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Engineering News editor Terence Creamer discusses ArcelorMittal South Africa's (AMSA's) confirmation that it will wind down of its longs business after protracted talks with government, including on trade policy changes.

Grindrod will roll out an R8-billion multiyear programme to scale up its business in South Africa and Mozambique.

This comes amid a softening in the global commodity cycle, as well as social upheaval in Mozambique following its 2024 national elections.

Announcing Grindrod's financial results for the year ended December 31, CEO Xolani Mbambo said the capital allocation would be split 50:50 between South Africa and Mozambique, in recognition of the need to create balanced exposure to the two countries.

He added that Grindrod had been present at the Maputo port since 2005, and had seen numerous administration changes in Mozambique.

This said, the losses attributed to subsequent intermittent border closures between the countries stood at 4.4-million tons of goods and R200-million in headline earnings for the 2024 financial year.

Mbambo said Grindrod's refined strategy would see the group focus on the areas of bulk cargo, logistics, containers, and rail.

Capital spend included R1.4-billion to buy the remaining 35% stake in the Matola terminal.

The terminal, a private entity in Maputo, operated a dry bulk terminal with yearly export capacity exceeding seven-million tons. It specialised in commodities such as magnetite and coal.

The deal should be completed before the end of June.

Following this, the plan was to spend R1.5-billion to upgrade the terminal over the next three to six years, including the acquisition of a new ship loader, to bump up volumes.

In terms of rail, Grindrod would spend R1.2-billion to participate in rail network opportunities, especially in South Africa, where the network was being opened to private operators.

The time frame for this project was one to three years.

Mbambo said Grindrod was already a train operating company, with a fleet of 41 locomotives, three shunt locomotives and 88 wagons.

The group was busy refurbishing 13 locomotives repatriated from Sierra Leone for potential participation in private-sector concessions in South Africa's rail network.

Grindrod would also seek to acquire new rolling stock to increase its reach in the domestic rail network.

"There is a buzz in the market around rail, and there seems to be some meaningful progress," said Mbambo.

Last year Grindrod was selected by Transnet to build and operate a container terminal in Richards Bay.

In light of his, the company had allocated R500-million to the Richards Bay container facility to upgrade infrastructure and mobile equipment.

The last part of the JSE-listed group's strategy revolved around mergers and acquisitions, with R3.5-billion set aside in a one- to three-year horizon for what would largely involve the acquisition of stakes in other businesses, said Mbambo.

He added that the short-term outlook for Grindrod was "bumpy", owing to the downturn in the commodity cycle, especially in terms of coal, lithium and graphite, but believed that the medium- to long-term prospects were "exciting".

Grindrod on Thursday reported a 2% drop in core revenue for the financial year ended December 31, to R7.4-billion, compared with the previous year.

Core trading profit was down 20%, to R2-billion.

Emerging electricity retail brand Earth & Wire is aiming to achieve financial close on a R40-billion renewables and storage cluster in the Eastern Cape by the third quarter of 2027 and begin supplying green electricity to multiple customers by 2030.

Known as EnergyFields, the facility is planned for construction south of Somerset East in the Blue Crane Route municipality on the western side of the N10, and will blend 700 MW of wind and 800 MW of solar PV with a battery energy storage system (BESS) facility of between 400 MW and 500 MW in size with four hours of storage.

Head of strategic business development Thomas Garner tells Engineering News that all the major permits are in place for the cluster and that the focus currently is on final turbine choices, detailed layouts and micro-siting.

In parallel, Earth & Wire is also navigating the grid-connection process in line with the Interim Grid Capacity Allocation Rules.

"We received the cost estimate letter for the cluster in early January 2025 which indicates that electricity can be evacuated by the end of 2029," Garner says.

Once in commercial operation, EnergyFields will be able to supply about 3.6 TWh yearly from its solar PV and wind generators and between 1.12 and 1.4 TWh yearly from the BESS.

"The BESS will play an important role in ensuring firm supply, even during times when the renewable resource is not available while also acting as additional load for the network," Garner explains.

Earth & Wire is also planning to support grid expansion and strengthen the Eastern Cape region by adding a total of 2.35 GW of connection capacity against the 2 GW required for EnergyFields itself, thus allowing for additional connections.

While 20-year power purchase agreements (PPAs) will be available for those customers seeking long-term arrangements, shorter tenure PPAs of between three and 12 years will also be offered.

Earth & Wire intends to own and operate its generation and storage assets rather than act as a trader and anticipates that licensed traders will be part of its overall customer base.

