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IDC to unveil R3.2bn manganese project
David McKay
Posted: Mon, 05 Feb 2007

[miningmx.com] -- THE Industrial Development Corporation (IDC), a South African government owned bank, is expected to unveil a R3.2bn manganese mine and smelter development on February 6 in Cape Town.

The IDC will take a 20% stake in the project, which will be black-owned, and provide financing for the venture. Integral to the project will be the production of ferromanganese at a dedicated smelter at Coega, an industrial development zone in South Africa’s impoverished Eastern Cape province.

The project will be owned by Kalahari Resources, the original mining license holder of manganese properties in the Northern Cape province. It has been suggested, but not confirmed, that Sipho Nkosi is involved in the project. Nkosi established Eyesizwe Coal which has now become part of Exxaro Resources, listed on the JSE. His participation in the manganese industry could well cement his position as one of South Africa's new mining magnates.

Further details of the project will be disclosed at the Indaba Mining Conference in Cape Town, according to an industry source. He declined to specify how much manganese ore and ferromanganese would be produced by the project.

A number of black-owned businesses would participate in the project including Siyanda Resources, the source said.

The manganese development was unconnected with efforts by Russian firm, Renova Group, which said last year it would develop a mine and a smelter for the manganese business.

“The funds provided by the IDC will go towards developing a bankable feasibility study which should be completed by the middle of the year,” the source said in an interview.

Control of South Africa’s manganese fields have been closely held, predominantly through a joint venture of BHP Billiton (60%) and Anglo American (40%) called Samancor Manganese. The other main producer of manganese is African Rainbow Minerals. However, state-owned land containing considerable manganese resources was last year granted to a number of black empowerment firms, including Kalahari Resources.

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Renova Group's interest in Southern African manganese is through its 49% ownership of United Manganese of Kalahari which has Chancellor House and Pitsa Ya Sesaba as shareholders. Following a state visit by Vladimir Putin in September, Renova Group said that it would spend $1bn building mines and a 300,000 tonne/year ferromanganese smelter at Coega.

Statements such as this have worried Samancor Manganese and ARM owing to the perceived fragility of the manganese market.

About 80% of the world’s manganese reserves – about 350 million tonnes - are found in southern Africa. By unlocking it suddenly, oversupply may easily result with the consequent dive in manganese prices and profits. The world’s manganese market is currently in oversupply by between 800,000 tonnes and 1 million tonnes.