While South African diversified miner African Rainbow Minerals (Arm) remains on the lookout for opportunities to acquire new manganese orebodies, its current deposits of the ferrous metal are “more than adequate” to facilitate growth going forward, CEO Andre Wilkens said on Tuesday.
The firm had had some talks with new entrants in the industry on possible consolidation, he said on a conference call.
Assmang, which houses the company's ferrous-metals assets and is co-owned with the Johannesburg-listed Assore, mines manganese ore from three mines in the Northern Cape and produces ferromanganese at its Cato Ridge operations, in KwaZulu-Natal. The company currently produces about 400 000 t/y of ore from its Gloria mine, and 3.6-million tons a year from the Nchwaneng operations. Output from Gloria is expected to double within the next two years, and the company was confident that it could increase throughput at Nchwaneng to 4-million tons a year, and beyond, “with small changes”, Wilkens said. “The orebody we own has got huge potential to expand in the future.”
About 90% of global manganese output is used in the production of iron and steel, and South Africa's Kalahari manganese fields (KMF) contain an estimated 80% of the world's manganese resources. About 40% of the KMF resources are high grade, and Assmang has the right to mine 60% of that high-grade ore, according to a presentation made by Wilkens. About 75% of the company's production is exported to Europe and North America, while the balance is sold locally to Cato Ridge and other customers.
On the mining side, the most significant constraint to growth for now is logistic bottlenecks, the company says.“The growth of the business really depends of what we can get through the ports and through the rail capacity,” Wilkens commented. The company was in talks with State transport utility Transnet to rail more ore, and was hoping to get its “fair share” of planned capactiy expansions at the Port Elizabeth port, Assmang's main export channel.
Assmang is currently renegotiating manganese contract prices and expects to agree on prices “fairly close” to current spot prices, Wilkens said.
The negotiations are expected to be wrapped up in the next couple of months.
Prices for both manganese ore and alloys rose sharply over the last year, driven by surging demand for steel, and are expected to continue at or just below the higher levels over the next couple of years, as the market is expected to be in deficit until 2011.
Source: Mining Weekly
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