Nyanza Light Metals Minimag

N Y A N Z A L I G H T M E TA L S

NYANZA LIGHT METALS

US$350 Million Titanium Project

Paints Perfect Picture in KZN PRODUCTION: Karl Pietersen

At the Richards Bay Industrial Development Zone, a major development is slowly growing out of the ground. A brand new, US$350 million, state-of-the-art titanium dioxide pigment manufacturing facility will create new jobs alongside export opportunities for South Africa.

To date, the Nyanza story is one of success. CEO Donovan Chimhandamba tells Enterprise Africa more about this ambitious and innovative idea.

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INDUSTRY FOCUS: MANUFACTURING

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A strong, enduring, and admired titanium beneficiation business is emerging from the ground in KwaZulu-Natal at the Richards Bay Industrial Development Zone (RBIDZ). The product of a decade of hard work, detailed planning, research and development, and continued positive thinking, breaking ground on this important project is a considerable milestone for the titanium mineral beneficiation industry and for the wider titanium value addition and manufacturing space in South Africa.

Across the country, conventional ilmenite ores, rutile slags and waste titanium slags are commonplace.

Waste slags, often viewed as necessary by-products from steel making processes, are often overlooked as an opportunity. But, these seemingly useless waste products can be put to good use, specifically in the making of titanium dioxide (TiO₂) pigments – the key ingredient in manufacturing of industrial coatings, paints, plastics, cosmetics, inks, dyes and a whole range of other products.

// LET’S SAY ONE OF THE BIG AUTOMAKERS HAS A NEW MODEL COMING OUT; THEY WANT A NEW PAINT THAT SHINES IN A CERTAIN WAY. THAT ALL STARTS WITH US AND IS DOWN TO A PARTICULAR PHYSICAL PROPERTY THAT IS IMPARTED

BY OUR TITANIUM PIGMENT // 4 / www.enterprise-africa.net

However, the process is far from easy, and to create high value and useful titanium products, a dedicated chemical and mineral processing facility is required to process the conventional ilmenite ores, rutile slags and waste titanium slags. This is the vision of Nyanza Light Metals.

Nyanza – a Shona (Zimbabwean) and Swahili word referring to a body of water like the sea, ocean, lake or a river – has been used as the name of the business to signify the major opportunities that come in the industry. Donovan Chimhandamba, Nyanza’s Chief Executive Officer, tells Enterprise Africa that the company is underway with the first phase of its construction program that will see a semi-production plant, engineering workshops, offices and advanced laboratory being built, all housed under what is called a Technical Services Centre and commissioned in the last quarter of 2021. The Technical Services Center will primarily be used to develop Nyanza’s products and brands jointly with the customers development center. In the second half of 2022, Nyanza will begin the second phase of its construction program which will see the full-scale manufacturing plant, capable of producing 80,000 tons of TiO₂ pigment annually built.

“We have gone through 10 years of feasibility studies,” he smiles. “We started this project from scratch in April 2011 and those studies were there to sift through the various options we could consider to get into the titanium related businesses, considering how minerally endowed with titanium mineral resources South Africa is.”

Titanium dioxide is one of the most common elements present in the earth’s crust. Found in beach sands, titanium and titanium economic minerals are heavily mined in South Africa – the world’s second largest producer of the mineral behind only Australia. Combined, the two countries produce more than 50% of titanium mineral concentrates globally.

// WE ARE MOVING AWAY FROM THE THEORETICAL AND CONCEPT DESIGNS AND INTO THE VERY FINE DETAILS FOR EXACT PRODUCTS // 10 YEARS IN THE MAKING Initially, Nyanza cultivated a partnership with Evraz Highveld Steel, formerly owned by Roman Abramovich. Waste slag from the company contained 28% titanium.

From here, Nyanza expanded its scope to look at titanium resources from other mines in South Africa, including Rio Tinto’s Richards Bay Minerals and various ilmenite mines along the KZN coast.

“At the end of the pre-feasibility study, we realised we can build a mineral processing company focussed on titanium dioxide beneficiation, producing titanium dioxide pigment.

There are also some by-products that are widely used in the chemicals industry that we will produce such aluminium sulphate, iron sulphate and gypsum,” says Chimhandamba.

This realisation was key for the company’s management team.

Previously funding the business as a concept, the confirmation that the raw material was available at scale solidified confidence.

