Baobab Resources has announced that it is likely to build a facility to produce two million tonnes of low impurity pig iron per year from its reserves in western Mozambiques Tete Province
The UK company focussed on the southeast African country had, earlier this year, released the results of a pre-feasibility study showing that it could produce a million tonnes of pig iron per year. A recent updated report suggests that two million tonnes per annum could be produced for an investment of US$1.98bn.
Ben James, managing director of Baobab Resources, said, “The Tete Project pre-feasibility study results from March showed the compelling economics of a one million tonnes per annum pig iron production scenario. These two million tonnes per annum results go a step further, demonstrating the ability to significantly scale up production at Tete.”
Baobab also predicted that the payback period for this investment would only be three or four years, with the mine having a life of 22 years. The company said that the pig iron can be produced for US$224 per tonne, which would make it one of the lowest cost producers in the world, industry sources said.
In addition, Baobab Resources also expects to be able to produce ferro-vanadium from the deposit using the smelting process.
One of the factors encouraging Baobab to set up a foundry is that the government is offering incentives such as favourable taxation terms for major industrial projects that add value and create job opportunities.