Mulanje Bauxite Project Profile

EXECUTIVE SUMMARY

MET-CHEM Canada Inc., on behalf of MIDCOR, carried out a feasibility study on the techno-economic evaluation of the feasibility of setting up an integrated alumina/aluminium plant based on Mulanje mountain bauxite. The study was undertaken in 1993 through funds from African Development Bank.

The results of the 1993 feasibility study show that:

1. The probable and indicated reserves of bauxite amount to 25.6 million tonnes using a
cut off grade of 30% Al2O3.

2. 580 thousand tonnes of bauxite will be mined per year to produce 200 thousand
tonnes of alumina which in turn will produce 100 thousand tonnes of aluminium through
the use of Bayer process in Alcan P-180 cells.

3. The capital cost estimate for the project is estimated at US$ 820 million.

4. Using all assumptions for the base case , the project will generate an Internal Rate of
    Return, in constant dollars, of 6.2 %, before tax for the smelter and 7.4% for the
    alumina plant alone. The corresponding payback periods are 17 and 15 years
    respectively.

5. The project will provide direct employment opportunity to 1,265 people

6. The project will contribute to Gross Domestic Product (GDP), foreign exchange earnings,
    Balance of Payment (BOP) support and provide a reliable revenue generation base for
    the Government.
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1.0 INTRODUCTION                                                                                                                                 Top of Page

Mulanje mountain bauxite is situated about 70 kilometres east of Blantyre city. On its foot is situated Mulanje Boma (district headquarters). A Tarmac road connects Mulanje Boma to Blantyre and a rail line from Blantyre to Beira passes through Luchenza township about 30 kilometres west of the massif. A 66 Kv electric line is available from Nkula Hydroelectric Power Station. Telecommunication system is very good.

The low lying areas around Mulanje massif experience warm to hot and humid weather with an annual mean temperatures of about 220 C. Annual mean maximum temperatures reach as high as 350 C in November in the Phalombe plain. The coldest month is July when temperatures reach as low as 10.8 0 C at Mulanje Boma.

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2.0 DEPOSIT DESCRIPTION Top of Page

Mulanje bauxite is a residual product which resulted from the weathering of syeno-granitic rocks that form Mulanje massif. Six extensive bauxitic areas have been identified, but the best deposits are found on Lichenya and Linje plateaux.

The bauxite is mainly a trihydrate gibbsite which lies over kaolinite and has free quartz and geothite as the main contaminants. Some of the quartz is semi precious.

A feasibility study conducted by LONRHO showed that the two deposits on Lichenya and Linje amount to 28.8 million tonnes within an average depth of 4.5 metres.

Below is the average analysis of the bauxite:

Al2O3	Free Quartz	Combined Silica	Fe2O3	TiO2	Kaolinite	LIO
43.3	13.3	2.2	14.2	1.8	<5.0	28.8

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3.0 PROJECT DESCRIPTION Top of Page

The bauxite deposit exists in form of lenses which are located on the plateaux at an elevation between 1800 and 2000 metres. The bauxite will be mined through the use of a front end loader and a backhoe hydraulic shovel will load it into articulated trucks.

The bauxite will then be hauled to a loading bay where it will be transported by a ropeway to an alumina plant about 600 metres below.

The proposed mining output has been set at 580 000 tonnes of bauxite (on dry basis) to produce 200 000 of alumina tonnes per year to meet an annual production of 100 000 tonnes of aluminium.

The processing methods will be employed to produce alumina and aluminium. The Bayer process will be used to transform the bauxite into alumina. Before the Bayer process the bauxite will be beneficiated to reduce the quartz content as well as reduce the quartz size to an undersized product below a 65 mesh size. The second process will be alumina smelting using an aluminium smelter with a capacity of producing 100 000 tonnes of aluminium sows per annum based on the Alcan P-180 cell. The aluminium smelting will depend on the availability power from Cabora Bassa which will be in the region of 15.3 kWh per kg of aluminium produced. The present power supply in Malawi cannot meet this demand.

