Existing naturally and grouped within the iron group of elements believed to have been chemically synthesised in large stars prior to the supernova explosion, manganese is the fourth most used metal by tonnage after iron, aluminium and copper
Manganese is the 12th most abundant element in the Earths crust, with the element seeing huge global demand thanks to its many and varied applications in the production of steel and high-capacity batteries.
South Africa is the worlds largest producer of manganese, accounting for 33.5% of global production. Its annual manganese production amounts to 6.2 million tonnes, with a majority of manganese mining concentrated in the Kalahari Desert, which is believed to hold more than 70% of global reserves.
Australian firm South32 has a significant presence in South African manganese operations, with its business consisting of the Metalloys alloy smelter along with the open-cut Mamatwan mine and underground Wessels facility.
Another Australian firm, Jupiter Mines, operates the Tshipi Borwa open-pit mine, which is located on a large and homogenous ore body in the southern portion of the Kalahari manganese field. The mine is designed to produce 2.4 million tonnes per annum (mtpa) of 37% manganese ore grades.
Australia is the worlds second-largest manganese producer, with annual production of about 3 million tonnes. The country, which is believed to have the fourth-largest manganese reserves, produces 15% of the globes manganese ore and has 11% of the worlds economic demonstrated resources of the ore.
Australia has three mines and one tailings re-treatment plant. South32 owns a 60% stake in the Northern Territory manganese mine, which operates via its subsidiary Groote Eylandt Mining Company (GEMCO). The open-cut operation is claimed to be the largest and lowest-cost manganese ore producer in the world.
Another key manganese miner in Australia is Anglo American, which holds a 40% stake in GEMCO. Tasmanian Electro Metallurgical Company (TEMCO) operates the countrys sole manganese ore processing plant at Bell Bay in Tasmania.
With an annual production of 2.9 million tonnes, China is third in the list of top manganese producing countries. A huge manganese ore reserve discovered in the Guizhou province in early 2017 is believed to contain an estimated 203 million tonnes of manganese ore, with a total value predicted to be more than $10bn. The manganese ore resources in China are mainly distributed across Guangxi, Hunan and Guizhou provinces.
The Wafangzi mine, situated in the north of China (Inner Mongolia), is one of the countrys largest manganese reserves, with an estimated 37.7 million tonnes of manganese ore grading 24% manganese metal.
The fourth-largest manganese producer in the world, Gabon has an annual production of about 1.8 million tonnes. Manganese is the countrys second-largest export, accounting for nearly 11% of its global sales.
The countrys manganese ore is associated with the Palaeoproterozoic Francevillian basin. Franceville, Okondja, Akieni, Lastoursville, Ndjole and Mbigou are the main areas where manganese deposits have been explored.
The company offers three types of manganese products: Metallurgical ore, chemical ore, and natural manganese dioxide. Vales Azul mine in Par, which produces 80% of the companys output, and Urucum mine in Mato Grosso do Sul are known for the high manganese content of their ore nearly 40%.
Demand for manganese is regarded by some economists as the most acute predictor of economic growth among all minerals, for manganese is an essential element in steel making and steel (along with iron) is the backbone of modern industrial civilisation. The theory is that when demand for manganese increases, the global economy is heading for an upturn. But last year demonstrated that the relationship between growth and demand for manganese is not so straightforward.
In the second half of 2019 the manganese market appears to have tipped into oversupply. China, which produces about half the worlds steel, imported about 15.7million tons of manganese ore in the first half of 2019, up from 12.3million tons in the corresponding period of the previous year. This drove the manganese ore price to an all-time high in the early part of 2019 but it has subsequently fallen. In December 2019, Toronto-listed Meridian Mining placed its Brazilian manganese operation on care and maintenance, citing depressed world manganese alloy prices  since April due to rising inventories in Chinese ports. The price of manganese concentrates, the company says, declined by 48% over the year.
