Investments Into New Plant Set to Stabilise Foskor

FOSKOR

Investments Into New Plant Set to Stabilise Foskor

Foskor is a proudly South African producer of phosphates and phosphoric acid with international exposure. Thanks to ageing plant and declining global commodity markets, the company has seen difficult times but with big planned investments on the horizon, the future is looking bright…

PRODUCTION: Manelesi Dumasi

// It’s well known that times in mining and commodity markets are difficult right now. The

situation in global markets has changed dramatically in the past few years and this is largely down to a confidence crisis in Chinese financial sectors. The situation in some areas is so bad that even the biggest companies have not been safe. Take Peabody Energy for example, the world’s largest coal miner announced that it had filed for bankruptcy after the commodities price collapse.

In South Africa, a country built on mining, falling prices are already causing trouble, despite the favourable export conditions with the recent depreciation of the Rand. In February, the mining sector recorded the worst figures in three years, contracting by 8.7% year-on-year, a much higher figure than even the pessimists predicted. This contraction has paved the way for new claims that the country could be facing recession.

But even with all the negativity, there are companies that have remained positive and decided to be optimistic and enthusiastic

about the future, and not get caught up in short term problems. A good example is Foskor, the country’s producer of phosphates and phosphoric acid and the only vertically integrated phosphate producer.

The falling commodity price has hurt Foskor but instead of getting stuck in a rut, the company has announced a large-scale investment into its equipment and plant with the aim of revitalising the business and improving reliability, availability and efficiency.

The company holds a strong position in the market, it has built fruitful and long-standing relationships with companies all over the world and with this new investment it is looking to improve its business case from within in the coming years.

One relationship which has been fertile for Foskor over the past 16 years has been with German company Loesche who installed an innovative mill, the VRM Type LM 50.4, back in 2000 at Foskor’s Phalaborwa site.

Foskor’s Senior Manager Project and Strategy, Shivaji Gadhave says that this type of outlay is indicative of the company’s strategy and bold approach to investment.

44 / Issue No.47 / www.enterprise-africa.net

“In 2000, we commissioned that Extension 8 plant. Before that we were using a ball mill or traditional mill. Our team visited the site and tested material before submitting the feasibility report. It was a courageous decision at that time as that type of mill had not been used in the phosphate industry.

“Whenever you try new things there are challenges and we worked hard with Loesche on this. This mill was not designed for the phosphate industry but we’ve seen improvements in performance since using the technology in this mill,” he says.

Foskor will hope that its future investments are as successful as this. The Loesche mill is suitable for hard rock processing, can be fitted with wear resistant products, uses low steel consumption compared to conventional milling and provides a better ore liberation compared to conventional milling.

For the next three to five years, one of the main focus areas for Foskor will be upgrading ageing plant and Gadhave is confident that this will be of huge benefit to the company.

Continues on page 48 >>>

//LOESCHE

16 YEARS OF SUCCESSFUL OPERATION OF A LOESCHE VERTICAL-ROLLER-MILL TYPE LM 50.4 IN A 25 KWH/T BWI HARD ROCK APPLICATION FOSKOR PTY (LTD) IN PHALABORWA

In 1999, Foskor has decided to increase their production capacity to cater for the increase in phosphate demand. During the project design phase, it was decided to install a Loesche Vertical Roller LM 50.4 mill instead of the conventional rod and ball mill technology. Extensive research at the time of the projects has revealed that the mill can be erected 30% cheaper than conventional milling process and a 25% smaller footprint is required compared with a plant of similar capacity. Due to the inherent operating flexibility of the VRM, better grand control can be applied by adjusting the feed rate, bed thickness, hydraulic pressure on the bed, air flow and speed of the classifier.

Comparative grind analysis in pilot plant test between the VRM and the conventional mills were conducted and it was concluded that the VRM provides much better differential milling and mineral liberation resulting in better flotation recovery and concentrate grades.

The Loesche Mill grinds Pyroxenite Phosphate Rock from - 90mm to a flotation feed of 85 weight.-% passing 425µm (P85=425µm). The annual production averages to 505 t/h of the hard-to-grind ore (Bond Work Index: 25 kWh/t). Despite of the abrasive ore to be processed, the Foskor team achieves a plant availability of 94% by executing appropriate preventative maintenance.

