Search Results for "Gabon"

BHK Mining Begins Exploration at Ndjole Manganese/Gold Licence in Gabon

BHK Mining Corp. (TSXV:BHK) announced that it has began exploration work at its 2,000 square kilometer Ndjole manganese/gold project in Gabon.

As quoted in the press release:

The Company utilizes a rapid exploration method, using auger drills combined with a handheld XRF unit for accelerated follow-up and semi-quantitative geochemical analysis of the weathered rock material below manganese soil anomalies. At the time of this report a total of 232 auger holes have been drilled and a total of 991 samples collected (See for location maps).

Analysis with the handheld XRF is currently underway and a total of 534 samples including standards and duplicates have been analyzed to date. Handheld XRF is a method that is used to produce reliable manganese analyses. Pits have been excavated at the site of two of the stronger manganese auger results to expose the mineralization in three dimensions.

The auger drill program is designed to test the weathered rock (saprolite) below scree, ferricrete and laterite, which covers much of the target area. The auger drills are capable of drilling to a depth of approximately 10 metres under favourable conditions. The aim of the rapid auger drill program is to produce bedrock manganese targets for subsequent diamond drilling.

Click here to read the full BHK Mining Corp. (TSXV:BHK) press release.

Silver Bull Sells Gabon Asset to BHK Mining

Silver Bull Resources Inc. (TSX:SVB,NYSEMKT:SVBL) announced that BHK Mining Corp. now officially owns Dome International Global Inc., its subsidiary. Dome indirectly holds a 100-percent interest in the Gabon-based Ndjole manganese-gold project.

As quoted in the press release:

Pursuant to the Transaction, BHK acquired all of the issued and outstanding securities of Dome from a wholly-owned subsidiary of Silver Bull for the purchase price of USD$1,500,000, payable in cash, of which USD$25,000 was previously paid as a non-refundable deposit. In addition, BHK reimbursed Silver Bull USD$75,000 for certain expenses related to the completion of the Transaction. Upon completion of the Transaction, Dome became a wholly-owned subsidiary of BHK. In connection with the Transaction, BHK changed its name from BHK Resources Inc. to BHK Mining Corp.

Tim Barry, president and CEO of Silver Bull, commented:

We are very pleased to close the sale of the Project to BHK and we wish them well in their future endeavors in Gabon. Silver Bull remains fully focused on advancing its flagship Sierra Mojada silver-zinc project in Coahuila, Mexico, and the sale of the Ndjole property provides Silver Bull with an additional USD$1.5 million in non-dilutive capital in what remains a very difficult capital markets environment.

Click here to read the full Silver Bull Resources Inc. (TSX:SVB,NYSEMKT:SVBL) press release.

BHP Halts Mining Investment in Gabon

Reuters reported that BHP has put the brakes on mining investment in Gabon, much to the dismay of the government, who had been banking on large-scale iron and manganese projects.

As quoted in the market report:

We respect the decision by BHP to freeze its activities in Gabon,” said a senior official at the mining ministry who asked not to be identified. “At the same time this is a blow to the country, which hoped to become the world’s largest exporter of manganese.

To view the whole Reuters report, click here. 

Gabon Aims to be the World’s Leading Manganese Producer

Gabon Aims to be the World’s Leading Manganese Producer

Gabon is the world’s second-largest producer of manganese, behind South Africa. In 2011, the country churned out 3.5 million metric tons of the metal.

The tiny country, located on the west coast of Africa, is home to just 1.5 million people, but it boasts significant mineral wealth. The US Energy Information Administration estimates that Gabon has 2 billion barrels worth of oil reserves. At one point, the country was the third-largest oil producer in sub-Saharan Africa. It has since fallen to sixth place as oil producers have exhausted fields without finding new production to take their place. However, a national oil firm, Gabon Oil Company, was recently founded to increase the country’s output.

Gabon is also focusing on diversifying away from oil. For example, it’s currently evaluating its Belinga iron ore deposit with the goal of outlining a resource. A concession is expected to be awarded in 2014, and BHP Billiton (NYSE:BHP,ASX:BHP,LSE:BLT) is thought to be a leading candidate. Gabon also aims to boost production of its other resources, including diamonds, gold, silver and rare earth elements.

“Gabon presents huge advantages to attract and secure foreign direct investment, including political stability, support sectors like banking, telecoms and energy, and established infrastructure,” mines minister Regis Immongault recently told Mining Weekly.

But despite that relative stability, operating in Gabon does entail some risks. For example, skilled labor is hard to find, wages are higher than in many African nations and infrastructure is still inadequate. The country is also in the process of updating its mining code, which could introduce new taxes on mining firms.

