Macozoma strikes ore

2014-11-23 15:00

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

Saki Macozoma’s Ntsimbintle Mining this weekend trumpeted its rise to becoming one of the world’s major manganese companies through its Tshipi Borwa mine.

Despite the current slump in prices for the steel-making ingredient partly related to South Africa’s increasing production, Macozoma also announced that Ntsimbintle has conducted a feasibility study for a second major manganese mine with a different partner.

Tshipi has now reached full production of more than 2?million tons of ore a year against national production of about 11.5?million tons last year.

At an event in Kimberley, he called it “proof positive” that broad-based BEE companies can compete internationally.

Due to a special dispensation for “alienated state land” under the country’s mining law, the black ownership requirement for most manganese resources is 51% as opposed to the usual 26%.

For the next mine, for which a feasibility study still needs to be done, Ntsimbintle is teaming up with a new partner, currently still trading under a shelf company named Blue Falcon 222 Trading, which owns 49% of what might become Mokala Manganese, a company registered in June this year.

Blue Falcon’s directors include Gary Nagle, the CEO of mining and trading giant Glencore’s alloys division.

Justin Pitt, a director of Ntsimbintle and Macozoma’s dealmaker since 2002, says: “We went to market to see who would give the most money.”

He wouldn’t be drawn into divulging who the partners in the potential second mine are.

The new mining regime created by the Mineral and Petroleum Resources Development Act (MPRDA) has had a dramatic effect on manganese.

The “use-it-or-lose-it” principle in the new law made the vast manganese resources of the Kalahari Basin available just as Chinese demand for all things related to making steel took off about a decade ago.

Pitt is full of praise for the government’s transformation push in manganese.

“Samancor and Assmang owned all the land in the Kalahari Basin and had [mining] applications for all

of it. The DMR [department of mineral resources] wanted to break the cartel.

“The DMR has been hugely successful. Two parties have become five or six when Kalagadi comes on.

“The market was locked up. It’s been opened by breaking the duopoly.”

The 51% rule that applies to most of the Kalahari Basin, where South Africa’s massive manganese resources are found, means the new companies mining manganese since 2004 are majority black owned and manganese is now probably the most black-owned sector in mining.

“The BEE guys had an asset to take to funders,”

says Pitt.

In Ntsimbintle’s case, the Tshipi right enabled it to approach Jupiter Mines and OM Holdings, the other shareholders in the mine.

Transnet has been able to accommodate much of the new capacity, transporting some manganese on its iron ore export line to Saldanha while the bulk goes through Port Elizabeth.

But a significant amount of manganese ore has ended up being trucked to Durban, something that massively inflates the cost and has been scaled down due to the subdued prices.

Daphne Mashile-Nkosi’s Kalagadi Resources is still developing its mine, but has a sinter plant on line that processes otherwise relatively useless fine ore bought from other mines.

United Manganese of the Kalahari, where Russia’s Renova holds 49% and a consortium including the ANC-linked Chancellor House the rest, claims to be delivering about 2?million tons a year.

Kudumane Manganese Resources is another new entrant where Japanese partners hold 49%.

true as steel

MANGANESE PRODUCTION ON THE RISE DESPITE PRICE SLUMP

In the decade since the promulgation of the MPRDA, the local manganese sector has more than tripled its production and gone from an airtight duopoly to probably the most significantly black-owned part of the mining sector, with six producers.

South Africa’s production of manganese ore has rocketed from 4?million tons in 2004 to 11.5?million tons in 2013.

While China still produces twice that much ore, the low grade of its manganese ore means South Africa is the world’s largest producer of the actual metal, providing 4.6?million tons of the total world supply of 18.6?million tons.

Most of that is shipped to China, which consumes 61% of the world’s manganese.

“There is a surplus now, but South Africa and Tshipi are in the lowest cost quartile”, says Pitt.

According to him, the high-cost Chinese mines will be the first to close.

The sector will probably suffer “soft prices for the foreseeable future”, he says.

But Tshipi has a 60-year mine life and there are bound to be good times and bad times, according to him.

The ore is marketed through a dedicated marketing company called OM Tshipi, in which each partner in the mine has a 33% stake. “We wanted to take control of the whole revenue line,” says Pitt.

Using a third party trader means sacrificing the same percentage of the price irrespective of what the price is, he says. That 3% to 4% is particularly important when the market is in a surplus like it is currently.

While Ntsimbintle is not a listed company, the two foreign partners in the Tshipi mine are.

According to their latest results, the mine and associated trading company is making money.

OM Holdings has an effective 13% stake in the mine and 33% in the marketing company.

In the first half of this year, its share of profits from the operations was $2.2?million (R24?million).

Jupiter Mines, which owns 49.9% of the mine and 33% of the marketing arm, reported profit from these of roughly $7.8?million for the six months to the end of August.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.