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BHP Billiton wants cooperation with Renova to ensure new manganese capacity does not harm SA industry
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18th September 2006
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The world's largest diversified miner, BHP Billiton, says that it is keen to cooperate with Russian minerals company Renova in exploiting extra manganese capacity in the Northern Cape, but cautions that a new mine could threaten the viability of the local industry.

During a recent visit to South Africa by Russian President Vladimir Putin, ZAO Renova indicated that it might open a manganese mine in South Africa next year. Renova confirmed that it was looking to spend $1-billion over the next five years on a manganese project in the country, including the development of a mine in the Kalahari and a smelter at the port of Ngqura in the country's Eastern Cape province.

During the visit, State transport company Transnet signed a cooperation agreement with Renova, which would need to transport ore to the port.

BHP Billiton president: manganese Peter Beaven tells Mining Weekly Online that, while it was keen to pursue cooperation with Renova, the company would also defend its market share if necessary. He argued that the opening of a new manganese mine in the Northern Cape could put prices for the black metal under real strain. Manganese, which enjoyed a purple patch on strongly rising steel production, saw its fortunes turn somewhat negative during 2006, with estimated oversupply of between 800 000 t and one-million tons having deflated manganese prices to $700/t from a high of some $1 000/t.

“Cooperation is the way to go,” Beaven stated. “But we are in a good cost position in our operations in the Northern Cape and Australia, and will not give way to a new entrant.

The entire Northern Cape industry would also be put under pressure if a new manganese mine was opened, Beaven argued. The province boasts 80% of global manganese reserves.

Beaven reported that BHP Billiton had extra capacity at its Hotazel operations, in the Northern Cape, and this would go underused if a new mine were indeed commissioned.

He emphasised that the advantages would be greater for the region if the newcomer cooperated with BHP in exploiting this extra capacity, and even said that the company would be willing to initiate talks in this regard.

Beaven warned previously that the future of manganese mining in South Africa could be threatened, should new mines be developed in the Kalahari region while existing mines still had excess capacity and infrastructure.

“Developing extra unnecessary infrastructure creates inefficiencies and increases costs,” he argued, adding that higher costs made it more difficult to compete in the international market.

Beaven noted that Samancor had a significant focus on reducing costs, and would continue to focus on reducing its costs base, whether there was a new entrant to the local manganese market or not.

This would put the company in a good position to supply a growing demand for seaborne manganese ore.

BHP Billiton estimated that global seaborne manganese-ore demand would grow to nearly 15-million tons, from current levels of some 11-million tons.

In 1995, BHP had a 68% share of the global manganese market, which had dropped to 53% by 2005, owing to the entry of new participants into the market place.

Assmang is another a significant manganese-miner in the Northern Cape.

Edited by: Matthew Hill

 

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PETER BEAVEN
 

PETER BEAVEN