In 2010, additional wet milling capacity was added to the plant. The parallel operation of a dry Vertical-Roller-Milling process and a conventional wet Rod and Ball Mill allows the first comparison of these technologies in a hard rock application. A sampling campaign in July 2014 compared the actual grinding and flotation performance between the two circuits and has revealed that the VRM provides:

• Better control over the process and hence consistently better product quality• Higher process flexibility which allows to operate the mill in an on- and of-mode according to the

production targets which is not be possible with the wet milling circuit• Faster adjustment of the process stability and product quality in case of mineralogical changes • Better mineral liberation at reduced ultra-fines production resulting in higher recovery and

concentrate grades in flotation

A recent comparison between the VRM and the Rod / Ball mill revealed that the VRM consumes only 3% of the grinding media steel compared to the Rod / Ball Mill (4.32 g/ton vs 143 g/ton). Besides the benefits in form of lesser iron contamination of the ground ore for the flotation this also leads to 35% cost savings per ton of ore ground.

As part of continuous improvement Loesche and Foskor joined hands and are busy developing a new generation modular air classifier with improved wear resistance and maintenance options which will be installed 2017.

Loesche wants to thank the Foskor team for proving that the Loesche Milling technology is successfully applicable for hard rock applications. Loesche is looking forward to continue the joint improvement of the plant performance between Loesche GmbH and Foskor Ltd..

LOESCHE VRM TYPE LM 50.4– 16 YEARS SUCCESSFUL OPERATIONIN A HARD ROCK APPLICATION AT FOSKOR PTY (LT D)

LOE_AD_Enterprise_Africa.indd 1 28.04.16 14:08

BUSINESS PROFILE


BUSINESS PROFILE

INVESTMENTS & UPGRADES Foskor has a 65 years heritage in South Africa and, as with any company that utilised heavy industrial machinery, the time has come for a significant upgrade to allow Foskor to remain competitive.

“We have some plant that is around 40 years old so we now have the requirement to replace a portion of the plant in the Acid Division in Richards Bay. We have had the funding approved from our shareholder, the IDC, for the acid equipment last year and we have initiated the project.

“What the project is going to do is improve the utilisation of plant, the reliability of the plant and the efficiency of the plant – currently because of the age of the plant, we are struggling with these parameters.

“This investment is between R3-4 billion,” explains Gadhave.

“It will definitely be positive for us in the future and we are quite excited. We are doing everything in house and as we require we are going to source contracts and consultants depending on their expertise and contribution. It’s completely funded by our major shareholder, the IDC.

“There will not be a single partner. Depending on the different part of the plant there are different levels of expertise available in the market, so there will be several partners, several construction consultants and partners who will help us to implement this project for the next three to five years,” he adds.

The company has had success recently following upgrades and benefits from that investment are already showing.

“In December 2014, we replaced

some of the major plant in our mining division. This was a R550 million investment and is currently running successfully and has helped protect our production capacity in the mining division as the old plant was no longer fit to run properly,” says Gadhave.

The R3-4 billion investment is going to act as a catalyst for growth for Foskor as it’s clear that the ageing plant has been the source of many problems for the business.

PRESSURE ON PRICE“There is certainly downward pressure in the market on pricing and currently we are struggling with efficiency issues and availability of plant so the situation is difficult but there are opportunities and soon the situation is going to change and we will make profits,” says Gadhave.


GM_31590DHM_27/03/15_V4

www.discovery.co.za Go to www.discovery.co.za or call us on 0860 000 628 to join the Discovery Health Medical Scheme.

Discovery Health Medical Scheme Registration number 1125

10 Reasons why Discovery Health Medical Scheme is your best choice.

Sophistication - Access to the best cancer treatment.

Technology - Advanced website and apps to give youthe best service experiences.

Life-saving - Advanced support to give your essentialinformation to emergency personnel.

Savings - Discounts on day-to-day medicines, chronicsupport and frames and lenses.

Wellness - Access to a separate world-leading science based wellness programme.

Choice - The widest health plan range in the market.

Prevention - Cover for preventative tests and screenings.

Stability - The highest possible medical scheme credit rating.

No surprises - Full Cover Choice options allow you to avoid out-of-pocket expenses.

Affordability - The most competitive contributions in the market.

SHIVAJI GADHAVEHEAD OF STRATEGY AND PROJECTS

<<< Continues from page 44

FOSKORBUSINESS PROFILE

Economic phases are cyclical and slumps are followed by peaks. If we assume that the falling global commodity prices will eventually stabilise and rise, Foskor will be well positioned to take advantage of new opportunities.

