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SUBJECT: South Africa: Minerals and Energy Newsletter "THE ASSAY" - 
Issue 5, April 2008 
 
This cable is not for Internet distribution. 
 
¶1. (SBU) Introduction:  The purpose of this newsletter, initiated in 
January 2004, is to highlight minerals and energy developments in 
South Africa.  This includes trade and investment as well as supply. 
 South Africa hosts world-class deposits of gold, diamonds, platinum 
group metals, chromium, zinc, titanium, vanadium, iron, manganese, 
antimony, vermiculite, zircon, alumino-silicates, fluorspar and 
phosphate rock, and is a major exporter of steam coal.  South Africa 
is also a leading producer and exporter of ferroalloys of chromium, 
vanadium, and manganese.  The information contained in the 
newsletters is based on public sources and does not reflect the 
views of the United States Government.  End introduction. 
 
-------- 
HOT NEWS 
-------- 
 
------------------------ 
Bad Week for Gold Fields 
------------------------ 
 
¶2. (SBU) The past week has seen 13 miners fatally injured at Gold 
Fields gold mines.  The latest accident occurred on the morning of 
May 1 at the South Deep mine.  Nine workers fell to their deaths 
when the steel rope on the service vehicle lowering them from level 
105 to level 110 broke and they fell 60 meters.  Eight were 
construction company employees subcontracted to the mine; one was a 
mine employee.  The Minister of Minerals and Energy ordered the mine 
closed pending inquiry into the accident.  The Minister expressed 
her sorrow for the victims and their families, and her anger and 
outrage at mine management for an "accident that should never have 
happened" had proper safety precautions and maintenance been 
undertaken.  Gold Fields management maintained that the rope in 
question was inspected the previous day.  They have suspended 
operations to inspect all similar rope systems.  The operation 
should take five or six days. 
 
¶3. (SBU) Two days earlier, four miners were killed in two separate 
mine accidents on Gold Fields mines.  Three died in a 
seismic-related rock fall at the Driefontein mine.  A fourth was 
killed by a fall of rock while drilling blast-holes at the South 
Deep mine.  (Comment.  Every effort is made by miners to secure 
working places, but it is not always possible to predict or prevent 
seismic events and rockfalls.  However, proper inspection, 
maintenance, and attention to safety practices should prevent rope 
breaks and other machinery-related accidents.  End Comment.) 
 
 
---------------------------- 
Eskom Suspends Load-Shedding 
---------------------------- 
 
¶4. (SBU) Eskom has suspended load-shedding indefinitely after 
electricity experts warned that the practice was detrimental to its 
aging infrastructure.  They warned that switching power on and off 
threatened the life of electrical equipment and increased its risk 
of failure.  At least two sub-stations exploded during the past week 
plunging local communities into extended periods without power, 
allegedly because of load-shedding.  Until now, the SAG and Eskom 
have insisted that load-shedding was the best strategy to conserve 
power.  Cape Town also called on Eskom to implement different 
Qpower.  Cape Town also called on Eskom to implement different 
energy-saving methods, arguing that load-shedding was not yielding 
the desired results.  Cape Town technicians asserted that, instead 
of saving the required 10 percent on electricity usage, 
load-shedding was having the opposite effect.  They said businesses 
and residents increased their electricity usage during times of 
electricity availability.  This added to the pressure on the power 
grid and infrastructure.  There are also indications that frequent 
turning on and off of household geysers is causing early failure of 
thermostats. 
 
----------------------------------------- 
Embassies to Visit DRC/Zambian Copperbelt 
----------------------------------------- 
 
PRETORIA 00000972  002 OF 008 
 
 
 
¶5. (SBU) A delegation of Economic and Energy/Minerals Officers and 
Specialist from Embassies in Kinshasa, Lusaka and Pretoria will 
visit copper-cobalt mines in the DRC and Zambia in mid-May.  The 
purpose is to increase mission cooperation in reporting on energy 
and mineral developments in the region and to assist the USGS in the 
compilation of their annual commodity and country reports.  The May 
issue of The ASSAY will include details of the visit. 
 
