KwaZulu-Natal-based South African Calcium Carbide (SACC) plans to build an 8 MW cogeneration (cogen) plant at a cost of R105-million at its calcium carbide facility in Newc astle.

The decision to invest in a cogen plant comes on the back of increasing electricity prices and constraints in South Africa, as well as growing environmental concerns, SACC GM Claudio Siracusano told journalists on Wednesday.

The production of calcium carbide, used in the welding, cutting and steelmaking industries, is an energy-intensive business. As South Africa's sole producer of this product, SACC uses around 50 MW/h of electricity, or half of Newcastle's power capacity.

The company spends close to R7-million on electricity a month, and Siracusano said that the cogen plant would cut this bill by about 20%.

SACC operations manager Juan-Manual Sabio said that the additional 8 MW capacity would enable the company to operate at full production, or produce about 100 000 t/y of calcium carbide.

He noted that the company had been operating at about 70% capacity because of electricity constraints.

The SACC sourced its funding for the cogen project from the Industrial Development Corporation (IDC) and will pay it off over ten years.

Siracusano noted that the plant had been registered as a Clean Development Mechanism project, which would make it eligible for about 450 000 carbon credits over the pay-back period with revenues going towards repaying the IDC loan.

With the funding now in place, SACC expects delivery of the equipment for the cogen plant from Austria by the end of May next year.

The plant will be up-and-running at the start of October 2012.

Following the completion of the cogen plant, SACC has another green project in the pipeline. It plans to capture quality carbon dioxide and supply South Africa's food and beverage industry with compressed air.

The company indicated that it would again enter discussions with the IDC around funding for the second project.

IDC green industries specialist Raoul Goosen said that the institution was happy to fund projects that assisted high-energy intensive industries to beneficiate products more efficiently.