South Africa has the potential to secure a larger share of the global manganese market, says Mineral Resources Minister Susan Shabangu.
Although South Africa has 80% of the world’s known high-grade manganese resources, it has managed to wrest only 15% of the global market for manganese ore, an ingredient in steelmaking.
“It’s disappointing as a country to be contributing only 15% to the market when we have such a large resource. This area has such a huge resource and so little mining activity,” Shabangu tells Mining Weekly in a video interview.
Xstrata’s Mike Rossouw says that South Africa’s manganese story is the country’s saddest mining story.
Shabangu was speaking at the opening of the new R1,2-billion Russian-backed black-controlled United Manganese of Kalahari (UMK) manganese operation, in the Northern Cape.
Shabangu said the new operation emphasises the strong potential position of the Kalahari basin, where more manganese mines are due to open.
UMK, which is 51% black-owned and 49% held by Renova, of Russia, has 282-million tons of manganese in resource and 41-million tons in reserve.
It has adopted a sell-as-you- develop strategy, taking advantage of shallow openpittable reserves in a traditionally underground mining area.
Quick access to ore resulted in UMK being able to sell 1,5-million tons of manganese ore last year, the proceeds from which covered some of the capital being expended on mine infrastructure.
UMK chairperson Lazarus Mbethe tells Mining Weekly the company expects to sell 1,8- million tons of manganese this year.
“Renova provided the financial underpinning and the technical know-how,” says Mbethe.
Black economic-empowerment company Majestic Silver Trading and Renova had to raise equity of R510-million, Majestic’s share being R260-million, as the 51% shareholder, and Renova’s R250-million, as the 49% shareholder.
“With that R510-million, we started the mine, first as small-scale miners. While we were developing the mine, we were in the fortunate position of being able to sell manganese, mined from shallow resources, to Transalloys, which Renova owns,” Mbethe tells Mining Weekly.
Renova owns 100% of Transalloys, in Mpumalanga, a ferromanganese alloys producer, and a due diligence is under way into the economic feasibility of consolidating the smelting business and the UMK mining business.
There are possibilities of invest- ing in the expansion of Trans-alloys and also in downstream businesses.
“The difference between the original R510-million equity capital and the R1,2-billion in capital invested has been provided from the sale of the manganese,” Mbethe explains.
Last year, UMK exported one-million tons of manganese to China and Europe.
The company has kicked off with a total employee complement of 800 people, and currently exports to Asia, Europe, India and the Middle East.
The UMK opencast mine is next to Samancor’s Mamatwan mine, which is 60%-owned and managed by BHP Billiton, and 40%-owned by Anglo American.
UMK’s plans to build a 750 000 t/y sinter plant at the mine are at an advanced stage, with funding assistance likely from the State-owned Industrial Development Corpor-ation.
UMK CEO Johan Kriek tells Mining Weekly that the mine is far from complete, and that the philosophy of the company has been to generate a revenue stream immediately to assist with the funding of the mine.
“Long before we had anything built, we commenced with contract mining to expose manganese and we started to export.
“We’re in fact trying to pay all the shareholders’ loans before the mine is completed. The mine has largely been funded by the trade balance,” Kriek points out.
He emphasises that investment in rail infrastructure, in which the company is keen to participate, is crucial to the success of the business.
Besides the traditional Port Elizabeth and the potential Saldanha expansion rail possibili- ties, there are also initiatives to provide rail infrastructure across the Kalahari to Swakopmund, in Namibia.
“There are five initiatives under way, and we are involved in all of them. We are intimately involved with Transnet, looking at the Saldanha, Coega and Port Elizabeth options and I believe that the iron-ore and manganese industries, as a whole, will arrive at an optimal logistics solution within the next year or two,” Kriek tells Mining Weekly.
Renova executive Vladimir Kremer tells Mining Weekly that UMK has a long-term contract to supply manganese to Transalloys and he is in favour of a consolidation of Transalloys and UMK.
Consolidation will open the way for the beneficiation that government is seeking and negotiations are also under way into possible investment in the brownfield expansion of Transalloys.
Kremer says, although the Renova group is looking for manganese opportunities in other parts of the globe, the company regards the Kalahari as its best manganese opportunity.
The Renova group is also looking at more mining possibilities in nonmanganese metals and minerals in South Africa and sub-Saharan Africa, and has established a permanent office in Johannesburg.
It is also keen on becoming involved in energy investments, in general, and alternative energy, in particular, both as a manufacturer of thin-film solar panels and as a developer of a potential 100 MW to 500 MW solar park. It is also studying wind-energy possibilities.
“We are likely to start at the level of 10 MW and then increase the level up to 500 MW,” Kremer says.
Shabangu forecasts that the newcomers will not be stuck in old ruts and she envisages companies becoming involved in generating their own electricity to facilitate beneficiation of metals.
She also has insight into potential for the development of new industries linked to mines like UMK as well as mine rehabilitation being dealt with in a far more sophisticated manner.
She acknowledges that rail and port logistics are essential for export-led growth just as adequate energy infrastructure is essential for beneficiation. UMK has built a railway loop and loadout silo to facilitate vital transportation of mined ore.
“You’ll see new rail infrastructure in line with mine growth in this area and we should not have to rely on the current suppliers of energy only,” she adds.
While government has agreed that up to 30% of energy can be provided by independent private-sector power producers, in the mining space, government envisages a special situation of mining companies generating their own power.
She points out that diversified miners like Xstrata and Exxaro are keen to generate their own power and believes that will facilitate immense mining growth.
“Government is opening space for private participation in rail. There is a role for all players. Government has many responsi-bilities and can’t achieve everything on its own. We are seeing a lot of interest from the private sector, both local and overseas,” she says.
With the inter-Ministerial committee having finalised its recommendations, Cabinet is expected to announce its beneficiation strategy before the end of April.
“When we have that, the market performance of every commodity in South Africa will be scrutinised and given [proper] attention. We have to be proactive and ensure that all our com- modities are properly placed within the global space,” Shabangu adds.
Project developer Kalagadi Manganese, of which steelmaker ArcelorMittal is half owner, is looking to build up to 2,4-million tons of sinter a year, as well as a beneficiation plant at Coega.
The Brian Gilbertson-chaired and JSE-listed Pallinghurst is working towards establishing a small high-grade underground manganese mine in the area and has new-order mining rights for its Tshipi asset.
There are also many other small Kalahari basin explorers.
With steel consumption expected to be 1,3-billion tons in 2010 and nearly double that, 2,5-billion tons a year, in the next 15 to 18 years, some see manganese as being in the position that chrome was several years ago, when stainless steel consumption was forecast to grow strongly on an ongoing basis.
BHP Billiton South Africa chairperson Xolani Mkhwanazi says that South Africa has substantial manganese potential to unlock through the provision of adequate rail infrastructure.
“If we can provide the rail infrastructure, we will be able to increase our global market share considerably,” says Mkhwanazi.