--------------- 
PRECIOUS METALS 
--------------- 
 
 
--------------------------------------------- ---- 
Fall in Precious Metal Prices - Global Confidence Returning? 
--------------------------------------------- ----- 
 
¶6. (SBU) Platinum tracked gold lower to record a 6 percent fall to 
$1,933 per ounce in the third week of April.  Strikes, power cuts 
and mine safety closures have disrupted South African production, 
leading to fears of a bigger platinum deficit in 2008 than 2007. 
Despite this prices have continued downward.  Recent positive 
first-quarter earnings reports by U.S. companies and positive labor 
market data have fueled forecasts that the Federal Reserve will not 
cut interest rates further.  This has caused the dollar to 
strengthen and platinum and gold prices to weaken.  Global risk 
aversion generally has investors fleeing to the safety of precious 
metals.  However, platinum and palladium (and gold) prices are also 
determined by supply and demand, and operating difficulties in South 
Africa, which accounts for 75 percent of global production, have 
caused both production and price volatility this year. 
 
¶7. (SBU) A commodity research group GFMS reported that South 
Africa's platinum production in 2007 was 5.07 million ounces, a drop 
of 370,000 ounces on 2006 output.  A similar decline is forecast for 
¶2008.  Companies reporting 2008 first quarter production compared to 
the previous quarter include: 
 
-- Anglo Platinum (Angloplats) refined quarterly output down by 24 
percent to 428,600 ounces and an estimated fall of 120,000 to 
150,000 ounces for 2008. 
-- Impala Platinum (Implats) estimated production down by 20,000 
ounces for 2008. 
-- Lonmin (Lonplats) quarterly production down by 17 percent and a 
forecast cut of 10 percent in 2008 production to 775,000 ounces. 
-- Aquarius Platinum quarterly production down 19 percent and 
estimated full year output similar to 2007 at 520,000-530,000 
ounces. 
-- Northam Platinum full year production estimated to be down by 
16.5 percent to 301,500 ounces. 
 
All the above are predicated on there being no further deterioration 
of South Africa's power and safety problems. 
 
----------- 
ENVIRONMENT 
----------- 
 
-------------------------- 
SA Climate Change Strategy 
-------------------------- 
 
¶8. (SBU) Fossil fuel-based industries are under pressure from the 
public, NGOs and governments to mitigate the emission of carbon 
dioxide (CO2).  The major CO2 emitters in South Africa are the 
coal-fired power plants followed by Sasol's coal-to-liquid plant. 
Sasol is the highest single-point emitter of CO2 in the world.  The 
QSasol is the highest single-point emitter of CO2 in the world.  The 
SAG has yet to come to grips with CO2 emissions and the Department 
of Minerals and Energy (DME), the South African National Energy 
Institute (SANERI) and Industry have gotten together to develop a 
strategy to tackle the problem.  South Africa hosted the Carbon 
Sequestration Leadership Forum (CSLF) meeting (chaired by the U.S. 
Department of Energy Secretariat) held in Cape Town, and the Fossil 
Fuel Foundation (FFF) conference held in Johannesburg, both in 
 
PRETORIA 00000972  003 OF 008 
 
 
April.  The purpose was to explore ways to efficiently capture and 
safely store CO2 in suitable underground geological storage 
formations for hundreds of years.  A similar situation faces the 
nuclear industry for the storage of spent nuclear fuels and waste 
products. 
 
¶9. (SBU) Fossil fuels, like coal, oil and gas account for about 80 
percent of global energy usage.  This is likely to remain the 
situation for decades until other bulk and versatile energy 
alternatives become available.  Some authorities opine that oil and 
gas are nearing peak production, but coal is abundant and widely 
distributed geographically.  Coal is likely to remain the energy 
source of choice and affordability for most countries, and 
particularly so for South Africa, which has large reserves of coal 
and very limited resources of oil and gas.  South Africa also has 
large resources of uranium, and nuclear energy is planned to account 
for 50 percent of the new-build power generation over the next 20 
years.  Nevertheless, coal will dominate the South African energy 
scene for the next 30-40 years, and the ability to capture and store 
CO2 emissions is an important issue.  Carbon capture requires 
technology, but storage requires suitable geology.  South Africa has 
initiated the Project Atlas that aims to identify over the next one 
to two years suitable geological formations for CO2 storage.  The 
goal of the global coal industry is to have at least 12 large 
demonstration storage sites in operation by 2020. 
 
