South32 agrees Metalloys manganese sale to Menar Group

SOUTH32 said on Thursday it had sold its Metalloys facility in South Africa’s Gauteng province to Menar Group, a privately-held coal and manganese mining firm.

The Australian group said it expected to conclude the deal, including its regulatory clearances, in the second half of next year. Menar would then assume Metalloys liabilities.

Metalloys has one million tons a year in manganese alloy capacity making it one of the largest manganese alloy producers globally.

South32 mothballed the facilities in  March 2020 booking a $109m impairment on the asset. It owns Metalloys through its Samancor subsidiary. It withdrew from a sales agreement in 2022 after the buyer failed to satisfy certain commercial conditions to the agreement.

Exclusively a thermal coal exporter, Menar stepped into the manganese market with the development of its East Manganese mine in 2021.

Menar MD Vuslat Bayoğlu described East Manganese as ‘school fees’ as his company hadn’t made money. The mine is due to close in about six months, but Menar is considering developing a new 50 million ton manganese desposit, he said.

Manganese is used mainly in the manufacture of carbon steel. Prices in the mineral can be volatile, and have been underwhelming over recent years. But the outlook has improved following weather damage sustained South32’s GEMCO facilities this year which supplies about 13% of world demand.

Global inventories of manganese are expected to last until the third quarter, thereafter a massive supply squeeze is expected, according to a recent report by RMB Morgan Stanley. Share earnings for African Rainbow Minerals, one South Africa’s largest manganese producers, could increase to as much as 66% to R21/share, the bank said.