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Strong showing by South Africa’s Hillside helps to lift South32 to record aluminium output

South32 CEO Graham Kerr

South32 CEO Graham Kerr

22nd January 2024

By: Martin Creamer

Creamer Media Editor

     

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JOHANNESBURG (miningweekly.com) – Ongoing strong performance by South Africa’s Hillside Aluminium operation in KwaZulu-Natal has helped diversified mining company South32 achieve record half-year aluminium production.

Moreover, South Africa Manganese sales increased by 9% in the December quarter at a 5% price premium to the medium grade 37% manganese lump ore index.

There were lower secondary production yields at South32’s Australia Manganese, where a royalty tax equal to 20% of adjusted earnings before interest and tax applies.

Full-year guidance of 720 000 t of aluminium production remains unchanged at South Africa’s Hillside Aluminium, whereas in Mozambique, full-year production guidance for the Mozal Aluminium smelter has been reduced by 12% amid Mozal’s saleable production decreasing by 9% in the six months to December 31.

Furthermore, owing to some 60% of Mozal’s production consisting of below specification material in the last three months of last year, Mozal product sold at discount prices compared with South32’s other London Metal Exchange-linked aluminium sales.

“With some of our commodities facing headwinds in the half, we continued to focus on delivering cost efficiencies and expect first half operating unit costs to be below or in line with guidance for the majority of our operations,” South32 CEO Graham Kerr stated in a release to Mining Weekly.

“As we enter the second half, strengthening market conditions for many of our commodities, our planned 7% production growth and ongoing cost management focus, position us well to capture higher margin,” Kerr said.

BATTERY MANGANESE

Meanwhile, Financial Review journalist Hans van Leeuwen has reported from Davos that South32 is pressing on with plans to potentially supply manganese for battery making.

Kerr revealed in the report that initial memorandums of understanding with some battery makers and the supply of samples for a pilot study were now being expanded.

“We’ll give enough material so they can seriously test it,” Kerr is quoted as saying. Ultimately, South32 might produce high purity manganese sulphate monohydrate or HPMSM itself and sell that to the battery makers.

“When we thought about this three or four years ago, our marketing team said it would be about a 10 000 t market. Then all of a sudden, we’re talking to our customers, and they’re all asking for 60 000 t,” Kerr said. “It’s looking more promising.”

Three other companies involved in the manganese industry in Southern Africa are showing strong interest in the production of HPMSM battery manganese for the battery industry in general and battery electric vehicles (BEVs) in particular.

Foremost among these is Bernard Swanepoel’s Manganese Metal Co (MMC) in Mbombela, Mpumalanga, South Africa, which has a half-century of experience in adding value to manganese and has been engaging in far-reaching preparation for entry into the potentially colossal HPMSM market.

Trade & Industrial Policy Strategies (TIPS) senior economist Gaylor Montmasson-Clair describes the Mbombela company as “a South African industrial jewel” that could be much bigger than what it is today. He describes MMC as a one-of-a-kind company that should be supported on its growth trajectory.

TIPS, an independent, non-profit, economic research institution based in Tshwane, was established in 1996 to support economic policy development, with an emphasis on industrial policy in South Africa and the region.

All that stands between MMC and the construction of the battery manganese project in Mbombela is the finalisation of funding, which South Africa’s State-owned Industrial Development Corporation (IDC) has managed to achieve for Botswana to the extent that the Canada-owned Giyani Metals has described the IDC funding as being the cornerstone of its $26-million funding package.

Funding from the IDC for construction of South Africa’s own potentially paradigm-shifting initial HPMSM plant in Mbombela is still undecided, however, after more than a year of contact between the State-owned entity and MMC.

ASX-listed Jupiter, which, like South32, mines manganese in South Africa’s Northern Cape, has produced a 99.9% pure sample of HPMSM, a product that for good technical and cost reasons is wanted in BEVs and for battery energy storage.

Jupiter quoted the International Energy Agency as finding that the typical BEV will require more manganese than lithium and cobalt and Bloomberg New Energy Finance as expecting a supply deficit of 72% (relative to total demand) by 2030.

Because the producers of green products generally take steps to be green themselves, MMC has started wheeling to its plant 1.8 MW of clean, green hydropower from Lydenburg, also in Mpumalanga, from a hydropower station on the Crocodile river.

This was commissioned following the completion of a selection process for a vendor for the supply of solar photovoltaic energy.

Edited by Creamer Media Reporter

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