THE National Empowerment Fund (NEF) has reached an agreement with two Russian firms to deploy their technology at a R15bn rare metals project for which the fund is now starting to raise capital, CEO Philisiwe Buthelezi said yesterday.

Russia’s Magnezit Group and Magnesium Metals have agreed to participate in the project and could be an equity partner once it reaches the bankable feasibility phase.

The NEF has a pipeline of 15 projects worth R27bn and aims to raise R10bn in a first tranche of capital that will go towards its top five projects, Ms Buthelezi said.

The projects tie in to the government’s desire to create jobs, outlined in the New Growth Path, and the revised Industrial Policy Action Plan (Ipap2) launched this week.

Trade and Industry Minister Rob Davies said at the launch of Ipap2 the trade and industry and mineral resources departments would work together to ensure value was added to the raw materials SA produced, through beneficiation projects.

The rare metals project will add value to the mineral sands that SA exports. Exxaro Resources is the world’s second-largest source of titanium oxide feedstock.

Exxaro had been approached as a source of material for the project, Ms Buthelezi said, and two years of work had gone into the scheme.

Trevor Arran, the executive GM of Exxaro’s mineral sands and base metal operations, said the company was willing to supply the project with feedstock.

The project could need up to 25000 tons a year of titanium dioxide and 15000 tons of zircon.

"We’ve been talking to them for a while and there is certainly interest on our side to supply them with feedstock. We will not be involved from a funding perspective," Mr Arran said.

The Industrial Development Corporation and a number of private companies have expressed an interest in the project.

"This project brings together most of the countries involved in the Brics (Brazil, Russia, India, China and SA) initiative," Ms Buthelezi said. "We are now talking to the Chinese about making up the shortfall in funding the project."

Talks have been held with the China Development Bank. French investors had indicated an interest in the project during President Jacob Zuma ’s visit to France last month with a delegation of businesses.

The first capital-raising tranche would secure R10bn and the second phase would raise a similar amount. The NEF has set up Rare Metals Industries (RMI), which is an investment by a group of venture capital investors, to establish the R15bn plant to produce pure titanium, zirconium, silicon and magnesium, Ms Buthelezi said.

Magnezit wants to buy the bulk of magnesium coming from the project. The project will yield 5000 tons of titanium, 2000 tons of zirconium, 8000 tons of silicon and 50000 tons of magnesium a year and is forecast to generate annual revenue of more than $2bn.

The project is most likely to be located at the port town of Saldanha, in the Western Cape, but NEF is investigating Richards Bay, Coega and East London.

seccombea@bdfm.co.za

Source : Business Day