South32 weighs $50m upgrade of SA manganese export facilities in Northern Cape

South32's manganese mine in Hotazel

SOUTH32 was investigating ways to improve the efficiency of its manganese supply chain in South Africa which could lead to an increase in production.

Speaking to analysts last month following the firm’s interim results presentation, South32 CEO, Graham Kerr said the group was weighing up installing rapid load out facilities at its Northern Cape operations.

Kerr said the outlay was “relatively modest in the scheme of things.”

“If you decided to build two rapid load out facilities it is in the magnitude of $50m [in capital expenditure]. But we are far off making that decision,” he added.

In terms of the manganese export capital allocation (MECA), South32 uses Transnet’s three million tons of rail capacity on the Northern Cape rail link to Saldanha Bay port in the Western Cape. Kerr said the firm uses about 2.45 million tons (Mt) of this, but with an expansion of the rail facilities provided by Transnet, it could potentially rail more, provided it had better loading capabilities.

“It (having rapid load out station) will be more important for MECA 3 as Transnet expands capacity and it looks to use the infrastructure more,” said Kerr. In terms of Transnet’s timetable MECA 3 was expected to be rolled out from 2023.

“We are in engagement with Transnet … that is what they are signalling: that we can get more out if we are more efficient and that’s what we are exploring as we go forward,” said Noel Pillay co-COO of South32.

The group was also looking at the expansion of its Wessels manganese mine which would create extra pressure to build better infrastructure or enter into a sharing agreement with another user of the line.

The manganese operations, held in joint venture with Anglo American, contributed towards free cash flow of $942m for South32 in the six months ended December 31. This was despite a working capital build up caused by logistics congestion, partly at the manganese mines, but predominantly in its “South Africa aluminium value chain”.

South32 has said in the past that it transported manganese to port by road rather than relying entirely on Transnet which has struggled with an array of problems ranging from absenteeism to vandalism and sabotage.