Low-grade seaborne manganese ore has slumped even further. The price fell from US$6.11 per dry metric ton unit (dmtu) in early 2019 to US$3.3/dmtu at the end of November. While there has subsequently been aslight upswing as Chinese buyers have taken advantage of the low prices, the major manganese market commentator Metal Bulletin, argues that oversupply will remain aheadwind going into 2020.
But these headwinds appear to be of little concern to South African producers who continue to ramp up production and look to open new mines. South Africa has the worlds largest manganese reserves. The Kalahari manganese field is ahighly concentrated deposit. North-east of Kuruman in the Northern Cape, it is only 35km long and 15km wide but contains 77% of the worlds known land-based manganese resources. According to the International Manganese Institute, South Africa mines about one-third of global production. But this figure appears to be out of date and too low.
Some years ago Wits University professor Nic Beukes suggested that South African reserves could fill the gap left by falling Chinese mining production. Recent figures suggest this has happened. In fact, the past year has shown that more manganese than ever is being extracted in South Africa.
In 2007, South Africa mined 6million tons of manganese. In 2012 the total production figure was 8.952million tons. Production then leaped to more than 14.4million tons in 2017, 14.9million in 2018, and it was on target to exceed that figure in 2019.
A key demand driver behind this soaring output is the stricter industrial standards imposed by the Chinese government in 2018. Rebar steel is now required to be stronger, and this means more manganese per ton. Chinas continuing economic growth is critical to future demand for manganese. Although in 2019, its GDP fell to a27-year low (6%), this is still sufficient to drive the South African industry. An equally important factor is that South African manganese deposits are highly concentrated (33% to 52%) while Chinas industry mines grades of less than 20%.
There are three major manganese miners in South Africa: South32, Jupiter Mines and Assmang. South32, listed on the Australian Securities Exchange with secondary listings on the Johannesburg bourse and the London market, owns manganese mines in Australia as well as two big operations on the Kalahari manganese belt.
The open-pit mine in the Groote Eylant archipelago off northern Australia is one of the highest-grade pits in the world but is expected to last only another 10 years or so. South32s South African operations are looking healthy though. The underground Wessels mine has the highest-grade manganese ore (55%) in South Africa. The 50-year-old open-pit Mamatwan mine, west of Kuruman, has the biggest reserves 433million tons.
South32 also operates one of two South African manganese smelters, at Meyerton, south of Johannesburg (Metalloys). The other is Assmangs Cato Ridge operation in KwaZulu-Natal. But the entire South African smelting industry has been hard hit by electricity price increases of 523% since 2006 (with further hikes planned). As aresult, only some 20% of South Africas manganese production is turned to alloy before exporting; the remaining 80% is exported as raw ore. In 2019, it was reported that South32 was reviewing operations.
Assmangs Nchwaning mine consists of three shafts and has the second-largest resource body in the jurisdiction (323.2million tons) after Wessels mine. It is also of notably high grade (42.5%). The company, which is part-owned by billionaire Patrice Motsepe, also owns Gloria mine at Black Rock (site of the original manganese discovery in 1907). In 2018 Assmang announced it was to spend ZAR2.7billion modernising Gloria, an initiative that involved asix-month shutdown.
The intention was to double production to 1million tons per year and is part of the companys ZAR6.9billion allocation to expand production in the Black Rock complex. The temporary closure of Gloria mine was largely made up by selling stockpiled manganese in 2019. Nevertheless Assmangs overall production fell by 8% in 2019.
The third major player in South African manganese space is the Tshipi Borwa open-pit mine, owned by aconsortium (called Tshipi Ntle) consisting of Jupiter Mines (49.9%) and the black-owned local company, Ntsimbintle Mining (51.1%), chaired by Saki Macozoma. Jupiter Mines is listed on the Australian Securities Exchange and numbers among its directors the legendary South African miner Brian Gilbertson, previously CEO of mining giant BHP Billiton. Ntsimbintle also owns 51% of the as-yet unexploited 80million tons Mokala deposit.