“When we started the company, it was Arkein Capital Partners (Arkein), a private equity fund management company we owned initially with Anglo American’s Sishen Iron Ore Community Development Trust.

We were using whatever fees we were making in that business to fund the feasibility studies,” recalls Chimhandamba. “We partnered with Evraz Highveld Steel and Vanadium, and they owned the resource that we

. . .

Grinaker-LTA | T: +27 11 923 5000 | SOUTH AFRICA

INDUSTRY FOCUS: MANUFACTURING

were targeting for use in the project.

They took 20% in the company and then seeded the resource. In 2015, Evraz went into business rescue and that added to our timeline as we lost almost two years dealing with the business rescue process around the legalities of retaining the raw material in our project while they were trying to dispose of assets to the market and pay off creditors. We eventually came to a settlement and we bought some of the material and their 20% shareholding in Nyanza.

“Subsequent to the Evraz shares buyback, another private equity management company called DBF Capital Partners owned by the founders of BancABC which was later bought by Bob Diamond’s Atlas Mara.

When they sold BancABC, it held assets valued at well over US$1.8 billion. DBF started with 20% and have increased shareholding to 32% of the project while the balance of 68% is still owned by the founders through Arkein. DBF and Arkein are currently the only two shareholders.”

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GROUNDED IN PARTNERSHIP In May 2021, Chimhandamba spoke at the event launching construction of the first phase of the Nyanza Light Metals project. He lauded the shareholders and the regional and national government officials in attendance for supporting the ambitious Nyanza vision, highlighting the opportunity for Africa to become a net exporter of value-added products as opposed to exporting the basic raw materials.

“Phase One of Nyanza’s construction program is well underway, with Grinaker–LTA as the principal contractor, and expected to be complete by the last quarter of 2021. What we are now focused on is making sure Phase-Two happens within the timelines and with the quality of execution we have planned for. We are now around 60% complete with the detailed engineering and associated feasibilities for this Phase Two construction program and expect to start construction in the second quarter of 2022.” Chimhandamba says.

“I think we did a very smart thing by

strategically starting with the customer and product development centre as that will give us an edge to be closer to our customers and raw material suppliers at an earlier stage, and allow all our supply chain counterparties to grow their volumes and quality traded with us in a manageable way while we construct the rest of the chemical complex. We are also proud that we are partnering with leading service providers such as Intertek

// THE PLAYERS ARE AT THE TABLE AND AS WE COMPLETE THE WORK AND TICK OFF REQUIREMENTS ON THE GROUND, WE ARE GETTING TO A POINT WHERE WE CAN ACHIEVE FINANCIAL CLOSE //

NYANZA LIGHT METALS

Group, a FTSE 100 company listed on the London Stock Exchange and one of the world’s leading quality control companies that will manage all our laboratories, quality control and quality assurance,” Chimhandamba adds.

Identifying and acquiring customers in this market is not straightforward. Existing supply chains have been in place for many years and both quality and price are wellunderstood. This is the reason behind installing the Technical Services Centre first; so that potential clients can come and see the processes, test the material, and influence any quality parameter that they might need considering that paints and coatings of the future might have different quality and performance parameters in the future.

“We are around halfway through construction of the first phase,” confirms Chimhandamba. “The building should be complete by November 2021 and then we have another three months to install and commission the equipment which is in containers across South Africa. From

there, we will start production-runs out of the Technical Services Centre and that will be ongoing for the life of the company as we develop new products and customers. For example, if a car manufacturer wishes to launch a new car with a unique paint colour, Nyanza’s Technical Services Centre becomes instrumental in developing the new paint formulation that will deliver the colour properties that the new car maker wishes to deliver. This is the same in building paints and other industrial coatings formulations.”

The advantages of being located in the RBIDZ are very impressive. In Richards Bay, home to the Transnet-run Richards Bay Port and Richards Bay Coal Terminal, the IDZ positions tenants perfectly to take advantage of rail connections and export opportunities.

Backed by Arkein Capital Partners and DBF Capital Partners, the project is also being funded and supported through incentives from the South African government through the Department of Trade Industry and Competition as well as several other

government stakeholders. A job creator in both the short and long term, and a demonstrator of vision becoming reality, the ongoing and long-lasting Nyanza project is important for the country. Nyanza will open up South Africa to the possibilities of manufacturing other downstream but high value derivative titanium products such as titanium carbide and titanium nano powders.