Gabon has South Africa in its sights

Which brings us back to manganese, a sector in which the tiny country has big ambitions. By 2015, it aims to boost its production of the metal, which is used to strengthen steel, to 5.7 million MT a year from a forecast 3.7 million MT in 2012. That would put it ahead of South Africa, which is currently the leading producer.

France’s ERAMET (EPA:ERA) jointly owns Comilog, the world’s second-largest manganese producer, with the Gabonese government. Comilog operates the Moanda mine in the country’s southeast. In November 2005, Comilog obtained a 30-year concession for a railway line that it uses to ship manganese to the port of Owendo. That has allowed the company to ramp up the mine’s production capacity to 3.5 million MT per year.

As well, Comilog is currently working on a manganese processing plant in the country that could produce 85,000 MT a day starting in 2014.

Another potential boost in manganese output could come from a new project by BHP Billiton. The company hasn’t officially commented on this possibility, but in April, Immongault said many aspects of an agreement between the government and the company have been decided upon, and that BHP is considering a mine capable of producing 300,000 MT per year, with a resource large enough to support a mine life of roughly 50 years. This project would be located about 10 kilometers from the town of Franceville.

Vancouver-based junior has high hopes for its Gabonese properties

One junior miner with significant holdings in Gabon is Vancouver-based Silver Bull Resources (AMEX:SVBL,TSX:SVB). The company is mainly focused on its Sierra Mojada silver-zinc project in Mexico, but it also owns the Mitzic iron ore property, located about 180 kilometers northeast of Libreville, the capital city of Gabon, and the 2,000-square-kilometer Ndjole manganese/gold project, located 120 kilometers east of Libreville. Silver Bull recently renewed its licenses for these properties for another three years.

The company recently released the results of its latest drilling at Ndjole, which it has conducted over the past two years. The program included 5,300 meters of diamond drilling, an airborne electromagnetic survey, geological mapping and basin analysis and 20,000 soil samples.

Silver Bull said that three of its drill holes at the northern end of the property intercepted thick manganese mineralization. Highlights include hole NDDD0002, which intercepted 22-percent manganese over 34.5 meters from the surface, including 42 percent over 5 meters, or 33.7 percent over 9 meters from the surface. In addition, the soil samples indicate an anomaly of more than 500 parts per million of manganese in an area of more than 50 square kilometers that remains open to the south and west.

“Within the Ndjole license, we have a huge manganese soil anomaly over 50 square kilometers in area with three near surface high grade drill holes at the very northern end of the anomaly,” said Silver Bull’s president and CEO, Tim Barry, in a press release. “When you consider over 90% of the anomaly still needs to be drilled, coupled with the fact that it sits in the same suite of rocks 25km away from a manganese mine that has just gone into production, and that it lies less than 25 kilometers from a functioning railway, we consider this to be an exciting target that now only needs to be tested with drilling.”


Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.

Gabon’s Manganese Output Set to Increase to 5.7-million tons by 2015

Mining Weekly reported that manganese production is going to ramp up in Gabon.

As quoted in the market report:

Immongault said Gabon also planned to increase its manganese production to 5.7-million tons by 2015 from around 3.7-million tons currently, driven by a ramp-up in production from Eramet’s Compagnie Miniere de l’Ogooue (Comilog) and other smaller projects.

To view the whole Mining Weekly report, click here.

Silver Bull Intersects Thick, Near-Surface Manganese in Gabon

Silver Bull Resources Inc. (TSX:SVB,NYSE:SVBL) announced that the work completed at its Ndjole license over the past two years includes the drilling of three holes that intersect thick, near-surface manganese mineralization.

According to the press release, drilling highlights include:

  • NDDD0002: 22% Mn over 34.5m from 0m; including 42% over 5m or 33.7% over 9m from surface.
  • NDDD0001: +11% Mn over 17m from 33m (detection limit for manganese for analysis is 11% – not analyzed for ore grade manganese)
  • NDDD0018: +11% Mn over 7m from 20m (detection limit for manganese for analysis is 11% – not analyzed for ore grade manganese)
Silver Bull’s president and CEO, Tim Barry, commented:
Within the Ndjole license, we have a huge manganese soil anomaly over 50 square kilometers in area with three near surface high grade drill holes at the very northern end of the anomaly. When you consider over 90% of the anomaly still needs to be drilled, coupled with the fact that it sits in the same suite of rocks 25km away from a manganese mine that has just gone into production, and that it lies less than 25 kilometers from a functioning railway, we consider this to be an exciting target that now only needs to be tested with drilling.

Click here to read the full Silver Bull Resources Inc. (TSX:SVB,NYSE:SVBL) press release.