------ 
ENERGY 
------ 
 
--------------------------------------------- --- 
Eskom Defends Price Hikes - Capital Budget Soars 
--------------------------------------------- --- 
 
¶10. (SBU) Eskom has justified its request for a 53 percent real 
increase in its electricity tariffs by saying that the current rate 
is too low and consumers should carry the costs of increased fuel 
and coal prices.  There remains considerable opinion that the 
increase will also be used to cover capital costs for new generation 
equipment.  Eskom's budget for capital expenditure for the next five 
years has escalated from an initial $15 billion two years ago to the 
current $44 billion.  Critics question why the company has done such 
a poor job of estimating capital costs since money for the new-build 
projects was in the pipeline as early as 2000.  Eskom's response is 
that fast-tracking projects and the global demand for plant and 
equipment have substantially increased original estimates.  At the 
same time, the National Electricity Regulator (NERSA) has given 
Eskom permission to have "commercially sensitive" information on its 
tariff increase withheld from publication.  NERSA recently estimated 
that Eskom would earn an after-tax profit of over $1.5 billion if it 
achieved a 53 percent increase.  Business Unity South Africa (BUSA) 
wrote to NERSA calling for its accelerated review of Eskom's tariff 
request to be abandoned to give stakeholders sufficient time to 
compile comprehensive responses.  BUSA also called for greater 
transparency from Eskom and government, which has come out in 
Qtransparency from Eskom and government, which has come out in 
support of the price increase. 
 
--------------------------------------------- - 
ANC and SAG Disagree on Energy Price Increases 
--------------------------------------------- - 
 
¶11. (SBU) South Africa's cabinet has said that state power company 
Eskom's request for a significant increase in electricity tariffs 
was understandable but premature.  Cabinet qualified the request as 
a proposal subject to consideration by the regulator and 
stakeholders.  The National Regulator (NERSA) announced that it 
would take three months to respond to Eskom's request.  The 
government has supported the increase, saying it was needed to cover 
sharp increases in fuel costs and to implement Eskom's accelerated 
demand side management program.  It also said that capital for the 
new-build program would be funded by other sources.  However, the 
ruling African National Congress Party spoke out against the 
increase, saying that the price hike would have an adverse effect on 
the daily lives of the poor people as well as on inflation. 
 
 
PRETORIA 00000972  004 OF 008 
 
 
------------------------------- 
The Negative Side of Boom Times 
------------------------------- 
 
¶12. (SBU) South Africa is enjoying a prolonged commodity and 
economic boom.  The upside represents more jobs and greater 
prosperity for many.  However, the downside includes rapidly 
increasing costs and inflation, strained power and skill resources, 
and a substantial delay in delivery of new plant and equipment.  For 
South Africa, this has meant that the inflation target range of 3 
percent to 6 percent has been breached for the past 12 months and is 
likely to remain above 9 percent for the rest of this year.  Basic 
food prices have escalated by nearly 100 percent, gasoline by 55 
percent, and interest rates by some 47 percent over the past two 
years.  It also means that the cost of power plants and equipment 
has doubled and that delivery times have lengthened.  State power 
company Eskom initially estimated that the country's power crunch 
would last for four to five years or until new power capacity was 
installed.  Recent statements by spokesman Andrew Etzinger seem to 
indicate that "crunch-time" has increased to seven years due to 
delayed decisions by Eskom/SAG and slower delivery expectations. 
 
¶13. (SBU) Eskom's power solution for South Africa is to include 50 
percent nuclear (20,000MW) in its new-build program mix.  However, 
the rush to nuclear power, with Asian countries leading the charge, 
means South Africa's order of five or six reactors may be delayed by 
equipment supply constraints.  Reports note that Japan Steel Works 
is the only factory in the world able to manufacture the central 
part of a reactor's containment vessel in a single piece - no joins 
that could be potential pressure weak-points.  The company currently 
makes four such units per year and even if capacity were doubled 
this would still not be enough to meet demand. 
 
---- 
COAL 
---- 
 
----------------------- 
New Coal Fields for Old 
----------------------- 
 
¶14. (SBU) South Africa's coal industry is increasingly looking to 
the Waterberg coalfield in northern-western Limpopo Province for 
future production.  The Waterberg is estimated to contain some 50 
percent of the country's coal resources, but this could be much 
larger considering that the field extends westwards into Botswana 
and may represent the eastward extension of a much bigger field. 
Estimates of Botswana's coal resources range from less than 100 
billion tons to over 200 billion tons.  The Waterberg already hosts 
the 17-million ton per year Grootegeluk coal mine that feeds the 
4,000 MW Matimba power station.  It will also feed the new 4,800 MW 
Madupi plant that is under construction.  Matimba is currently the 
world's biggest dry-cooled plant, but Madupi will take the title 
when completed in about 2015.  Further west, the Canadian company 
CIC Energy is negotiating with the Botswana government and Eskom to 
build the large Mmamabula mine and 4,900 MW power station (in two 
phases of 2,450MW each).  The plant will be located on the 
SA-Botswana border and supply power to South Africa.  Industry 
QSA-Botswana border and supply power to South Africa.  Industry 
research association Coaltech's manager Johann Beukes estimates 
there is the potential for eight power plants on the Waterberg by 
¶2026. 
 