Tshipi Borwa is an extremely modern open-pit operation located adjacent to South32s Mamatwan mine. In 2019 it exported 3.51million tons. It claims to be one of the largest and lowest-cost exporters and has acapacity to load ore faster than any other manganese mine in South Africa. The company has invested ZAR2billion in Tshipi Borwa but has been able to pay its investors extraordinarily well offering a dividend of ZAR1.1billion at the end of February 2019.
With South Africas manganese mining sector looking like alicence to print money, it is not surprising that other companies are getting involved. Kalagadi Manganese is in the process of ramping up production at its ZAR9billion manganese mine and sinter plant near Hotazel. Sinter is an intermediate product, of higher content than ore but lower than alloy. The company plans to reach production of 2.4million tons of ore by 2021/22.
Another new producer is the 51% black-owned company United Manganese of Kalahari (UMK). It produced 3million tons of ore in 2018 and is currently busy with aZAR280million expansion plan. This is expected to lift production to 3.6million tons by 2021. The privately owned firm is rather obscure but it has said it is considering plans to list, which will shed more light on its numbers.
With South Africa producing such high volumes and exporting mostly unprocessed ore, transport is inevitably an issue. The harbour at Coega, near Port Elizabeth, has adedicated manganese terminal with ahandling capacity of 12million tons. However, Transnet moved 14.4million tons of manganese in FY2018 and stated in June 2019 that it expected to move 15.1million tons in FY2019 (ending March 2020). The difference between this figure and South Africas total exports more than 2.5million tons is shifted by road.
The shortfall in harbour capacity means that six different South African harbours are used to export manganese. The commodity is the reason Transnet has started to run the worlds longest train a4km-long, 375 wagon monster on the line between the Northern Cape manganese fields and Saldanha Bay. But the railway system is close to capacity and even with Transnet planning to increase carrying capacity to 18million tons over the next three years, future increases in manganese production may be constrained by this factor.
South Africa is endowed with highly concentrated manganese resources, and with demand from China continuing to expand, the mineral looks like agood long-term bet. It is already the countrys fifth-highest earning mineral, behind coal, platinum group metals, gold and iron ore, and it may now be appropriate to refer to South Africas big five minerals rather than the big four.
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JOHANNESBURG (miningweekly.com) South Africa has 22 operating manganese mines, with only four of them owned in part by Johannesburg Stock Exchange- (JSE-) listed companies, AmaranthCX director Paul Miller has calculated.
These same two companies, South32, with 60%, and Anglo American, with 40%, own the manganese alloys company, Metalloys, near Meyerton, in Gauteng, which is on care and maintenance. Assmang, held 50% by African Rainbow Minerals, owns the Nhwaning and Gloria manganese mines.
So, there are four mines owned in part at least by JSE-listed companies not four listed companies that own manganese mines and these are the four original still operating manganese mines, Miller stated in an emailed response to Mining Weekly.
If ever you needed evidence of the decoupling of the South African resource sector from the South African public capital markets then there you have it. We have had 18 new manganese mines of various sizes (mostly, to be fair, quitesmall - except Tshipi Borwa, UMK, Kalagadi and Kudumane),come into production since about 2006 and none is listed on the JSE, Miller pointed out.
Their listing of Operating Mines of SA on their website was last updated in 2016 and they have not published any sector/commodity reports for about a decade.Yet they probably employ more people in their Mineral Promotion Directorate thanthey did back in 2010. You would think they would be crowing the growth in the number of participants in manganese from the rooftops, said Miller.
Besides the traditional export port of Port Elizabeth and now the Saldanha multi-purpose terminal, there are also extensive skip-to-ship exports at Maydon Wharf in Durban, after being road hauled a thousand kilometres. We have mapped it all - for use by non-GIS specialists in Google Maps/Google Earth on a smart phone, PC or tablet. We hope it is of interest to transporters, traders and mine suppliers, said Miller.
