Aluminium Federation of South Africa estimates that the sales of the downstream aluminium industry in South Africa are R30-billion a year, and employ more than 15 000 people, with another 150 000 downstream dependants.

BHP Billiton Energy Coal South Africa (Becsa) is South Africa’s fourth-biggest coal producer with collieries at Khutala, Klipspruit, Wolvekrans and Middelburg, and the Becsa coal processing plant.

It has spawned black-economic empowerment coal companies like Eyesizwe, today Exxaro, and Optimum, now in the Glencore group.

Mkhwanazi says that through direct sales of these assets in empowerment transactions, Becsa more than meets the transformation requirements of the Mineral and Petroleum Resources Development Act and the Mining Charter.

The company’s manganese business has interests in the Hotazel manganese mines in the Northern Cape, the Mamatwan opencast mine and the Wessels underground mine.

Concern About Hydrocarbons Licensing Proposals

On the hydrocarbons licensing front, African Institute of Petroleum president and Global Pacific & Partners CEO Duncan Clarke has criticised South Africa’s latest plans to abolish the Petroleum Agency South Africa (Pasa), which was established as an independent entity to manage the licensing and marketing of local acreage and assets to the international oil industry.

Clarke writes in Business Day that, under the proposed Mineral and Petroleum Resource Development Amendment Bill, Pasa’s function will be taken over by the Department of Energy, placing its key role in the hands of Minister-appointed regional managers.

“No more regressive and damaging initiative could be imagined, except by those without knowledge of the global oil industry,” Clarke writes, adding that the government also wants the State to obtain free 'carried interest' in both exploration and production rights, plus an extra option to secure additional production interest.

Letsema Circle founder Dr Mamphela Ramphele, in her keynote address to the Investing in African Mining Indaba, held up the Norwegian ‘free-carry’ approach to oil-and-gas licensing as an exemplary model that resulted in hydrocarbon revenues being more widely distributed.

Ramaphele said that 96% of the revenue was invested in Norway's Petroleum Savings Fund for general development.