Scaw Metals’ new stake in a Chilean foundry opens the door to one of the world’s biggest growth markets in mining, reports Karen Harverson
Scaw Metals of Germiston, part of Anglo American Industrial Corporation (Amic), has clinched a $12-million deal to buy a 50% stake in a foundry in Chile.
The deal will enable Scaw to supply more than a third of the $80-million market in Chile for grinding media — cast steel heat-treated grinding balls — which are used in the mining industry to mill ore.
”South America’s copper mining industry, in particular, is expected to undergo significant growth by the year 2000 with a number of copper mining projects coming on stream,” says Scaw executive chairman Tony Harris.
Worldwide consumption of refined copper is forecast to grow at 3% a year, with most of the demand coming from the United States, and with two-thirds of that growth being supplied by Chile. By 2000, the annual production of copper from Chile will be in excess of 3,8- million tons a year from its current output of 2,2-million tons a year.
Current capacity of the foundry is around 45 000 tons a year, but Harris hopes to double capacity within the next two to three years at an estimated cost of about $5-million. ”We’re looking at changing some of the processes to improve output with minimal capital expenditure,” says Scaw financial manager Laurence Erasmus.
Scaw’s partner in the venture is Belgium-based Magotteaux International which specialises in the international grinding media market. ”Scaw also manufactures a number of products in South Africa under licence to Magotteaux,” adds Harris.
This week the company announced a 10% increase in turnover to R1,12-billion for the year ended December 1995, with attributable earnings rising 3% to R126-million.
Harris said steel export prices declined in the latter half of 1995 and would continue to decline in 1996.
The company won orders for the export of railway freight car bogies valued at R60- million in 1995, but Harris said he expected this demand would also decline this year.
He added that increased costs of steel scrap and ferro-alloys would continue to place margins under pressure, particularly when Columbus Stainless was in full production.
”However,when our third Direct Reduction Iron plant is commissioned in December, Scaw will have an additional 150 000 ton a year of iron units, alleviating the impact of the expected steel scrap shortage on the company,” he said.