South Africa is the global leader in manganese reserves - with a growing export market. Manganese ore was traditionally railed from the Northern Cape to the manganese terminal in Port Elizabeth. This export channel soon reached full capacity as new producers entered the market to join the four original mines - new export channels were needed. Practical innovations were necessary absent further capital investment by Transnet:road hauling with empty backhaul shipping containers being stuffed at Lohatla, Kimberley and Bloemfontein; skip-to-ship operations at out-of-season privately operated fresh produce terminals in Port Elizabeth and general purpose terminals at Maydon Wharf in Durban; repurposing of the coal handling facilities at the old Swartkops power station; and using straddle backactors to unload rail wagons in Saldanha and Port Elizabeth. Of the seven domestic beneficiation plants (sintering, silicon and ferromanganese alloys plants), two have been shuttered owing to Eskom.
Reactionhas been positive to the discussion document of the economic transformation committee (ETC) of the African National Congress (ANC), which states that the listing of mining companies on the JSE should be encouraged and mining exploration incentivised, as is the case in other mining jurisdictions.
The 30-page discussion document puts forward an economic framework for reconstruction, growth and transformation, with the objective of building a new, inclusive South African economy, at a time when the Covid-19 pandemic is continuing to impact negatively on economic activity.
In its comment on the mining sector, the ANCs ETC document states: Listings of mining companies on the Johannesburg Stock Exchange should be encouraged and South African retail investors willing to invest in mining exploration should be incentivised, as is the case in other mining jurisdictions.
Minerals Council South Africa has acknowledged the release of the ANCs reconstruction, growth and transformation document and said it was pleased to note the approaches proposed to reinvigorate the countys mining industry.
In his response to the ANC document earlier this year, Miller, as director of AmaranthCX,a consultancy to the mineralsindustry, stated: Im very pleased to see that the penny has dropped that the development of public markets, like the JSE, and the junior exploration sector should be firmly linked two sides of the same coin basically and that any effective policy must do both, simultaneously. Previously initiatives like Section 12J have failedwhen it came to mining exploration, in part becausethey did not both develop the market for raising the capital and the junior minerals sector itself.
Miller led the JSE-listed coal exploration and development company Keaton Energy and advised many others in his former capacities as Nedbank CIB mining finance principal and as MD of the CCP 12J startup, which specialised in the financing of secondary and ancillary projects on existing mines.
I am concerned, however, that the South African mining sector has for all intents and purposesdecoupled from our public markets remembering that the JSE was born to serve the primary capital requirements of the mining industry. Forty years ago,half of global mining industry market capitalisation traded on the JSE; we are now down to some 26 companies of which quite a number have no operations in South Africa. However, South Africa still has close to 400 operating mines (more than the rest of Africa, collectively)across a diversity of commodities, ranging from small limeworks to global Tier One assets, and yet almost no primary capital raising for new projects takes place in local publicmarkets. It seems that our market regulators think that secondary trade in exchange traded funds based on foreign indices or just the80 largest most liquid local companies is enough. Perhaps we need to relook thevalue of a stock exchange to a society, which in my view should bethe raising primary capital for the real economy.
If the ANC wants to encourage listings on the JSE, then the national chairperson of the ANC [Gwede Mantashe]could start the process by simply phoning the respective chairpersons of Bushveld Minerals, Ivanhoe Mines, Jupiter Mines, Magnum Mining & Exploration, Platinum Group Metals, Bluerock Diamonds, Diamcor, Taung Gold and any other foreign listed mining company with operations in South Africa and ask them to please apply for a low-cost, fast-tracked, secondary listing on a local market as part of their contribution to post-Covid recovery. This would create some interest and excitement in the short term and getsome positive momentum going. Moral suasion should probably be enough to do it, said Miller.
