South African phosphate mining and processing group Foskor gave its name to foskorite—but ironically, it is no longer mining that ore as it refocuses its strategy and resources. John O’Hanlon speaks to the VP of Mining, Johan Horn.
The macronutrients in fertilisers are nitrogen, phosphorus (in the form of phosphates) and potassium—usually described as NPK. World demographics and climate change mean that demand for these ingredients can only rise: the exponential growth in global food production sent the price of fertilisers skyrocketing in 2008 and it was feared there could be a world shortage of phosphate within decades.
All this gives South Africa’s only indigenous phosphate mining and processing company a sustainable future, both for the rock concentrate that Foskor mines and feeds to its processing plants and for the phosphoric acid and granular products it sells to the world fertiliser industry. However, the high prices that it was obtaining in 2008 slumped during 2009, says the company’s VP of Mining, Johan Horn. “At its peak we were getting $2,200 a tonne for the phosphoric acid produced at our Richards Bay facility. During the last year, that dropped to $450!” Recently world prices have risen, Horn says, and are currently at around $750 a tonne, but he’d be surprised to see prices anywhere near 2008 levels before 2011.
The divestment by South Africa’s national oil corporation Sasol of the phosphoric acid plant it ran in Phalaborwa close to Foskor’s mine and its closure in the latter part of 2009 was a blow to Foskor. This plant was its biggest external customer for phosphoritic rock, taking some 20 per cent of its entire production. It therefore made commercial and strategic sense for Foskor to buy the plant, and negotiations commenced; however, the national antitrust authorities blocked the sale. Sasol Nitro is in talks with other potential buyers, but for the time being this important resource remains closed.
The Phalaborwa plant consumed half a million tonnes of rock, but the good news is that Foskor has not needed to cut back production during the closure. “We had almost completely run down our stockpiles last year, so our reaction to this situation has been to continue at capacity and build up our reserves to a comfortable level: when the plant comes back on-stream, we will be ready.”
In the medium to longer term, Foskor’s mining division will need to be able to supply even more milled rock than it does already. In order to be able to do this, it is in the process of commissioning a new mine to the south side of its existing pyroxenite deposit at a cost of R550 million (around $71 million).
Up until the present, Foskor has mined two distinct types of ore—pyroxenitic and foskoritic. The latter was first exploited by Foskor, which accounts for its name. The foskorite, though, accounts for only a small part of the huge deposits in the Phalaborwa region, though it contains other metals, including copper—which until very recently provided a separate revenue stream for the company—as well as magnetite, a source of iron ore. The pyroxenenes from the new south pit will yield greater quantities of phosphate per tonne mined, so it has been decided to focus entirely on pyroxenitic rock and discontinue the production of copper, which was in any case a marginal activity.
The South Phalaborwa Mine lies in the same geological complex as the existing North Phalaborwa pyroxenite mine. “The deposits are enormous, and this has the potential to grow into a very large open pit mine. We have already started production there and are currently ramping up operations with the eventual objective of deriving about 60 per cent of our feed from the south pit,” says Horn. The south pit material will be used to feed two of the company’s four production streams, the crushing and milling facilities at Phalaborwa mining company and the largest of the four flotation circuit that separate phosphates from other minerals in the ore.
A side effect of the strategic Pyroxenite Expansion Projects (PEP), being overseen by Horn, will mean the end of foskorite, and by implication copper, production by the end of this year. “We don’t own any foskorite resources any more—there will be no copper revenues in the financial year 2010/11 and we have run down our foskoritic rock reserves and successfully changed over to pyroxenitic,” he asserts.
The big positive effect will be to increase the annual production of concentrate from 2.2 million to 2.6 million tonnes without any increase in processing capacity: it will be achieved simply through the higher yield from pyroxenitic feedstock, and this will more than compensate for the loss of the copper revenues, Horn affirms.
The South Pyroxenitic Mine is PEP Phase 1. Phase 2 is a project to remove a significant bottleneck that had arisen in the milling capacity at Phalaborwa. In 1999, a Loesche mill was commissioned with an annual capacity of 4.4 million tonnes. This was a vertical air swept table mill of a type successfully used in the cement industry, but it proved less successful than had been hoped in milling phosphoritic ore, says Horn.
It simply couldn’t feed the flotation capacity that the company has, so in October 2008 aseries ofconventional horizontal wet ball mills were commissioned to make up the shortfall. “We are in the process of installing milling capacity of 250 tonnes per hour,” Horn explains. The EPC contract was awarded to Bateman Engineering. “Theproject involves the design, supply and construction of a tertiary crushing, rod milling, ball milling, classification and flotation feed thickener circuit, fully integrated into the Extension 8 process facility to make use of the surplus flotation capacity the Loesche mill can’t feed.”
Horn is delighted with the progress by the contractor, which has shaved at least six months off the scheduled completion date: it ought to be on-stream by January 2011. That will enable the current year’s output target of 2.6 million tonnes to be increased to 2.85 million in 2011. “After that, we will engage in smaller debottlenecking projects and we think these will increase our overall output of phosphoritic ore concentrate to about three million tonnes per annum in 2012.”
Looking further forward, Horn says that Foskor’s strategy will be to achieve its annual production of diammonium and monoammonium phosphate of 4,000 tonnes. “After looking at further value-added products like purified or defluorinated acid, we may consider entering the retail NPK market, but that’s in the mid to long term,” he concludes.
Horn is one of nine members of the executive membership team led by the CEO and president of Foskor, Alfred Pitse. The political and economic landscape has changed significantly since Pitse took over the helm in June 2003. Despite the cyclical nature of the phosphate and fertiliser industry, Pitse has managed to turn Foskor around from a loss making entity.
In 2005 Foskor broke even after successive losses and in 2008/09 Foskor made record profits when operating profits increased by 149 per cent to R2.7 billion from the previous year. Foskor expected much weaker performance in 2009/10 on the back of the second round effects of the global financial crisis. The appreciating rand hurt export earnings and commodities slumped from its 2008 peak. Under Pitse’s stewardship, firm controls and prudent financial management enabled Foskor to make profits yet again, when at best, management was hoping for break-even due to hardening trade conditions.
Pitse reiterates: “I am exceptionally proud of my management team and the consistent successes they achieve. Mr Horn’s team have executed a R1.2 billion expansion project with military precision, despite the extraordinarily difficult environment we operate in. PEP, to date, is running ahead of schedule and well below budget. Mr Horn’s passion and determination for delivery value is commended and he remains a true leader in the Mining Division and an example to the rest of Foskor.” www.foskor.co.za
