Government’s opening up of South Africa’s Kalahari manganese fields (KMF) to exploitation has led to the establishment of several new manganese mining projects and the promise of economic freedom and prosperity, should the country commit itself to overcoming its infrastructure challenges, says mineral adviser Venmyn.

“South Africa is a mineral-rich country, so why are we not improving the management of our resources and creating adequate infrastructure, skills, power processes, capital efficiencies and the regulative certainty needed to fully benefit from these resources?” asks Venmyn MD Andy Clay.

South Africa has the largest mineral resource and mineral reserve base of manganese and ranks second, after China, in both the global production and export of manganese ore. The country accounts for 80% of global reserves with a 34% manganese content.

The majority of South Africa’s manganese ore comes from the KMF and most is converted into various manganese alloys at dedicated plants around the world.

South Africa’s significant share of the world’s high-grade manganese reserves far outweighs the Ukraine with 9%, India’s 3% and China’s 2%. The remaining 2% is shared among other countries.

Clay states that South Africa’s manganese fields can contribute to the economy for at least another 100 years.

The official opening, in May, of the new R1.5-billion Northern Cape Manganese-owned Kudumane manganese mining project near Hotazel, in the Northern Cape, marked the fourth new black-controlled manganese mining development in South Africa’s well-endowed Kalahari.

Other black-controlled manganese mining developments in South Africa are Kalagadi Manganese run by black women and United Manganese of the Kalahari that has a 51% black economic-empowerment partner.

Venmyn states that the opening up by government of the KMF, previously controlled by mining duopoly Assmang and Samancor, will alter the industry significantly, as new global producers primarily operating in the KMF are projected to contribute 18% of the global production of manganese ore by 2013.

“Beneficiation of the KMF will create many opportunities for South Africans in terms of economic growth and job creation but certain challenges need to be overcome before South Africa can reach its full export potential,” says Clay.

He states that South Africa has the potential to increase manganese ore exports drastically if its rail infrastructure is improved. It will also be able to increase its beneficiated manganese product exports if South Africa’s ability to power beneficiation plants improves.

Rail Shortage

One of the challenges faced by South Africa’s manganese industry is that the railway networks, which used to transport ore to export destinations or smelters for further processing, are not able to provide the capacity required by the industry, says Clay.

A large portion of the country’s manganese is exported from Port Elizabeth. However, the rail infrastructure is con- gested, owing to a lack of capacity and an increasing number of entrants into the sector.

Mining Weekly reported in February that the announcement of a 16-million- ton-a-year manganese export channel brought certainty about rail capacity in South Africa.

Manganese mining company Tshipi é Ntle CEO Finn Behnken believed that the expanded railway capacity, to be connected to the Port of Ngqura, in the Eastern Cape, could not have happened soon enough for the industry.

President Jacob Zuma said in the beginning of February during his State of the Nation address that five significant geographically focused programmes, aimed at unlocking key mineral resources and exports in South Africa, would be implemented.

These included a new ‘South Eastern node’ in the Eastern Cape, which would embrace the new 16-million-ton-a-year manganese export channel through Ngqura.

“Access to cost-effective and -efficient rail transportation is crucial for South African manganese exporters to become and then remain globally competitive, because the costs associated with the resource industry went up quite significantly in the past five to seven years,” said Zuma.

However, Clay states that government has not responded in a timely manner to the rail and port capacity shortage in South Africa and that the Port of Ngqura has, to date, not been used to its full potential.

Electricity Shortage

“Power is another constraint on the manganese industry,” he adds.

Because of the electricity shortage in South Africa, which became apparent in 2010, miners and smelters faced electricity rationing that limited their production. For new producers, the decision whether to establish a ferromanganese or sili- comanganese smelter is often dependent on whether electricity is available, Clay points out.

In November 2009, State-owned power utility Eskom applied for increases of 35% a year over a three-year multiyear price determination timeframe.

South Africa’s Chamber of Mines (CoM) told the National Energy Regulator of South Africa (Nersa) at its hearings on the proposed electricity tariff hikes in January 2010 that the South African economy could not absorb the large price increase proposed by Eskom and that the outlook for mines higher up on the cost curve would be bleak.

However, in February 2010, Nersa approved a tariff increase of 24.8% from April 2010, and subsequent increases of 25.8% and 25.9% for 2011/12 and 2012/13 respectively.

In March, Nersa announced a revised lower Eskom power tariff increase for the period April 1, 2012 to March 31, 2012, of 16% instead of the previously approved 25.9% increase.

Clay still maintains that as a result of the price and shortage of electricity in South Africa, ferromanganese projects may be put on hold. CoM president Dr Xolani Mkhwanazi noted at the time of Nersa’s March announcement that at 16%, power tariffs were still increasing well ahead of inflation.

“The manganese industry has gone out of its way to raise and develop businesses commercially but if the umbilical cords to power and rail are not available it is impossible for new projects to come on board,” concludes Clay.

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