BHP Billiton to Develop Manganese Mine in Gabon

Mining Weekly reported that according to Gabon’s Mines Minister, BHP Billiton (ASX:BHP,LSE:BLT) will meet with the government of Gabon on April 16 to finalize a convention for the development of a manganese mine.

As quoted in the market news:

[The Mines Minister] noted that while much of the convention had already been decided upon, the parties still had to confirm the use of railway capacity for the project.

A spokesperson for BHP Billiton said on Tuesday that the company was unable to comment at this stage, but added that the project was at an advanced stage of feasibility.

The company previously reported that the Gabon mine would be a 300 000 t/y operation, with a resource to support an estimated 50-year life-of-mine.

Click here to read the full Mining Weekly report.

Metalline Appoints Country Manager in Gabon

Metalline Mining Company (TSX:MMZ,AMEX:MMG) announced the appointment of Mr. Luc Stevenin as Country Manager for Gabon in Central West Africa.

The press release is quoted as saying:

Metalline, through its 100% owned subsidiary, Dome Venture’s SARL Gabon owns three 2,000 square kilometer licences inGabon that are highly prospective for gold, manganese, and iron ore.

To read the full press release, click here.

10 Top Manganese-producing Countries

10 Top Manganese-producing Countries

Manganese was first discovered in the late 1700s and has been produced in large quantities since that time, according to Jefferson Lab. The element does not occur in isolation, and is obtained by breaking down other minerals. The most common source of manganese is pyrolusite, which releases manganese when heated. 

Today, 90 percent of manganese is used to create steel. When manganese is added to molten steel, it increases the alloy’s strength and makes it more impact resistant.

In the first half of 2015, the price of manganese declined 30 percent, slipping under $3 per tonne, as per the Financial Times. The dip was due to declining demand for the metal and high stocks at Chinese ports. Booming construction in China has elevated the metal’s price in recent years, but some analysts believe the recent dip could be the beginning of a lasting slump.

With that in mind, it’s interesting to look at which regions produce the most manganese. Here’s a look at the 10 top manganese-producing countries, as per statistics from the US Geological Survey (USGS).


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1. South Africa

Mine production: 4.7 million tonnes

South African holds 150 million tonnes of manganese in reserve, and between 2013 and 2014, its production of the metal increased by 400,000 tonnes between 2013 and 2014 . In March 2015, Brian Molefe, CEO of Transnet, South Africa’s state-run logistics company, said the country intends to increase its manganese output threefold by 2019, according to Reuters. That plan would further secure South Africa’s place at the top of the global manganese market.

2. China

Mine production: 3.2 million tonnes

Construction in China has been a key driver of recent spikes in manganese demand, and the country is also one of the top producers of the metal. Despite a slowdown in domestic demand and a declining price for manganese ore, China increased its production by 200,000 tonnes in 2014 compared to the previous year. That growth may slow, but market research firm Shanghai Metals Market said in a March report that it anticipates that the nation’s ore output will grow less than 5 percent year-on-year for the next five years.

3. Australia

Mine production: 3.1 million tonnes

Australia is home to the world’s biggest manganese producer, South32 (ASX:S32). The company was created after BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT) announced plans demerge its aluminium, coal, manganese, nickel and silver assets into a new, independent global mining and metals company. The company holds interests in South African mines, as well as in two manganese projects in Australia.


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4. Gabon

Mine production: 2 million tonnes

Comilog, a subsidiary of Eramet (EPA:ERA), is the largest manganese-producing company in Gabon, and is responsible for 15 percent of the world’s overall production. Gabon’s manganese production may rise over time as infrastructure improves and allows the country to more readily access its 24 million tonnes of manganese reserves.

5. Brazil

Mine production: 1.1 million tonnes

Brazil is a key producer of manganese, and it uses a lot of the metal as well. According to Visual Capitalist, much of the country’s manganese output could end up being used domestically in the future; however, the country’s agricultural sector is currently facing a manganese shortage. The country’s demand for manganese that is both high-grade and high-purity is expected to grow in coming years as farmers look to improve crop health.

6. India

Mine production: 940,000 tonnes

India is not only one of the biggest producers of manganese worldwide, but also one of the largest consumers. That could pose a problem for the country in the years to come. The Indian Ministry of Mines has stated that the country will face a shortage of manganese for steel production by 2020. The organization’s report, “Manganese Ore: Vision 2020 and Beyond” outlines the need for increased production that could support growing domestic manganese demand. The element is particularly important for developing countries because there is currently no substitute for manganese’s role in steelmaking.