"We are targeting a blend of large, medium and small businesses, and it is a blend of offtakers on the Eskom distribution network as well as certain municipal networks," Garner explains.

Owing to the fact that wheeling is impacted by the location of the different offtakers on the grid, the company is still working on finalising domestic wheeling agreements.

"But we are also gearing up to play in the South African Wholesale Energy Market, as well as to deliver electricity to customers in the region utilising existing export licences and the Southern African Power Pool network."

Through EnergyFields, Earth & Wire aims to prove that it can supply predictable firm electricity from a combination of solar, wind and BESS to meet the demand profiles of various customers, including small customers, at affordable and competitive tariffs.

A new World Bank report argues that South Africa can raise growth and employment by pursuing four priorities aimed primarily at stimulating market competition and bolstering the efficiency of public institutions and spending.

Titled 'Driving Inclusive Growth in South Africa', the first priority listed in the report is for the country to improve the efficiency of public spending, while leveraging private resources to enhance economic growth and job creation.

The report proposes the establishment of a centralised gateway for priority capital projects above a certain threshold and also suggests that partnerships with the private sector be considered outside of infrastructure to include the social sectors of education and even health, where government is pursuing a national health insurance model.

Also proposed is a move to hire top managers in public administration based on competencies, under the auspices of what is termed a Head of Public Administration.

The second priority listed relates to the delivery of quality, climate-friendly, and resilient infrastructure services, particularly in the areas of electricity and the railways.

Among other interventions, the bank argues in favour of scaling up private investments in electricity transmission and transferring the operational responsibilities of bulk mineral rail lines to large mining companies, while establishing public-private partnerships for feeder lines.

Thirdly, the report urges South Africa to promote efficiency and equitable urban development and mobility, including by relaxing national building and municipal zoning regulations and introducing financial bonuses for social housing projects in high-density areas close to business nodes.

The bank also proposes improving urban transport through conditional financing to the Passenger Rail Agency of South Africa based on performance, and upgrading privately owned minibus taxis.

The fourth priority listed relates to injecting dynamism in the private sector to create jobs and productivity gains.

Here, the bank sees significant scope for streamlining administrative procedures, simplifying the tax regime and adjusting policies, including "generalising the use of the Equity Equivalence Investment Programs by the Department of Trade and Industry instead of the hard complex conditions associated with Black Economic Empowerment policies".

In addition, the bank argues that the potential of small and innovative firms could be unleashed through venture capital and authorising nonbank institutions to issue mobile money.

Speaking at the launch event in Cape Town, which was attended by Finance Minister Enoch Godongwana and Transport Minister Barbara Creecy, World Bank senior MD Axel van Trotsenburg highlighted the importance of raising South Africa's growth to address its own social problems as well as to catalyse growth in the rest of the region.

He also stressed that the report was the product of intensive dialogue with South Africans from the public and private sectors as well as academia, which had been complemented by inputs from a group of international experts led by Nobel laureate in Economic Sciences, Michael Spence.

World Bank country director for South Africa Satu Kahkonen expressed her desire for the report to generate further discussion on what more could be done to accelerate growth in South Africa, while acknowledging that some of the recommendations were already part of government's reform agenda.

"This is not the end. This is but the beginning of the discussion," she said.

Engineering News editor Terence Creamer discusses the challenges facing the South African metals and engineering sector, as highlighted in a new report by the Steel and Engineering Industries Federation of South Africa; the impact of rising geopolitical tensions; and the uncertainty created by the planned closure of ArcelorMittal South Africa's longs business.

The Steel and Engineering Industries Federation of Southern Africa (Seifsa) is warning that absent a sustained recovery in domestic demand there is a risk that South Africa's persistently weak production, investment and capacity utilisation outcomes could transition from a cyclical to a structural trend.

In his 'State of the Metals and Engineering Sector 2025' presentation, COO Tafadzwa Chibanguza highlighted that following the initial upturn from the Covid shock, production had since failed to recover to levels in line with the sector's long-run average.

Production fell by 1.4% last year and has shrunk by 1.3% on a compound annual growth rate basis since its 2007/8 peak.

Likewise, average capacity utilisation of 75.4% last year was well below the "optimal" level of 85%, with all subsectors recording sub-optimal outcomes.

Chibanguza also stressed that the 6.2% rise in the sector's gross fixed capital formation last year was deceptive, as it was directed overwhelmingly towards sustaining rather than growth capital - an investment trend that had potentially deleterious implications for the long-term sustainability of the sector as a whole, as well as its various subsectors.

The subsectors tracked by Seifsa include basic iron and steel, plastic products, non-ferrous metal products, structural metal products, other fabricated metal products, general and special purpose machinery, household appliances, electrical machinery and other transport equipment.

