Kudumane Manganese Resources, a new mining venture launched in the Northern Cape on Tuesday, is expected to establish a smelting facility that will meet demand for the metal from China, India and the Middle East.
Manganese is a key ingredient in the production of steel which is used in the building and construction sectors. Currently, China is the largest producer and consumer of steel, accounting for 46 percent of global steel production and 45 percent of its consumption.
Kudumane, which is aiming to take advantage of the demand from China, is a Japanese-backed joint venture between empowerment firms Dirleton Minerals and Energy, and the Northern Cape Manganese Company. Each of the empowerment partners owns equal shares in each other.
Hong Kong-based Asian Minerals Limited (AML), which has expertise in marketing and mining of manganese ore, owns a 49 percent stake in each of the two companies.
AML, which was started in 1993, already has customers in China, the US, Europe and Korea.
AML chairman Hirotaka Suzuki said last week AML operated smelters in China, Malaysia and India, and a smelter was on the cards for South Africa.
“We can do the smelting here, but the local market is not enough for the demand, so we must export the ore. We believe smelting is economical in the reduction of production.”
Kudumane has acquired mining licences for six farms in the Kalahari Manganese Field. About 30 million tons of the reserve is higher grade, and 70 million tons is lower grade, which can be used for smelting in South Africa.
Kudumane, a R1.5 billion mine, will produce 1.5 million tons in its first phase, and a total of 2.5 million tons in the second phase, which is expected to be complete in seven years. The mine’s life is expected to be about 50 years, says Suzuki.
Funding for the project had been raised through 40 percent equity and 60 percent debt. Standard Chartered Bank had approved funding for the project, Suzuki said.
“Demand for manganese ore from China, India and the Middle-East is growing. We need to provide them with more ore. In South Africa there is a shortage of power, and we want to produce more ore.”
Suzuki said in the mine’s first phase, the manganese ore would be transported to the port of Durban via trucks until Transnet had put its infrastructure in place. Transnet had a contract with Assmang, BHP Billiton, and United Manganese of Kalahari, a new mine in the Northern Cape, to transport 5 million tons. The contract expired in March. Suzuki said the company was planning to be included in the renewed contract as from April.
He confirmed that Eskom had guaranteed the company would be provided with power.
The company was confident it would be able make the most of Transnet’s R300 billion investment to double rail infrastructure capacity in the next seven years.
Kudumane chief executive Sechaba Letaba is a former senior general manager at local manganese producer Assmang. Kudumane chairman Zwelakhe Sisulu is the son of late ANC stalwart Walter Sisulu.
The company aims to produce 500 jobs in the construction phase and 300 full-time jobs when the mine is fully operational. South Africa is home to about 80 percent of the world’s manganese.