¶15. (SBU) South Africa still has substantial resources of coal in 
the ground in its main producing fields.  It is the responsibility 
of the Department of Minerals and Energy to establish the country's 
reserve base, but they do not have the capacity to do the job.  The 
bigger mining companies have a better knowledge of where the 
reserves are, but for competitive reasons do not divulge this 
information unless forced to do so.  Reserves in the main 
coal-producing region of Mpumulanga are contained in a few large 
blocks, each of sufficient size to host 40 to 50-year life power 
plants or coal-to-liquid (CTL) complexes.  The remaining reserves 
are in smaller blocks amenable to smaller-scale operations, which 
favor black economic empowerment (BEE) companies.  Coaltech's 
chairman Dick Kruger estimates that production in Mpumulanga will 
 
PRETORIA 00000972  005 OF 008 
 
 
peak at about 280 million tons in the next decade and then decline. 
Other analysts believe that production will not decline for decades, 
but that new mining could be constrained by water and environmental 
issues and by conflicts over land use.  South Africa has some 
nineteen identified coalfields of varying size and coal quality. 
 
-------------- 
IRON and STEEL 
-------------- 
 
-------------------------------------- 
SA Seeks to Diversify Steel Production 
-------------------------------------- 
 
¶16. (SBU) The SAG has been in dispute with (virtual) monopoly steel 
producer ArcelorMittal South Africa for a number of years over the 
companies import parity pricing model for domestic steel, which 
inflates local prices.  The SAG wants Arcelor to adopt a 
developmental model that would allow local steel fabricators, 
manufacturers and users to be more competitive in the international 
market.  A further aggravation for government is Arcelor's 
"sweetheart" deal with Kumba Iron Ore that allows it to purchase 6.5 
million tons of iron ore per year on a cost plus 3 percent basis. 
As a consequence of high local demand for steel, the pricing policy, 
and the low price paid for iron ore, Arcelor is making very healthy 
profits on local sales.  At the same time the high steel price is 
negatively affecting heavy steel users.  A number of companies 
recently took Arcelor to the Competition Tribunal and the company 
was fined $100 million last September for "excessive pricing".  Not 
withstanding, Arcelor raised prices on four consecutive occasions 
during 2008. 
 
¶17. (SBU) The SAG plans to make a decision in September on the 
feasibility of helping to build a new steel plant that will provide 
needed competition for Arcelor.  The Minister of Trade and Industry 
has said that the government is considering several initiatives, 
including a plant in Mozambique, to expand the manufacturing sector 
by making steel available at prices below those charged by Arcelor. 
State mining research organization Mintek and the Mozambican 
government are studying the feasibility of constructing a steel mill 
in Maputo.  Enron Corporation originally proposed the mill in 1997, 
using magnetite from the Palabora Copper Mine tailings dump, located 
in South Africa a few kilometers west of the Kruger National Park. 
The plan lapsed because of the demise of Enron and environmental 
concerns regarding the proposed transport route, which was to be 
through the park. 
 
------ 
MINING 
------ 
 
-------------------------------------- 
Energy Crunch Impacts on Mining Output 
-------------------------------------- 
 
 
¶18. (SBU) Statistics South Africa (Stats SA) said in its monthly 
publication that South Africa's total mining output fell by 7.3 
percent year-on-year in February.  Gold production declined by 28.2 
percent and non-gold production by 3.2 percent.  The lower February 
figures followed on January's 10.7 percent decline in mining output. 
 During that month gold production took the biggest knock, falling 
by 16.5 percent, PGMs fell by 15.9 percent, and coal fell by 12.5 
Qby 16.5 percent, PGMs fell by 15.9 percent, and coal fell by 12.5 
percent.  The mining industry was hard hit by the national 
electricity crisis in January and February, and total mining 
production for these two months declined by 5.2 percent, gold 
declined by 11.1 percent and non-gold minerals by 4.1 percent. 
Stats SA attributed the drop to lower production of platinum-group 
metals (PGMs), gold and diamonds.  Total gold output for South 
Africa in 2007 fell by 6.5 percent.  However, due to massive 
commodity price increases Stats SA reported that the value of South 
Africa's mineral sales increased by 13.5 percent in the three months 
ended January 2008.  This was mainly due to higher prices for PGMs, 
coal, manganese ore and iron-ore. 
 
