Xstrata plc has approved development of the second phase of its Lion ferrochrome complex near Steelpoort in Mpumalanga province, South Africa. The expansion will involve construction and commissioning of a 360,000-mt/y capacity smelter and will increase the Xstrata-Merafe chrome venture’s total ferrochrome capacity to more that 2.3 million mt/y.

In announcing the expansion, Xstrata said the Lion project had met all of the company’s key value and risk metrics for some three years; however, an absence of security of supply of electricity resulted in project approval being held in abeyance until a firm allocation of power was received from South Africa’s power utility, Escom. Xstrata also is advancing its own power generation plans and is currently completing a feasibility study for the first phase of a 600-MW thermal power generation plant that will supplement future electricity supply.

The Lion expansion will utilize Xstrata’s proprietary, energy-efficient Premus technology, which will reduce the overall cost of the Xstrata-Merafe venture’s total ferrochrome production by about 6%. Premus technology consumes approximately one-third less electricity than other available smelting technologies, an industry leading average of between 2.2 and 2.4 MW/mt, Xstrata said.

The Lion expansion will entail a total capital investment of R4.9 billion ($710 million), which includes R700 million ($100 million) for the concurrent development of the 1.2-million-mt/y per Magareng mine within Xstrata’s Thorncliffe mine complex. Construction is scheduled to begin in the first quarter of 2011, and commissioning is planned for the first half of 2013.

Xstrata’s pooling and sharing venture partner, JSE-listed Merafe Resources, holds a 20.5% interest in the Xstrata-Merafe chrome venture and has an option to participate in the expansion.

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