The 1.4% decline in production in 2024 had been driven primarily by a contraction in downstream activities relating to fabricated metal products, as well as general and special purpose machinery, while the potential closure of ArcelorMittal South Africa's longs business was creating uncertainty for the upstream outlook in 2025.

Chibanguza said the domestic market was insufficient to sustain the sector, which currently exported more than 45% of its production.

However, the rising geopolitical temperature and the threat of trade wars meant that its immediate fortunes would hinge largely on there being a sustained recovery in economic growth, together with an accelerated implementation of economic reform.

The export headwinds could be further strengthened should the US withdraw South Africa's eligibility for the preferential market access granted under the Africa Growth and Opportunity Act and if its products fell victim to the reciprocal tariffs that President Donald Trump had proposed.

Last year, 12% of the South African metals and engineering sector's exports, or R32.9-billion, flowed to the US, while South Africa imported R40.6-billion-worth of American products in the same category, leaving a R7.6-billion trade balance in favour of the US.

However, South Africa's exports to the US are primarily in the form of non-ferrous metal products and basic iron and steel products, both areas that are poised to be subjected to higher tariffs.

Chibanguza also does not see much scope to redirect product to other markets, including China, whose exports to South Africa continue to dramatically outpace imports in both pace and scale.

While South Africa exported R43-billion to China last year, the country imported R231-billion-worth of Chinese metals and engineering products, leaving a negative trade balance of R188-billion.

In Europe, meanwhile, Seifsa was concerned about the sustained competitiveness of South African products in light of the planned phased introduction of the carbon border adjustment mechanism.

Under these circumstances, Chibanguza said it was crucial that the domestic market did most of the "heavy lifting" by reversing both the protracted period of weak demand, as well as the falling metals-intensity of the country's overall GDP.

To do so, it was vital that there was delivery on the infrastructure promises being made, including delivery through public-private partnerships in key areas such as electricity, water and transport.

"The [downward] trends we are observing in the met...

JSE-listed AECI's earnings and profit for the year ended December 31, 2024, decreased year-on-year as the group executed its new strategy and made several concessions to enable this.

The reported results are said to reflect the impact of these strategic enablers which include strategic divestments, transformation investments and one-off impairments.

The group is seeking to double the profitability of its core businesses by 2026 and to secure a global market position of third in mining by 2030. CEO Holger Riemensperger told Engineering News that the results are a testament to successful strategy execution.

Revenue from continuing operations was down 3.8% year-on-year to R33.6-billion, while earnings before interest, taxes, depreciation and amortisation (Ebitda) from continuing operations decreased by 12.7% year-on-year to R3.03-billion.

Profit from continuing operations decreased by 36.8% year-on-year to R1.5-billion and headline earnings a share by 37% to R7.16.

AECI reported a basic loss a share of R2.68, compared with earnings a share of R11.12 in 2023.

Working capital, at 16% of revenue, and gearing, at 31%, are within target ranges.

AECI declared a final cash dividend of R2.19 a share for the period.

The group said steady progress was being made with the roll-out of its strategy.

As part of the strategy, it implemented a new operating mode; rolled out its leadership compact and culture code; signed sale agreements for AECI Animal Health and AECI Much Asphalt; delivered an Ebitda run rate of R800-million for the year and converted R504-million of the run rate into profit and loss.

AECI also advanced its globalisation strategy by leveraging its chemical expertise to further internationalise its business, expand into Peru and significantly enhance its presence in Australia.

Until December 31, 2023, AECI's operating businesses were structured into four key segments: AECI Mining, AECI Water, AECI Agri Health and AECI Chemicals.

In line with its strategy of optimising the portfolio, these have been restructured into AECI Mining, AECI Chemicals, AECI Property Services and Corporate and AECI Managed Businesses.

AECI Mining's operational performance for the year was mainly impacted on by weak market conditions, coupled with inefficient global logistics. Profit from operations fell by 24.8% to R1.6-billion.

AECI Chemicals' performance was impacted on by ongoing challenges in the South African manufacturing and industrial sectors, along with an oversupply of key products that exerted pressure on pricing and demand.

Despite these challenges, the business achieved a significant increase in profit from operations, driven by disciplined cost management and enhanced operational efficiencies, increasing by 30% to R823-million.

For AECI Managed Businesses, progress was made with the divestment strategy, following the signing of sale agreements for AECI Much Asphalt (classified as a discontinued operation) and AECI Animal Health, two of the six targeted divestments. These transactions are expected to close in the first half of the 2025 financial year.

