[Ferro-Alloys.com]SA HAS the greatest manganese resource on the planet, but the domestic industry to extract and process the mineral appears in disarray. Global prices for the steel ingredient are deep in the doldrums, while high and rising electricity prices are threatening to close all the country’s smelters.

 

The Department of Mineral Resources insists it wants manganese beneficiated in SA despite the South African processing industry shutting smelters or curtailing production because operations have become uncompetitive as electricity prices increased 255% since 2009. With Eskom pushing for further increases to fund new power plants and to pay for diesel to fuel generators, the outlook is bleak, warned Hilgard Rademeyer, a director at Witbank manganese alloy smelting company Transalloys.

 

Transalloys, one of the few remaining manganese smelting companies at full production, issued an impassioned plea for the government to meet with the sector and find a way to save the industry.

 

If prices kept increasing the way they had been, there would be no more smelting industry in SA within three years, said Mr Rademeyer at the Mining Indaba on Wednesday. Transalloys was considering retrenchments and an output reduction, he said. "The locality of the manganese resources is the only competitive advantage we still have. Our electricity prices have destroyed all the other competitive advantages we had and our cost of production is not competitive at all," he said.

 

"The government needs to meet with the industry to think of creative ways to address the problems and ensure we are competitive in current market circumstances so that job creation and beneficiation are still a point of focus," he said. "The smelting will cease to exist within two or three years in SA if something is not done."

 

The continued closure of smelters would deal a telling body blow to the government’s beneficiation ambitions in manganese, a strategically important mineral.

 

However, the department’s Mosa Mabuza, the deputy director-general of mineral policy and investment promotion, stuck steadfastly to the line that the government demanded more beneficiation of the mineral and wanted research into alternative uses of the mineral so it was not so heavily dependent on the fortunes of the steel sector. "We need to very quickly as players in the manganese industry get into a room with all our views … and develop a Marshall Plan," Mr Mabuza said.

 

There was a terse exchange when Roger Baxter, CEO of the Chamber of Mines, offered the chamber’s services to bring the entire industry together to resolve mounting tensions about supply-side discipline as new entrants have poured into the production of manganese, with competition for allocation of rail capacity, and problems in the smelting of manganese.

 

Mr Mabuza shot down Mr Baxter’s offer, saying it was up to the government to host such a meeting.

 

Daphne Mashile-Nkosi, chairwoman of Kalagadi Resources, one of the new mining firms that has built a sinter plant to produce 2.4-million tonnes of smelter-ready manganese, tore into the department and Transnet, arguing that those who beneficiated manganese at the behest of the government were treated better than those exporting raw ore.

 

She blamed the government for showing no leadership.

 

"Mosa (Mabuza), you spoke of government co-ordinating efforts. What are you talking about? How do you co-ordinate efforts in a fragmented industry, where everyone is doing whatever they want and not looking at SA Inc."

 

Graham Kerr, CEO of South 32, the company housing the assets spun of BHP Billiton, warned manganese producers in SA had to constrain output in an oversupplied market.