The main waste from the bauxite processing will be the tailings from beneficiation plant and the red mud from the Bayer process. The red mud will be washed in high capacity wash thickeners to remove chemicals derived from the Bayer process. The red mud and the tailings will then be pumped to a mud disposal area.

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4.0 LABOUR AND INFRASTRUCTURE Top of Page

The proposed labour for Mulanje bauxite is divided into mine and ropeway, alumina plant and alumina smelter as shown in the table below:

DEPARTMENT	STAFF	HOURLY	CONTRACT	TOTAL
Mine and Ropeway	14	77		91
Alumina plant	236	326	143	705
Smelter	169	300		46
Total	419	703	143	1265

The above table includes 26 expatriates in the alumina plant and 29 in the smelter. They are expected to be in Malawi for a period of up to 4 years.

The plants and residential areas will be supplied with water from a dam in the Likabula river.

There is enough electricity to supply the alumina plant, but for the smelter more electricity will have to be sourced elsewhere. Suggestions have been made to import electricity from Cabora Bassa through Electricity Supply Commission of Malawi (ESCOM).

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5.0 PROJECT SCHEDULE Top of Page

The project schedule indicates a a project length of 41 months after the approval process. The approval process includes finalization of ownership and financing arrangements and granting of licences by regulatory bodies. In some cases this can take up to six months.

Engineering design and detailed drawings will be produced within 24 months.

Procurement of major equipment will be done in the early stages of the engineering phase.

The construction period will take 11 million manhours using an average workforce of 1100 men and basing on a 60 hour work week.

There will be a 24 month training programme for key plant personnel prior to production. The technology suppliers will conduct this course in order to cover all aspects operations in the alumina plant and smelter.

The commissioning period will be approximately 4 months. Trial production runs will be effected by the 40th month.

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6.0 MARKET Top of Page

If the Mulanje bauxite project starts with alumina production, then its market will either be ALUSAF Smelter at Richards Bay in South Africa or the MOZAL Smelter in Mozambique.

The world aluminium consumption has been projected to grow at a rate of 3 % in the 1994/95 period and grow to a stable growth of 2 % per annum afterwards. Mulanje aluminium will find its way to the world market through the London Metal Exchange (LME).

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7.0 COSTS AND REVENUE Top of Page

The capital cost estimate for the whole integrated project to produce 100,000 tonnes of aluminium is US$ 820 million. If options for construction of a rail extension, power line and port are considered, a total addition of US$ 50 million will be required. Full capacity operation in the fifth year will put operating costs of alumina and aluminium at US$122.03 per tonne and US$ 1003.49 per tonne respectively.

The following tables summarize the capital costs required to establish a bauxite industry in Malawi:

DIRECT AND INDIRECT CAPITAL COSTS

ITEM	Local	Import	Install	Freight	Total
Mine	523,524	17,796,540	3,431896	1,779,654	25,531,614
Alumina plant	23,605,029	105,262,384	70,092,908	6,499,864	205,460,185
Smelter	56,798,736	327,204,081	182,443,260	24,484,008	590,932,085
TOTAL	80,927,289	450,263,005	255,968,064	32,765,526	819,923,884

OPTIONS

Rail extension	10,000,000	-	inclusive		10,000,000
Power line	28,700,000	-	inclusive		28,700,000
Port	153,920	7,200,000	3,151,680	720,000	11,225,600
TOTAL	38,853,920	7,200,000	3,151,680	720,000	49,925,600

Financial analysis was made with the purpose of evaluating the financial viability of the whole project. COMFAR software model and MET-CHEM's software model were used to analyze the project for a period of 23 years (including 3 years of construction). On the basis of these projections it was found out that the internal rate of return before and after taxes was 7.38 % and 5.67 % respectively for the alumina production and 6.16 % and 4.35 % respectively for the smelter. The payback period established before and after taxes are estimated at 15.5 years and 17.4 years for alumina production and 17 years before tax and 19 years after tax for aluminium. Under all estimated scenarios the internal rate of return on equity is positive and the project will generate enough funds to cover operating expenses and debt servicing.