“In 10-12 months, we will be complete with the detailed engineering work we are doing for Phase Two. After that, we should be in a position to go to market with tenders seeking for engineering and construction companies to supply various equipment and services. The construction period for phase two will likely be 24-30 months. For the next two and a half years, the RBIDZ Nyanza site will be a massive construction site as we build the only titanium mineral beneficiation and chemical complex in Africa,” Chimhandamba confirms.

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PERFORMANCE MINING REAGENTS Frusina is a supplier of speciality and commodity mining and mineral processing chemicals. These chemicals are backed by a highly experienced team of Chemical and Metallurgical Engineers who fully assist our customers in the optimal use of the products we supply.

www.frusinaholdings.com

FLOTATION REAGENTS The Frusina range includes flotation aids for non-sulfidic minerals as well as frothers and modifiers for numerous flotation application. Beyond the standard portfolio, the Frusina team develops tailor made collector and/or frother solutions in collaboration with customers and supports test works in laboratories, pilot plants and industrial operations.

Collectors Xanthates | Dithiophospates | Thionocarbamates Formates/Esters | Frothers | Depressants, Dispersants and Activators

FLOCCULANTS AND FILTER AIDS Frusina supplies a wide range of flocculants and coagulants to the mining and water treatment industries.

Polyacrylamides | Coagulants (monomer DADMAC, poly DADMAC) Dispesants ( homopolymer & copolymers) | Binding agents

MISCELLANEOUS CHEMICALS Ammonium chloride | Caustic soda flake and lye | Cobalt sulphate | Sodium Cyanide Hydrochloric acids | Sulphuric acids | Silver nitrate | Copper sulphate | Lead nitrate Sodium Hydrogen Sulphate | Ferric Sulphates | Tetrabromoethate | SMBS | Elemental Sulphur MgO | Ferrous Sulphate | NaHS | XS,IX resins | Smoothing agents

GRINDING MEDIA Frusina can supply a wide range of both cast and forged steel balls of all sizes for the communition plants in the mining industry. The General size range is 30mm-100mm diameter.

LABORATORY EQUIPMENT Frusina can supply all metallurgical laboratory equipment including; Laboratory size flotation machines | Laboratory rod and ball mills Crushers | Pulverizers | Pressure filters | Driers

MINE SUPPORT Steel cable safety nets | Nylon safety nets | Mining equipment | Rebar steel | Mild steel nuts Steel energy management systems | Resin anchored rock bolts | Shepherd’s crooks | Tendon straps Mechanical anchors | Mechanical shell end anchored bolts | MineCrete S3 | Pillar wrapping

SALES, SERVICE, LOGISTICS Whatever the customer’s needs are and through our wide network and highly experienced technical, research and development team we can satisfy their needs. Additionally, via our vendor management service program reagent plant engineering and localinventory stores we can establish ourselves as a full-service provider of reagents.

• • • • • • • • • • • • •

Address existing technical problems with customized, optimized blends, unique flowsheets/simulation tools Provide high level of technical support and routine testing analysis Monitoring inventories Efficient delivery services On and of-site warehousing Reagent dosing equipment engineering/maintenance On site reagent preparation Contracted chemical handling and management and workforce Performance testing and reporting Regent suite development and improvement Quarterly cost/price control and governance Electronic single invoice billing SHEQ training of customer staff on a need basis

www.frusinaholdings.com

INDUSTRY FOCUS: MANUFACTURING

Continued from page 19

FINANCIALLY STRONG On completion, the Nyanza Light Metals titanium dioxide pigment manufacturing facility will represent a US$350 million investment of confidence into South Africa. But, as always, investors are looking for more than a vote of confidence. Chimhandamba and the team of Directors and executive management (William Mathamela, Beki Moyo, Francis Dzanya, Doug Munatsi, Rob Mhishi and Ian Cameron) have displayed exceptional relationship building and project financing skills, and have been beacons for FDI into South Africa, already attracting vast institutional inflows to support the project.

“As we get towards the end of the first phase, we are starting to attract multilateral finance institutions. We have just onboarded Afreximbank, the Cairo-based institution which has availed US$2 million towards completion of the next 10-months of work,” says Chimhandamba.