 
PRETORIA 00000972  006 OF 008 
 
 
-------------------------------------------- 
Cynthia Carroll Wins Mining Rights for Anglo 
-------------------------------------------- 
 
¶19. (SBU) From the moment Cynthia Carroll took over the reigns as 
CEO of Anglo American in October 2006, a cyclone seemed to rip 
through the world's third largest mining company.  In its wake it 
took a number of subsidiary company CEO's and senior staff who had 
failed to meet her safety and efficiency standards.  Her biggest 
coup however, was the relationship she quickly established with 
Minister of Minerals and Energy Buyelwa Sonjica, which was evident 
at the 2008 Mining Indaba in Cape Town.  Anglo has not been a 
"favorite son" of the new ANC-dominated regime for a number of 
reasons.  These related to Anglo's dominance and size in the South 
Africa economy and the perception that it helped sustain the 
previous government.  Anglo has faced a number of government-related 
hurdles in converting existing mining and exploration licenses, and 
in obtaining new licenses as prescribed by the Mineral and Petroleum 
Resources Development Act (2002).  Prior to Carroll's arrival, Anglo 
had numerous pending license applications and had on a few occasions 
resorted to the courts to force the Department of Minerals and 
Energy (DME) to process them.  The DME-Anglo relationship could only 
have been described as "frigid". 
 
¶20. (SBU) Then came "Cyclone" Cynthia.  Cynthia Carroll has been 
referred to along some corridors of mining power as 'Cyclone 
Cynthia' because of the gusto with which she tackles tough issues. 
With unprecedented success she has been awarded new-order mineral 
rights for Anglo's South African operations.  The only remaining 
loose ends relate to Anglo Platinum's 50:50 joint ventures (JV) with 
black economically empowered (BEE) mining companies Royal Bafokeng 
Resources and African Rainbow Minerals (ARM).  These apart, Carroll 
has been awarded new mining rights for Anglo's coal, ferrous metals, 
base metals and other platinum projects.  Anglo Platinum now has 
conversion of rights in everything but the above two specific 
transactions, which are being worked on with the joint venture 
partners, and, according to Carroll, completions are imminent. 
 
-------------------------------------------- 
Senior Mining Resignations and Skills Exodus 
-------------------------------------------- 
 
¶21. (SBU) Gold Fields CEO Ian Cockerill became the fourth South 
African mining chief within a year - third in the gold sector - to 
announce his resignation.  His departure follows the resignations of 
Anglo Platinum CEO Ralph Havenstein, Harmony Gold CEO Bernard 
Swanepoel, and AngloGold CEO Bobby Godsell.  Cockerill has since 
been appointed CEO of Anglo American's coal subsidiary, Anglo Coal. 
Gold Fields Chief Financial Officer Nick Holland has held the post 
of for ten years and has been appointed to succeed Cockerill. 
 
¶22. (SBU) Much of the skills exodus of both senior and middle mining 
management has been attributed to government interference, growing 
concerns about the power crisis, political transition, and an 
Qconcerns about the power crisis, political transition, and an 
upsurge in crime.  Mining academics at the Witwatersrand School of 
Mining Engineering are being headhunted by Australian and Canadian 
companies at salaries three times higher than paid locally.  South 
Africa continues to provide a good training ground to meet the 
skills demand of overseas mining companies. 
 
-------- 
DIAMONDS 
-------- 
 
--------------------------- 
Visit to Historic Kimberley 
--------------------------- 
 
¶23. (SBU) The Embassy Minerals/Energy Officer and Resource 
Specialist were hosted by De Beers to see their historic and current 
operations in Kimberley in the Northern Cape on April 3.  De Beers 
no longer has active mines around Kimberley, having sold them to 
Petra Diamonds, but they have a plant to recover diamonds lost to 
the tailings dumps decades ago when technology was rudimentary.  The 
diamond concentrate recovered from dump re-treatment, together with 
 
PRETORIA 00000972  007 OF 008 
 
 
that from their other South African production is processed, sorted 
and classified at the Combined Treatment Plant in the Harry 
Oppenheimer House located in the center of Kimberley City, which is 
run by De Beers' Diamond Trading Company (DTC). 
 