7. Ghana

Mine production: 540,000 tonnes

Within Ghana, most manganese is mined in the area around Takoradi. Consolidated Minerals, or Consmin, owns 90 percent of Ghana Manganese Company, which runs the Ntusa mine. The mine has total reserves of 45.01 million tonnes grading 28.16 percent, and total resources of 101.3 million tonnes at 26.8 percent in an area of 175 square kilometers. Only 3 percent has been mined to date.


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8. Kazakhstan

Mine production: 390,000 tonnes

Manganese production held steady in Kazakhstan year-on-year, and the country has 5 million tonnes of known manganese reserves. Privately owned Eurasian Natural Resources currently runs multiple manganese mines in Kazakhstan.

9. Ukraine

Mine production: 300,000 tonnes

Although Ukraine has the second-largest manganese reserves in the world, the country’s production trails that of other countries significantly. Russia Insider notes that the country is unable to harness its mineral resources due to a combination of corruption, war and mismanagement.

10. Mexico

Mine production: 220,000 tonnes

Mexican manganese output dropped by 2,000 tonnes between 2013 and 2014. According to the USGS, the country has 5 million tonnes of manganese reserves.


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Ferrex and Cancana Moving Forward in Manganese Market

Ferrex and Cancana Moving Forward in Manganese Market

Two companies have made progress as they look to breathe some new life into a somewhat stagnant manganese market.

Ferrex (LSE:FRX) announced Thursday that it has been granted an environmental permit for its Nayega project in Northern Togo, while Cancana Resources (TSXV:CNY) revealed earlier in the week that it has identified four additional sites on its Brazil Manganese Corporation (BMC) tenements. BMC is a joint venture between Cancana and Ferrometals.

Ferrex makes the switch

Though Ferrex produces iron in addition to manganese, falling iron ore prices have forced the company to focus on its manganese properties.

“The Company has decided to primarily focus on its manganese assets and developing it towards production in the near term whilst continuing to advance its iron ore assets in South Africa and Gabon using in house skills to keep expenditure to a minimum,” Dave Reeves, managing director of Ferrex, said in a press release earlier this month.

Since then the company has stayed true to its word, not only gaining an environmental permit for Nayega, but also receiving extensions on its prospecting permits after relinquishing 50 percent of the 92,000-hectare property.

“The renewal of the exploration permits also shows the support that the company has in Togo and allows us to continue the ongoing exploration programme that is defining new manganese mineralisation outside the main Nayega deposit,” said Reeves in a statement.

The permits have been renewed for two years, and a further two years subsequently, giving the company the space it needs to develop.

Cancana hopes exploring pays off

Cancana provided a Q3 update on behalf of BMC, noting that during the quarter, BMC’s production hit 1,200 tons, with 250 tons sold as commercial samples.

The company hopes to improve those numbers by increasing its efficiency — this past quarter, the company shut down its Rio Madeira plant for five weeks as it made improvements to the trommel and tailings ponds and addressed water access issues. Meanwhile, acquisition delays forced the Jaburi plant to come online in late September.

Cancana CEO Anthony Julien seems confident the best is yet to come. ”The BMC team has done an excellent job in bringing together the 3 assets and improving them to reach Canadian mining standards. Now that both plants are online and we have a mine plan to deliver consistent quality material, BMC is on-track to meeting its production target by December, 31, 2014,” he said in a press release.

On a different note, BMC has identified four additional sites for mining. The company has started permitting and planning as it looks to start mining at those sites; if they appear feasible they will provide a source of feed for Rio Madeira and Jaburi.

Looking forward

Both Ferrex and Cancana have moves to make as they look to thrive in the current market. Ferrex is looking to both secure its mining permit before the end of the quarter and finalize its definitive feasibility study.

For its part, Cancana is waiting on the completion of testing performed by BMC to ensure the material it’s producing meets market requirements. To help that cause, BMC is currently constructing an on-site sample preparation lab to improve analysis times.


Securities Disclosure: I, Nick Wells, hold no direct investment interest in any company mentioned in this article. 

Manganese Ore Prices Holding Steady

Platts reported that manganese ore prices to China firmed today, with the 44-percent variety hitting $4.20 per dry metric ton unit CIF Tianjin.

As quoted in the market news:

‘We have not heard many transactions, but prices are holding and sellers are trying to push offers higher [by 5-10 cents],’ a miner source said.

A Chinese trader said Australian 46% manganese ore transaction prices were at $4.43/dmtu in port, adding he had bought Gabon origin ore at $4.15/dmt CIF China in the second half of August.

Click here to read the full Platts report.