The segment reported an operational loss of R383-million with all businesses, except AECI Schirm, reporting profits.

AECI Property Services and Corporate recorded a loss of R1.3-billion, compared with earnings of R106-million in 2023.

AECI'S focus for this year shifts from the transition phase of its strategy to the execution phase with an emphasis on driving cost savings, preparing for growth and focusing on free cashflow generation.

Riemensperger lauded the delivery of the team despite a challenging 2024. This and next year are also expected to be challenging, however, he is bullish that the company would further progress its divestments and achieve its commitments.

Chairperson Dr Khotso Mokhele has elected to retire as a director of the company at the conclusion of the upcoming AGM of AECI, expected to be held on May 27, following a stint of nine years.

Independent nonexecutive director P...

The G20 Energy Transition Work Group will have its inaugural meeting this week to discuss the energy priorities that South Africa is seeking to place on the international agenda during its G20 presidency.

Electricity and Energy Minister Dr Kgosientsho Ramokgopa has confirmed that the meeting will take place virtually on February 27 and 28 and will be attended by senior officials from all G20 countries, including a senior official from the US Department of Energy.

America, which is due to assume the G20 presidency from South Africa in December, has raised concern over South Africa's overarching G20 theme of 'Solidarity, Equality, Sustainability' and US Secretary of State Marco Rubio did not attend the G20 Foreign Ministers' Meeting in Johannesburg last week.

This despite the fact that the US, Brazil, which held the presidency in 2024, and South Africa are the so-called troika currently leading the G20.

This week's Energy Transition Work Group meeting is the first of four meetings scheduled in the run up to the G20 gathering in Johannesburg in November.

In-person meetings are also meant to take place at various venues in South Africa on April 30 to May 2, July 29 to 31 and September 23 to 26.

The September meeting, which is likely to take place at the Kruger National Park, is also meant to include a day of Ministerial-level meetings.

Ramokgopa reports that South Africa has proposed three energy priorities, including:

energy security and affordable, reliable access;

Just, affordable and inclusive energy transitions; and

African interconnectivity and energy pool.

He acknowledges that there could be disagreements on the priorities, particularly in relation to the so-called just energy transition (JET), which South Africa championed in the run up to the Glasgow COP in 2021, which culminated in the JET Partnership.

To date, some $13.8-billion in pledges have been made in support of South Africa's JET implementation plan, including by the US.

However, President Donald Trump's administration is currently reviewing all foreign aid, which could affect the $1.06-billion currently pledged to support South Africa's transition in the form of concessional loans and grants.

South Africa will, thus, seek to minimise areas of contestation in the interest of ensuring that they do not become an impediment to the eventual signing of a Ministerial Communique that builds on the Brazil declaration.

"We will be seeking to stay away from areas that could polarise the conversation and potentially render our presidency ineffective," Ramokgopa explains.

South Africa has appointed the South African National Energy Development Institute (Sanedi) as the secretariat for the Energy Transition Work Group, with the technical team being coordinated by seasoned Department of Mineral Resources and Energy official Thabang Audat.

Sanedi CEO Dr Titus Mathe reports that the secretariat is currently integrating the lessons and declarations that emerged from Brazil and is also being set up to ensure continuity after the Johannesburg gathering.

Energy and chemicals group Sasol is repurposing its Twistdraai export coal plant as a destoning operation to improve the quality of coal being used in its Secunda gasifiers, in Mpumalanga, where it is also aiming to recover yearly output to a range of between 7.4-million and 7.6-million tons.

Sasol is expecting its South African energy and chemicals cluster, which includes Sasolburg, to produce between 6.8-million and 7-million tons this financial year, having last produced above the 7.4-million-ton level four years ago.

The JSE-listed group produces liquid fuels and chemicals at Secunda using both coal and gas imported from Mozambique as a feedstock.

Sasol says the gas supply plateau from Mozambique will be sustained until its 2028 financial year, after which it would no longer be supplying gas to domestic industrial customers. Supply to Sasol's own facilities, by contrast, was due to continue until 2032.

CEO Simon Baloyi tells Engineering News & Mining Weekly that the 10-million-ton-a-year brownfield destoning project at Twistdraai is already under way at a capital cost of less than R1-billion, having been selected in preference to a greenfield plant that would have cost up to R6-billion.

The export plant is scheduled to shut in May and Sasol is planning to lease rather than sell its Richards Bay Coal Terminal entitlement, while it assesses a separate coal briquetting option that, if implemented, could raise the quality of its fines to an export grade.