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8.0 ENVIRONMENTAL ASPECTS Top of Page

Environmental considerations have been included right from mining to smelting stage.

Within the mine itself, there will be no blasting as the ore is soft and friable. There will be no mining benches as the average thickness of the bauxite is 4 to 5 metres. The top soil (0.2 m) will be scraped and conserved for later mine rehabilitation in form of reforestation and replanting grass.

Mulanje mountain is a sensitive area, therefore it has been decided that the alumina plant and smelter will be located on the plain at Mangani village. These processing plants have the potential to pollute air and water. Air quality will be affected by dust emission from excavation, loading and hauling activities. Roads will be sprayed with water to avoid airborne dust. Pot grass emissions will be reduced by 99 % using dry scrubbing systems in the smelter chimneys. Dust collection systems and ventilation systems will be installed in the plants.

Paved chutes and sediment traps will be used to avoid water pollution from the mine. Original Vegetation cover will be used, wherever possible to control suspended solids.

Flora and fauna will be protected as much as possible. The mining area is covered by grass and some bushes. This will reduce loss of flora. Occasional tree thickets found in the mining area will be kept intact wherever possible. Construction of the aerial ropeway from the mountain to the foot of the mountain and a railway from Luchenza to the plant site is expected to cause

no impact on the flora. Movement of fauna on the mountain will be less affected through avoiding the use of high flood lights avoiding the use of explosives during mining and through the use of the ropeway instead of constructing long distant roads.

An environmental specialist will control an on site environmental surveillance and monitoring team.

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9.0 EXISTING OWNERSHIP Top of Page

The development of Mulanje mountain bauxite is being promoted by this Malawi Government. The Government is looking for a strategic partner and finance for the project up to alumina production for sale to MOZAL Smelter.

Contact
     The Director of Mines
      P. O. Box 251
      Lilongwe
      Malawi

     TEL. (265) 754 777 FAX No. (265) 754 793
     E-mail: mines@malawi.net

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10.0 INVESTMENT AND TECHNICAL SUPPORT REQUIREMENT Top of Page

The development of Mulanje mountain bauxite deposit depends mainly on major contribution by Multilateral companies through joint venture agreement with Malawi Government appointed parastal.. The first four years of operation will require the provision of management and technical expertise in the field of aluminium industry. Training of local staff is expected to take place in alumina and aluminium smelters outside Malawi by the technology supplier at his own aluminium facilities.

A total of US$300 million is required to launch the project to alumina production. This includes mining, bauxite processing and optional infrastructure provision.

11.0 AVAILABLE REPORTS Top of Page

1 Anglo American Corporation. 1956. Reports on Mulanje Bauxite. Unpub. Rep. Geol.
Surv. Malawi,T238.

2 Aitken, W. G. 1964. Notes on the Mulanje bauxite deposits. Unpub. Rep. Geol. Surv.
   Malawi,T238.
3 Austroplan, 1990. Integrated Exploitation and Processing of Mulanje/Manica Bauxite
   and Establishment of Alumina/Aluminium industry in the SADC Region.
4 British Aluminium Company, 1957. Malawi Bauxite, Alumina and Aluminium. Unpub. Rep.
   Geol. Surv. Malawi, T239.
5 Garson, M.S. 1969. The Geology of the Mulanje area.Bull. Geol. Surv. Malawi, No. 21.
6 LONRHO (MALAWI), 1969. Mount mulanje bauxite Project:Feasibility study, Unpub. Rep.
Geol. Surv. Malawi, T659.
7 LONRHO (Malawi), 1973. Mount Mulanje Bauxite Project:Feasibility Study, Phase II.
Unpub. Rep. Geol.Surv. Malawi, No.659.
8 MET-CHEM, Canada Inc. 1994. Feasibility study for Mulanje Mountain Bauxite in Malawi.
   MIDCOR, Malawi.

Content obtained from Geological Society of Malawi