Zambia Aims to Kickstart Manganese Production

Zambia Aims to Kickstart Manganese Production

The landlocked African nation of Zambia is best known for its copper. In 2012, it produced 675,000 metric tons (MT) of the metal, good for seventh on the US Geological Survey’s (USGS) list of leading copper-producing countries. However, the country is looking to lower its reliance on copper by encouraging the development of other metals, including coal, uranium, iron ore and manganese.

Estimates of Zambia’s manganese reserves are hard to come by. In March, Zambia Manganese Corporation’s smelter general manager, Leon Erasmus, told an environmental impact assessment meeting that the country has 15 million MT of high-quality manganese. That’s obviously a very general estimate, but if substantiated, it would make Zambia roughly the world’s eighth-largest producer, behind Gabon, based on USGS data.

Zambia: open for business?

The country’s mining sector was nationalized in 1978 only to be reprivatized in 1998. Since then, the Zambian government has been taking steps to attract more foreign investment to the industry.

“Time-wasting procedures that may confront foreign investors elsewhere have been eliminated in Zambia and legal requirements have been reduced to an absolute minimum,” states the website of the country’s Ministry of Mines and Minerals Development. “Streamlined processing of paperwork and rapid decisions, guided by the Investment Centre, greatly facilitate all aspects of importation of equipment and export of products.”

The country is currently reviewing its Mines and Minerals Act and is expected to approve an amendment that will allow the granting of longer licensing permits. That will allow investors to “have the confidence that they will have security of tenure,” Mines Minister Yamfwa Mukanga was quoted as saying in a February 6 Mineweb article. “We are trying to attract more investment in the country by reviewing the legal framework. We are not going to go backwards,” he added.

The country ranks 94th, or roughly in the middle, of the 185 nations listed in the World Bank’s 2013 Ease of Doing Business index. That’s down four spots from last year’s ranking, but still well ahead of a number of other African nations, including Kenya (121), Ethiopia (127), Sudan (143), Liberia (149) and the bottom-ranked Central African Republic (185). However, importantly for miners, Zambia still ranks poorly on two important factors: getting electricity (151st) and dealing with construction permits (151st).

There are a number of major multinational mining firms with a presence in Zambia, most of which are operating copper projects. These include First Quantum Minerals (TSX:FM), Vedanta Resources (LSE:VED), Glencore International (LSE:GLEN), Barrick Gold (NYSE:ABX,TSX:ABX) and Vale (NYSE:VALE).

Illegal manganese mining still poses a challenge

Despite the country’s strong mining potential, operating in Zambia still entails risk. For example, according to a recent report from Southern Africa Resource Watch (SARW), some manganese miners operating in Zambia’s Luapala Province are largely unregulated. Edward Lange, SARW’s Zambia coordinator, has said that’s because they are being granted licenses by the Ministry of Mines and starting work without any consultation with local people, which obviously runs counter to current mining practices.

“Manganese miners act with impunity — uprooting communities, destroying farmers’ livelihoods, wrecking the environment, providing no local benefits and paying far too little in taxes and levies,” said Lange in a December 11, 2012 Zambian Watchdog article. “What people do not realise is that most of these are Zambian companies, owned by MPs or government ministers, and they act just as badly as foreign companies — if not worse.”

“Manganese occurs in small pockets so companies move rapidly from one place to another without giving a second thought to the damage they leave behind,” he added. “The companies do not seem to care about the impact of their work on increasingly angry communities — ruined crops, huge empty pits and health problems — since they are not going to suffer any consequences from their appalling corporate behaviour.”

Active manganese miners in Zambia

A significant amount of Zambia’s manganese is extracted by small-scale and privately held firms. However, two ASX-listed companies are currently involved in the Zambian manganese business. Here’s a look at their operations.

Kaboko Mining (ASX:KAB) is focused on exploring for and developing manganese in Zambia. Its assets in the country consist of a 51-percent interest in five large-scale prospecting licenses and three small-scale licenses covering over 2,700 square kilometers, according to the company’s website. Kaboko continues to conduct further exploration to define manganese resources on these holdings.

On April 3, the company announced the acquisition of a processing plant to crush and process the ore from its Northern Zambian manganese project at Mansa. Kaboko is now developing a mine plan for the project, with a scoping study expected to be completed early in the current quarter. It will then undertake a 24-hole drilling program with the goal of extending the current mineralization. After that, the company aims to produce a JORC-compliant resource estimate.

The project will have an initial run rate of 5,000 MT per month, starting in the third quarter of 2013, according to a March 12 Proactive Investors article. That will increase to 10,000 MT per month by the end of the year.

