PERTH (miningweekly.com) – ASX-listed Element 25 has seen shipping costs reduced by about 45% from the Utah Point facility, at Port Hedland, after shifting from Handymax size vessels to Supramax vessels.
The company told shareholders on Thursday that Covid-related shipping congestion had resulted in a sharp increase in global shipping costs, which significantly impacted the company’s gross margins for the first two manganese shipments from its Butcherbird operation, in Western Australia.
A decision was taken in September to transition from the Handymax size vessels to the Supramax vessels, which the company said had successfully resulted in a tariff reduction for the third concentrate shipment of around 45% from peak rates to date.
Element 25 noted that while this was an important cost rationalisation exercise, shipping costs remained one of the key sensitivities in relation to costs and margins going forward until these macroeconomic conditions ease over a sustained period.
“The company is in constant discussion with its shipping brokers and offtake partner to explore strategies to manage and optimise freight costs throughout the business,” the company said in a statement.
The Butcherbird operation is expected to achieve nameplate capacity by the first quarter of 2022, with the Stage 1 processing plant to produce 365 000 t/y of high-quality manganese concentrate over a mine life of about 40 years, prior to a proposed expansion in Stage 2.