¶24. (SBU) In the past, all diamonds mined by De Beers were sent to 
London to be aggregated with its global production, and a quantity 
equal in value but not the original quantity was returned to South 
African to be cut and polished by local cutters.  This was long a 
sore-point with cutters and government, as they perceived that the 
returned diamonds were not sufficient to grow the industry.  Under 
South Africa's new mineral beneficiation policy, which has also been 
adopted by Botswana and Namibia, the newly established State Diamond 
Trader may request that up to 10 percent of all production be sold 
to it for resale to local cutters, and that 40 percent of the 
remainder be sold into the local diamond industry.  The remainder 
can then be exported in rough without payment of a 5 percent export 
tax.  De Beers pointed out that they have happily abandoned their 
old monopolist ways and are now just a market leader, having settled 
their various anti-trust and class-action suits in the U.S. and the 
E.U. 
 
-------------- 
AFRICAN MINING 
-------------- 
 
--------------------------- 
Flooding at Tanzanite Mines 
--------------------------- 
 
¶25. (SBU) More than 65 miners drowned in Tanzania after floods swept 
through a remote tanzanite gemstone mine near Mount Kilimanjaro in 
late March.  Eight pits were inundated, drowning the miners. 
Torrential seasonal rains have hammered much of East Africa and 
floods have killed a number of people in neighboring Kenya and 
Uganda.  Mining accidents among informal (artisanal) miners are 
relatively common in Tanzania, which is the continent's third 
biggest gold producer after South Africa and Ghana.  Mererani lies 
to the south of Arusha, and is the only place in the world where the 
violet-blue gemstone tanzanite is mined.  Tanzanite was discovered 
in the late 1960s and is still mined in some pits using crude, 
unsafe methods and technology by small-scale operators with little 
capital and training. 
 
¶26. (SBU) Tanzania's government licenses the tanzanite mines and 
most miners work independently and normally use ropes to lower 
themselves into shafts dug by hand.  More than 100 people died in 
1998 when heavy rains flooded the mines, and 39 tanzanite miners 
suffocated to death in 2002 after inhaling carbon monoxide produced 
by a dynamite explosion in the mine shaft.  The government suspended 
mining operations in the area after the latest flooding accident. 
London-listed TanzaniteOne also operates formal tanzanite mines in 
the area and this has caused major disputes with the artisanal 
miners. 
 
------------------------------- 
Potash in the Republic of Congo 
------------------------------- 
 
¶27. (SBU) MagMinerals, a subsidiary of Canada's MagIndustries 
Corporation, is set to put the Republic of Congo (not to be confused 
with The Democratic Republic of Congo or DRC) back on the map as a 
Qwith The Democratic Republic of Congo or DRC) back on the map as a 
potash producer.  The GOC has granted the company a 25-year Mining 
License for its 2,200-square-kilometre Kouilou concession.  The 
planned Kouilou Potash Mine project is located 16 kilometers east of 
the Atlantic port city of Pointe-Noire, and promises to produce 1.2 
million tons per year of potash when ramped up to full production. 
The government will retain a 10 percent free carried interest in the 
mine.  The final feasibility study showed that the first phase of 
mine development would require $723-million for a 600,000 ton per 
year operation to produce granular potash. 
 
¶28. (SBU) MagMinerals plans to build, own, and operate a stand-alone 
potash facility to be situated next to sister company MagMetals' 
brine mining field.  Five commercial scale exploration wells are 
 
PRETORIA 00000972  008 OF 008 
 
 
currently being developed.  The potash facility will be located 
adjacent to the proposed site of the magnesium plant and smelter 
being developed by MagMetals, where annual production of 600,000 
tons of magnesium cathode is envisaged.  The plant is a modular 
design, which would allow additional 580,000 ton per year units to 
be added over time to fully utilize the extensive resource base.  It 
will use proven solution mining technologies to exploit the 
deposits, which resource has been estimated at some 800 billion 
tons.  MagIndustries initially decided to mine magnesium, not 
potash, but potash prices are currently bullish while those for 
magnesium have remained relatively flat under pressure from 
subsidized supplies from China.  The company is also refurbishing 
the small Inga I and Inga II hydroelectric power plants for its own 
use and to sell power locally and regionally. 
 
BOST