The project is backed by a $10-million prepayment debt facility and manganese offtake agreement with Noble Group (SGX:N21)

Zamanco Minerals (ASX:ZAM) also explores for manganese in Zambia. It aims to develop its Serenje project, which includes a $60-million manganese processing plant that will start production by 2014, Mineweb reported in November 2012. Jacques Bandenhorst, managing director, has said the plant will have a capacity of 56,250 MT of medium-carbon ferromanganese and 9,600 MT of silicomanganese per year.

The company’s website notes that it has also entered into a joint venture with a Zambian national that holds a prospecting permit in the country’s Mkushi region. As well, it has had discussions with small-scale miners in the Mansa area to purchase material currently being stockpiled as waste, which it says it can smelt “to produce a high value product.” The company is currently conducting a bankable feasibility study, which it expects to complete by the end of the third quarter of 2013.


Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.

Related reading: 

Illegal Manganese Mining in Zambia

South Africa Aims to Process More Manganese at Home

South Africa Aims to Process More Manganese at Home

A 2010 estimate from Citigroup (NYSE:C) identifies South Africa as the most resource-rich nation on Earth, with more than $2.5 trillion worth of reserves (not including energy resources such as oil and gas). The country is home to the world’s largest reported reserves of gold, platinum group metals, chrome ore and manganese ore, according to the South African government’s National Planning Commission.

South Africa is a particular standout in manganese: according to the US Geological Survey, the country is home to 75 percent of the world’s identified manganese resources. It was the number-one producer in 2012, with 3.5 million metric tons (MT) of output. However, it has struggled to increase its output, mainly because of antiquated or absent transportation infrastructure. Last year, for example, Gabon and Australia, which in terms of production come fourth and fifth, respectively, increased their production at a faster rate than South Africa; Gabon aims to become the leading producer of manganese within the next four years.

In addition, South Africa continues to export the bulk of its commodities as ores or in semi-processed forms, rather than as fully processed or finished products (such as jewelry), which carry a much higher value. That, along with the nation’s 24.9-percent unemployment rate, has spurred the government to develop a beneficiation strategy that aims to process more minerals in South Africa. The government hopes that it will create jobs, spur domestic resource consumption and lead to a more modern mining industry.

“As part of addressing the triple challenge of poverty, inequality and unemployment, government has developed a beneficiation strategy, which seeks to provide opportunities in the downstream part of the minerals sector,” said South African President Jacob Zuma in his February 2011 State of the Nation address.

Broad strokes of beneficiation plan begin to emerge

In June 2011, the government released its Beneficiation Strategy for the Minerals Industry of South Africa, which provides a road map for its approach.

“In 2008, gross revenue from sales of all minerals in South Africa amounted to just below R300 billion,” the policy document states. “Similarly, just over R86 billion was generated from processing of base metals, precious metals and other minerals, which represented 11 percent of the total volumes of minerals produced. This represents the national opportunity loss in export revenue and employment creation opportunities.”

The document names 10 minerals, including manganese, that the government sees as holding the most potential to gain from beneficiation. It also identifies five value chains that will be the focus of the government’s plan.

In the case of manganese, the policy aims spur the production of steel, for which manganese is essential, by increasing competition in the local steel industry. The policy also aims to facilitate the development of new steel and stainless steel plants in the country itself. Further, the document recommends investigating “mechanisms to protect and support the competitiveness of existing intermediary plants, such as ferro-chrome smelters.”

At the same time, the government has been investing heavily in transportation infrastructure to support the industry. As we reported last year, in September, the country assembled and tested its first-ever distributed power train for manganese at the new Tshipi Borwa mine, which recently blasted its first ore. In addition, South Africa has announced a 300-billion-rand (US$32.5 billion) plan to boost railway capacity, build and upgrade port facilities and add new fuel pipelines.

South Africa is not the only nation pushing miners to process more ore locally. Leading tin producer Indonesia, for example, plans to ban the export of a number of unprocessed mineral ores starting in 2014. There’s no sign that South Africa is planning to go that far. Last year, South African mines minister Susan Shabangu said the country’s beneficiation initiatives won’t lead to a “complete ban on exports.”

Recent developments show beneficiation is picking up steam

Two developments in recent weeks provide evidence that the government’s plan is moving forward. The first is the introduction of a new research and development (R&D) tax credit for mining companies. As BDlive reported, the new tax will provide an additional 50-percent income tax deduction on eligible R&D expenses.

Secondly, earlier this month BHP Billiton (NYSE:BHP,ASX:BHP,LSE:BLT) opened a fourth furnace at the Metalloys manganese smelting plant, owned by its 60-percent-owned subsidiary, Samancor Manganese. The new furnace has the capacity to produce 12,000 MT of high-carbon ferromanganese a year and will allow BHP to process 30 percent of the manganese ore that it mines locally, according to a March 6 Metal-Pages article.

