ASX-listed Jupiter Mines recorded a consolidated net profit of $33-million for the half-year ended August 31, on the back of its $46-million share of net profit from its investment in Tshipi é Ntle Manganese Mining.

Jupiter declared an interim dividend of $0.01 per ordinary share, to be paid on November 17.

During the half-year period, the principal activities of Jupiter have been its investment in Tshipi and the sale of manganese ore.

Tshipi’s Tshipi Borwa manganese mine is a long-life, openpit manganese mine with an integrated ore processing plant located in the Kalahari Manganese Fields in the Northern Cape province of South Africa.

For the half-year period, Tshipi recorded a net profit of R1.1-billion ($93.7-million) and declared a total of R550-million ($48.9-million) in dividends to its shareholders.

Tshipi’s net profit was higher year-on-year owing to a 2.4% increase in sales tonnes and a 10.8% increase in the average cost, insurance and freight (CIF) price achieved.

Tshipi and its mining contractor, Moolmans, embarked on an operational improvement programme at the start of the financial year, which is noted to have delivered progress during the period, with total volumes having improved.

Shipping costs have started correcting, resulting in lower CIF costs.

Low-grade production was suspended in May and will only be produced for blending purposes.

Logistics capacity from the low-grade volumes was used to transport high-grade ore and Tshipi shipped 1.7-million tonnes of ore in the six months under review.

Rail and ports operator Transnet continued to struggle with rail disruptions, including as a result of cable theft, derailments and flooding that impacted on the Manganese Export Capacity Allocation channels.

Tshipi says it was able to access additional road trucks to ensure shipping targets were met.

MANGANESE MARKET

Jupiter outlines that the global economic environment has been impacted by decade-high inflation across several regions, political unrest and continued Covid-19 restrictions during the six-month period.

These factors have contributed to a slowdown in global economic activity, which has impacted on crude steel production – the largest consumer of manganese ore.

Chinese crude steel production accounts for about 56% of global crude steel production and production in this region has been impacted by weak demand from the industrial and construction sectors, particularly buoyed by the sustained depressed real estate sector, Jupiter points out.

It says crude steel production in other major steel-producing regions has also been impacted by weakened demand and, more recently, by a widespread energy crisis which has put pressure on energy intensive industries such as steel mills and alloy plants.

Manganese ore prices have fluctuated through the period and remained particularly resilient in the first quarter of full-year 2023, as high-grade oxide supply concerns supported prices and, to an extent, semi-carbonate prices leveraged off this, Jupiter points out.

However, it says manganese ore prices started to decrease as the period progressed as supply concerns abated and weakened demand continued.

With weak demand from regions outside of China, increased manganese ore tonnage was and continues to be exported to China further affecting prices. This has led to a rise in manganese ore stocks at main Chinese ports.

With the supply of high-grade material having improved, the price premium over semi-carbonate material has also reduced after historical highs.

Freight rates remained elevated at the beginning of the period, particularly given the uncertainty of the conflict between Russia and Ukraine, which led to an increase in oil prices.

Since July, manganese ore CIF prices have also decreased with the decrease in freight rates. Freight rates have reduced as a result of global economic factors impacting supply and demand fundamentals but also as costs decreased.

The introduction of further stimulus and policy measures, particularly aimed at steel-intensive industries and their downstream sectors, is essential to promote steel demand recovery which should in turn assist with promoting manganese ore demand and consumption, Jupiter emphasises.