The destoning project is expected to be completed before the end of the 2025 calendar year, as it does not entail any changes to the way the Twistdraai plant operates. Instead, the investment relates mostly to auxiliary systems, such as conveyors, that are needed to redirect the destoned coal to Secunda rather than for export.

All of the production from Sasol's Thubelisha mine will be routed to the destoning facility, with the balance to be supplied from other internal operations, such as Bosjesspruit, and potentially purchased from other suppliers, such as the Isibonelo Colliery.

Once blended with other coal sources, Sasol aims to decrease the so-called "sinks" or stone content of the coal feedstock used at Secunda to less than 12%, with the material that will be processed through Twistdraai expected to have only 1% sink material.

In total, Sasol is planning to supply some 35-million tons yearly to Secunda.

Baloyi says that by recovering the quality of its coal feedstock to Secunda, Sasol expects the yield from its gasifiers to improve, while also reducing wear and tear, which has become a major problem as the stone content of the material increased above the historical level of 12%.

He tells Engineering News & Mining Weekly that this wear and tear as a result of the higher quantity of stones in the gasifiers has resulted in far longer maintenance outages of up to 150 days, rather than the 50 days such repairs took previously.

It has also decreased both the yield and the availability of Secunda's 84 gasifiers, where Sasol requires at least 72 to be operational if it is to produce within the yearly range of between 7.4-million and 7.6-million tons.

Baloyi says the destoning project reflects the priority that is currently being given to coal quality over volume.

"For me, quality is the driving factor.

"I mean, in your own car, you're not going to supplement diesel with cooking oil from your kitchen; it just doesn't work nicely in the long term," he mused.

Electricity and Energy Minister Dr Kgosientsho Ramokgopa has given the strongest indication yet that the next edition of the Integrated Resource Plan (IRP) will include a 10-year delay to the shutdown of certain coal-fired power stations, as was flagged as a possible option when the reworked plan was made public in November.

In response to questions posed by members of the Portfolio Committee on Energy and Electricity on February 20, Ramokgopa indicated that the 'IRP 2024' was currently before the National Economic Development and Labour Council, and expressed a desire for these deliberations to be conducted "expeditiously".

The committee was also told that it was still the ministry's intention for the updated IRP to be adopted by Cabinet early this year, whereafter it would be Gazetted as the country's "blueprint" for electricity security of supply.

While indicating that he was unable to pre-empt what was contained in the new edition of the IRP, Ramokgopa indicated that the delayed shutdown took account of a socioeconomic impact assessment, as well as the results of a security-of-supply study.

He said the socioeconomic assessment pointed to there being a major economic fallout for Mpumalanga should the stations be shut in line with the decommissioning schedule included in the prevailing IRP 2019, including the shedding of tens of thousands of direct and indirect jobs.

The supply study reportedly found that the pipeline of mostly variable renewable energy generators needed so as to fully replace the dispatchable coal fleet would not be deployed at the pace required to ensure security of supply.

Ramokgopa did not name the stations that would be extended for 10 years, but the draft IRP 2024 options unveiled in November stated that, should the life of the coal plants be extended from 50 to 60 years, the following stations would continue operating: Kendal, Majuba, Lethabo, Matimba, and Tutuka.

The document showed that, under a 60-year scenario, coal-based electricity production would not fall by 10 GW by the mid-2030s as was currently assumed. Instead, coal capacity would hold steady until 2042, when 15 GW would be retired.

The option for a coal life extension to 60 years was not presented as the reference case, however, and the document confirmed that it would result in higher carbon and particulate emissions.

Eskom is already operating its coal plants under an exemption from minimum emission standards (MES), and has indicated previously that it would need to invest R300-billion to ensure full MES compliance.

Last year, it also received permission to operate five aged power stations that were due for immediate decommissioning under existing MES plant limits until March 31, 2030. The plants included Hendrina, Grootvlei, Arnot, Camden and Kriel.

The decision is currently being legally contested.

However, Ramokgopa told lawmakers that he was confident that a cost-effective technical solution could be found, making specific reference to ammonia co-firing, which has been commercialised in Japan.

He said he visited Japan in December to investigate the solution and had had further engagements with the technology provider at the recent Mining Indaba.

Should the final IRP include the delayed decommissioning option, it would have implications for South Africa's decarbonisation trajectory, which would have to be reflected in its next Nationally Determined Contribution, which is due to be lodged with the United Nations this year.

It could also affect funding flows under the Just Energy Transition Partnership, which has been extended by several developed countries on the basis that it would help South Africa fund its transition away from coal in a way that cushioned coal workers, as well as communities that live in close proximity to the power stations.