In all, BHP has invested $1 billion rand ($83.7 million US) in the plant, which has the capacity to produce 120,000 MT of high-carbon ferromanganese a year. The facility will also contribute carbon dioxide to an onsite power-generation plant, which will help lower the smelter’s dependence on local power grids.

Shabangu, who was on hand to open the furnace, sees BHP’s investment as a clear win for the government’s plan. “Ladies and gentlemen, this project is positive proof that the Government’s vision of increased mineral beneficiation is beginning to take shape, and that it will happen within the context of sustainable development, as the technical specifications of this furnace show,” she said in a speech that was later posted on the government website.


Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.

Related reading: 

Gabon Aims to be the World’s Leading Manganese Producer

South Africa Aims to Get Manganese Production Back on Track

South Africa’s Newest Manganese Mine Blasts First Ore

MOIL Instructed to Increase Availability of Manganese Ore

Mining Weekly reported that the Indian Steel Ministry has instructed MOIL to increase mangaese ore availabilty to meet the needs of the domestic steel industry.

As quoted in the market report:

The push to increase manganese production comes in the wake of MOIL not making much headway in following through proposals, received last year, to acquire manganese ore assets in South Africa, Gabon and Turkey.  The company also failed to report progress on plans to revive the government-owned Kisenge manganese mines in Katanga province, in the Democratic Republic of Congo.

To view the whole Mining Weekly report, click here.

Why South Africa’s Manganese Production is Falling

Why South Africa’s Manganese Production is Falling

South Africa is the most resource-rich nation on Earth. A 2010 report from Citigroup gave the country’s mineral reserves a total value of more than $2.5 trillion.

Manganese makes up a big part of that wealth. South Africa has about 75 percent of the world’s reserves, according to the US Geological Survey. The country also led the way in manganese production in 2011, with about 3.4 million tonnes of output, ahead of second-place China’s 2.8 million tonnes.

ArcelorMittal (NYSE:MT) is one global miner that is currently active in South Africa. The company has a 50/50 joint venture with Kalagadi Manganese, which is building an underground mine in Hotazel, in the Northern Cape province. The company expects the mine to produce 3 million tons of manganese ore a year. The project also includes a sinter plant on the site and a smelter at the port city of Coega that will produce 320,000 tons of ferromanganese a year.

BHP Billiton (NYSE:BHP,ASX:BHP,LSE:BLT) owns 60 percent of Samancor Manganese, which also mines manganese ore at Hotazel. Junior miners active in the country include Ferrex (LSE:FRX), which is currently exploring for manganese at its Leinster property.

Production drop couldn’t come at a worse time

Even with its huge reserves, South Africa only controls 20 percent of the global manganese market. And that could be set to shrink due to an ongoing decline in its output.

The country’s manganese production dropped 22 percent in April 2012 from April 2011, according to Statistics South Africa. Manganese output also fell 6.5 percent in April from March.

Across the entire South African mining industry, production volumes dropped 10.6 percent in April from a year ago. That marked the tenth straight month of seasonally-adjusted declines.

The production slump comes as other countries take steps to export more manganese. For example, Gabon is now in the process of revising its mining code to encourage more foreign investment, and BHP Billiton is reportedly considering building a 300,000-tonne-per-year manganese mine in that country. Gabon aims to overtake South Africa as the world’s largest manganese producer by 2015.

Politics a big factor in the South African mining industry

External factors, such as the weak global economy, are part of the reason for the production cutbacks in South Africa, but there are a range of other issues within the country that are also playing a role.

One is concern about ongoing labor unrest in South Africa’s mining industry. For example, over the past few months, fighting between two unions has caused four deaths and a strike that closed the Rustenburg mine, the world’s biggest platinum operation, for six weeks.

Proposed tax could be a drain on miners’ profits

Miners are also worried about a number of proposals being discussed at the African National Congress (ANC) convention, which is now underway. The ANC is the party of the country’s president, Jacob Zuma.

The Zuma administration is currently facing significant pressure to address the country’s chronically high unemployment and poverty levels. A number of policies aimed at raising funds for the government’s initiatives to deal with these problems are being considered. Proposals include a 50 percent tax on the profits of mining companies and the nationalization of certain assets, including mines.

Ideas such as these are further clouding the mining industry’s long-term prospects. “You’re adding more to the camel and pretty soon you’ll break the camel’s back,” said Patrick Mathidi, a fund manager at Momentum Asset Management in Johannesburg. “We’re unlikely to get any good news out of the policy conference.”