“We have seen a reduction in our market share but the major contributor to that is our old plant as we cannot produce at the level we were producing before. Our quality is still the best in the market, we have good customer relationships so I think that the market is not responsible for our reduction in share, it’s to do with our internal issues surrounding the age of our plant.

“The quality of our rock is among the best in the world. It’s the same with our phosphoric acid – it’s world class. If there is a customer looking for phosphoric acid and our acid is available at the same price, customers will go for our aid as there’s less impurities and our acid is good for niche markets. We have a quality

grow our business there while looking for strategic alliances where possible so that we can penetrate those markets,” says Gadhave.

“We also have strategies to increase our product basket. We want to add value and move into downstream products and we are planning to diversify our business to reduce risk and ensure everything is financially sustainable.

“We are still focussing on our South African market and there are advantages here for us. We have long-term relationships and established logistics so we are well positioned in local and international markets,” he adds.

The business is also focussed on developing its most valuable asset – its people. Foskor was awarded Top Employer status in 2016, an award that has been bestowed on the company many times before, and this accreditation demonstrates that Foskor offers ‘exceptional employee conditions, nurtures and develops talent throughout all levels

advantage and excellent customer relationships,” explains Gadhave.

Commodity pricing has also been effected by unpredictable events that cannot be planned for. Because of the close link between phosphate and farming, events such as droughts are hugely damaging to the supply and demand situation.

“Phosphate is a commodity but you can’t generalise and group with other commodities because it is mainly used in fertiliser so it’s closely related to the farming industry. There are others uses in the food, pharmaceutical and animal feed industries but the main use is in farming. There is currently a drought in South Africa, there’s a drought in parts of India and India is the largest consumer of phosphoric acid and fertiliser so with the drought and with changing government policies there is a downward trend in price of phosphate,” says Gadhave.

“It’s a temporary cycle and we’ve seen it in the past. Things always go

of the organisation and has demonstrated its leadership status in the HR environment, always striving to optimise its employment practices and to develop its employees’.

Gadhave, who joined the company in 2010, is the perfect example of how an employee has been nurtured. “I am a mechanical engineer and a registered and certified project management professional in South Africa. I joined as a project engineer in the mining division and I climbed the ladder and I am now heading up strategy and new business development.

“Foskor offers fantastic career development opportunities and shows confidence in its staff,” he says.

Development of staff forms one of the pillars of Foskor’s strategy – it’s not all about profit. Part of the company’s mission is to ‘earn the respect of stakeholders’.

“We have a mechanism in place where we engage with not only employees but also the local community. Foskor is a company that has the IDC as a majority shareholder and that means that

down and then come back up. We are geared up to survive in this is economic cycle. Currently, there is no crisis for us – we’re not going for a reduction in production or retrenchments so we are surviving and I’m sure the future will be bright.

“Returning to profit is one aim and the other is sustainability. The current plant has completed its useful life so we cannot expect much more from this plant. New plant will mean sustainability and improved efficiency and that improves cost of production,” he adds.

GROWTH & DEVELOPMENT Following the installation of the company’s new plant and the upgrades of machinery, Foskor will be looking to grow in terms of profits and markets served.

“We always think about our country and our continent so one of the initiatives from our side is to contribute to the SADC market and

FOSKOR

+27 11 347 0600 [email protected]

www.foskor.co.za

50 / Issue No.47 / www.enterprise-africa.net www.enterprise-africa.net / Issue No.47 / 51

we are not only driven by profit making but also by community development, empowerment, small business development and economic growth,” says Gadhave.

“We have the internal problem with our old plant as well as the downward pressure from the market on prices and so in the last couple of years, we haven’t made huge profits so it’s difficult to continually offer bonuses.

“We had a temporary problem but now everyone is motivated and everyone is giving their best effort to assist in the turnaround of the company,” he explains.

In the long-term, the investment into new plant is likely to be one of the biggest decisions Foskor has ever made. With the markets the way they are, always unpredictable, the pressure is on this sizeable business to perform well. Fortunately, Foskor’s people are committed and its partnerships and products are solid.

“To remain in the market you must be a profitable business but we do have other objectives and we want to emphasise this as much as possible,” says Gadhave.

This is going to be an interesting few years, and Foskor is certainly worth keeping an eye on

//R3-4 billion investment

Investments Into New Plant Set to Stabilise Foskor

Technology

Transcript of Investments Into New Plant Set to Stabilise Foskor