“Importantly, we have also signed on Afreximbank as the Mandated Lead Arranger and coordinating bank to arrange the US$350 million to fund the

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project and Afreximbank has issued a term sheet for this with a minimum holding position of up to US$100 million, syndicating the balance with other global Investment and South African finance institutions.

“We are also busy speaking to other multilateral finance institutions on from the continent. The players are at the table and as we complete the work and tick off requirements on the ground, we are getting to a point where we can achieve financial close for the second phase construction program. It is now shorter to swim to the finish line than to turn back from where we came,” he adds.

Support from the government has been strong. At the launch event in May, the temporary structure use to house attendees was packed with regional, provincial and state officials.

Chimhandamba spoke of his excitement to continue working alongside the various departments as his dream comes to fruition. Financially, support issued by government has been transformational.

The South African government through the Department of Trade Industry and Competition has demonstrated its seriousness towards supporting mineral beneficiation projects and Nyanza is taking the lead in showcasing this strategic intent.

“In terms of funding, we got a lot of support because we are locating the project in a Special Economic Zone – Richards Bay Industrial Development Zone. When you locate here, the government helps with incentives such as contributions to feasibility studies, income tax benefits, and accelerated depreciation of assets.

We have significant support from the South African government through the Department of Trade, Industry and Competition, where they have physically provided capital and incentives.”

Ravi Pillay - MEC for The Department of Economic Development, Tourism and Environmental Affairs stated his excitement about the project. “More than 1200 jobs are to be created during construction and more than 550

NYANZA LIGHT METALS

permanent jobs during operation. In terms of raw materials, the plant will use 320,000 tpa of sulphuric acid, 36,000 tpa of ammonium sulphate, 380,000 tpa of lime and 250,000 tpa of feed material.

Most of the raw material would require railway infrastructure closer to the site and sulphuric acid supplied. 60% of the final annual capacity will be exported to African and international markets.

“In terms of sectors of our economy - manufacturing, agro-processing, oceans economy, oil and gas, transport and logistics and several other identified sectors remain a major focus of RIBDZ. These sectors have not only proven to be relatively labour-absorbent, but also have the potential to be expanded to strategically position KwaZulu-Natal as a lead investment destination and hence contribute to achieving the vision of KZN becoming a trade gateway to Africa and the world.”

The project has already agreed tax incentives of R900 million in non-taxable revenue and R10 million in training allowances, and estimates suggest that exporting the value-added product will bring in more than $90 million annually.

FINAL STEPS Like most projects with a construction element, Covid-19 has been a factor to navigate for Donovan Chimhandamba and team. A delay more than a dead end is how the CEO views the issue, citing only lost time as the real impediment.

“We were not as badly effected as others as we are not yet in operation and we don’t have the major overheads to pay while there is no business,” he admits.

“We lost almost a year on the Technical Services Centre construction program as we were under hard lockdown and we couldn’t go out to the market on time to find and appoint the principal construction contractor. However, we used the time wisely to focus on our bankable feasibility studies with guys working from home and with that we are happy to have improved on our implementation strategy.

“Nyanza has been 10 years in the

making. We started it in April 2011 with Roman Abramovich’s Evraz Highveld Steel and Vanadium as an idea ‘at the back of a match box,’ driven by our ambitious and youthful raw imaginations and desires to be leading Africa’s industrialisation. Built from a mere concept, through feasibility studies, to construction, we have now entered another exciting phase of our journey as we convert our ideas and vision into brick and mortar.

“Our legacy is to usher in a 21st century mineral beneficiation and chemicals manufacturing company that will outlive generations to come,” he adds. “We are building a company that combines modern manufacturing technologies, innovative investment banking instruments, 4IR, use of sustainable resources for water and energy, higher ESG capital allocation

to support our climate goals and most importantly integrating the communities we operate in into our value chain.

“The men and women behind these efforts at Nyanza simply can’t hide the excitement and as part of the team, I can confirm the energy and excitement at this moment considering how Covid-19 has impacted our lives.

“Nyanza, an ocean of possibilities, represents an opportunity for South Africa to demonstrate that we as Africans can transform the continent from just being an exporter of low-value primary raw materials to becoming an exporter of value-added products,” Chimhandamba concludes.

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July 2021

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US$350 Million Titanium Project Paints Perfect Picture in KZN Exclusive interview with Nyanza Light Metals CEO Donovan Chimhandamba

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