In response to the uncertainty, South African companies are holding onto near-record amounts of cash – about 522 billion rand ($63 billion US), according to the South African Reserve Bank. That’s up 11 percent from a year ago.

New railway investment should boost manganese shipments

On a more positive note for miners, South Africa appears poised to address its ongoing transportation problems.

State-owned transportation company Transnet recently announced a 300 billion rand ($35.6 billion) plan to increase railway capacity, build and improve port facilities, and upgrade fuel pipelines. The plan is specifically aimed at speeding up resource shipments. It also includes a new railway line to transport 16 million tons of manganese to Coega.

Obsolete transportation infrastructure is a significant problem for miners active in South Africa as it causes major bottlenecks and forces companies to ship resources by road – an option that Transnet says is about 75 percent more expensive than rail.

“Capacity has been a major constraint,” said Asief Mohamed, chief investment officer of Aeon Investment Management in Cape Town. “With the committed expansion by Transnet, mining companies would be able to increase volumes, which would be good for earnings.”

The government expects the plan to double Transnet’s freight capacity within the next seven years.


Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.


Is Chinese Manganese Supply Shrinking?

By Michael Montgomery—Exclusive to Manganese Investing News

Electrolytic manganese dioxide (EMD) has long been used in alkaline dry cell batteries, and is rapidly being developed for use in lithium-manganese batteries. These batteries have shown incredible potential in energy density levels, as well as rapid recharging and life cycle. They may just be the battery of the future for not only mobile electronics, but for electric and hybrid vehicles. However, in China a supply shortage of the material in the coming years means that producers of the metal worldwide may get a big boost.

China produced 1.4 million tonnes of manganese last year, with a capacity to produce upwards of 2.2 million tonnes. According to a report from Metal Pages, due to shrinking ore bodies, the production of electrolytic Mn may fall off dramatically in the coming years. “China may lose 500,000-700,000 tonnes a year of metal capacity in the next 3-5 years if no new resources are found,” stated Zeng Xianbo the General Secretary of China’s Sodality of Manganese Plant Directors. This massive reduction in supply will result in higher prices, as well as moves by China to protect their resource.

In an exclusive interview with Manganese Investing News, Larry Reaugh CEO and Mike Mcleod Chief Operating Officer of American Manganese (TSXV:AMY)(PINK:AMYZF) spoke about the prospects of manganese producers going forward.

After years with extremely high production volume prices fell, forcing many western mines to close due to low prices. China has moved to protect many of their national resources with tight production and export quotas, as well as building strategic stockpiles. Chinese officials have citied the environmental protection as the main reason for changes to trade policy.

“I believe that China will have to make a move to protect that resource, they don’t have the same quality ore bodies as in the past. I see the next step for China is to protect the resource similar to their recent actions for molybdenum,” stated Reaugh.

Recently, the Chinese National Development and Reform Commission (NDRC) encouraged the import of molybdenum and antimony to satiate domestic demand for the metals. The result of China being a net importer of molybdenum helped double the price of moly in a short period of time after the global economic crisis decimated the price.

The desire for high quality manganese deposits has motivated the Chinese and Indian consumers of the metal to look at Africa as the future supplier of their needs. “We are trying to find suppliers of Ghanaian ores,” stated a producer in Hunan province. In the first quarter of this year Mn exports from Ghana to China increased by 1,800 percent to 214,000 tonnes, according to Chinese customs data.

India is also looking to Africa for future manganese supply. “Manganese Ore India Limited, is also looking to revive Congo government-owned Kisenge manganese mines in the African country,” according to The Economic Times. Other major mining firms such as BHP Billiton (NYSE:BHP) are coveting deposits in Gabon.

The desire for manganese supply has until recently, been primarily linked to future steel growth. Currently, emerging technologies are also making demands on manganese which could dramatically increase the level of demand. The appetite for mobile electronics around the globe, as well as the switch to electric vehicles increases the need for lower cost and more efficient battery technology. This is where EMD comes into play.

“The annual demand for electrolytic manganese dioxide is currently around 270,000 tonnes. The rise of electric vehicle sales to approximately 10 million units per year, which according to industry projections could occur between 2015 and 2020, could increase the annual demand for EMD to about 5 million tonnes,” stated Mike Macleod.

While the 10 million electric vehicles in the next ten years my seem far-fetched, dramatic advancements in battery technology could make it a reality. Ford Motors (NYSE:F) Chairman, Bill Ford recently stated in an article for Fortune magazine, “I would say that about 25 percent of Ford’s fleet will be electrified by 2020.” He added that the company is hedging its bets by producing hybrids as well, however, both types of vehicles need electrical storage, and increases in battery performance will increase demand for the vehicles.