A really quick way of encouraging retail participation on the local markets already exists, without incurring the cost to the fiscus of new incentives - this would be to allow individual investors to manage their own tax-free savings accounts, or perhaps a capped portion of their own retirementannuity, in a ring-fenced stock broking account.In a similar way to which Australians can self-manage a portion of their Superannuation Funds (a retirement annuity equivalent).Rent seeking big business members of ASISA wouldn't like this - as they benefit from high fees and will lobby National Treasury against investors being able to do their own thing at low cost. But small companies, like junior miners, need a diversity of small investors and our concentrated financial services sector needs to open up space for smaller growth companies and less risk averse investors.We can follow that up by cloning the flow through share schemes of Canada or Australia, however, that would probably take a full legislative process, which is a longer termsolution," Miller said.
Afrimat CEO Andries van Heerden said that there are many positives to the acquisition, the first being that the Group will be adding another commodity, i.e. manganese, to its diversification strategy within the Bulk Commodities segment of the business, the second being that this sizeable acquisition will propel Afrimat into the mid-tier mining space.
He went on to explain that the resource is well positioned within Afrimat operationally as it is not dissimilar to its existing operations given the process and is considered attractive in both size and quality of the resource. Gravenhage is a long-life, near-development manganese resource situated in the northern part of the Kalahari Manganese field approximately 120km from Afrimats existing Demaneng iron ore mine.
Current studies show an extensive Life of Mine in excess of 20 years. A Definitive Feasibility Study was finalised confirming the technical and economic feasibility of the Gravenhage Manganese Project based on an initial open cut operation with the potential for subsequent underground mining. The resource and its significant potential has been well defined by continued exploration drilling.
Van Heerden continued by saying that Afrimat has ensured sustainability through diversification. The successful development of Gravenhage will increase our scale in the ferrous-metal value chain and provide further exposure to foreign currency denominated earnings.
Afrimat has been able to successfully invest into commodities that generate a strong cash flow cash that the Group has in turn spent on making further strategic acquisitions to grow cash incrementally. This approach has proved successful for us and will be applied to this acquisition and in turn by ensuring focused execution of Gravenhage, I am confident we can achieve growth of the Group.
Operational synergies with the Demaneng iron ore mine are expected to be realised, and a plan is in place to accommodate logistics to extract manganese product from Hotazel to ports for outbound international markets. Afrimat already has an excellent working relationship with Transnet through Demaneng and it is envisaged that the further co-operation of Transnet as a partner to enable new entrants like Afrimat into the manganese sector, will be forthcoming.
Van Heerden makes it very clear that economic viability and profitability are one thing, but that Afrimat is equally passionate about the longer-term contribution it will be able to make to the immediate local community, the Northern Cape province and in turn the South African economy through its dedication to job creation and skills development and transfer. We know from experience how important this commitment is, said van Heerden, going on to say that this sustainable intervention is a core part of the Afrimat culture.
According to van Heerden the manganese price has lagged other commodity prices, such as iron ore. In true Afrimat style, we will ensure from the outset that the mine will remain profitable even at the bottom end of a commodity cycle, he said.
Afrimat is purchasing the Gravenhage manganese mining right and associated assets from Aquila Steel (S Africa) and Rakana Consolidated Mines for a total purchase consideration of roughly R650 million (or the Rand equivalent of USD45 million and R15 million for the property).
There are conditions precedent that include approval in terms of section 11 of the Mineral and Petroleum Resources Development Act, Competition Commission approval, the granting of a water use license, and approval having been obtained by Aquila Steel from the Chinese State-owned Assets Supervision and Administration Commission of the State Council for the sale of the assets and the assumption of the assumed liabilities as contemplated in the agreement.
In conclusion van Heerden indicated that while this represents a large acquisition for Afrimat, it would be supported by the Groups experience of undertaking solid research and due diligence and underpinned by vigilant execution.
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