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First blast at new Kalahari manganese mining project

08 May 2012
HOTAZEL, Northern Cape ( – The first blast took place on Tuesday at the new R1.5-billion Kudumane manganese mining project near Hotazel in the Northern Cape.

Mineral Resources Minister Susan Shabangu conducted the official opening of what is the fourth new black-controlled manganese mining development under way in South Africa's well-endowed Kalahari.

Shabangu urged that steps be taken now to ensure that the economic legacy of the Kalahari manganese fields turns out much better than the disappointing legacy of poverty and alcoholism that has been left in the wake of the mined-out diamond fields of Kimberley, developed in the same province more than 100 years ago.

She said that development of the area provided the chance to extend economic freedom to South Africans through the many spinoffs that mining and beneficiation spawns.

Surface preparation and civil engineering work are being advanced at the site, which is being developed jointly by two black economically empowered (BEE) companies, Northern Cape Manganese Company and Dirleton Minerals & Energy.

The Kudumane ore reserve will be mined at an initial rate of 1.5-million tons a year, rising eventually to 2.5-million tons a year.

First production from the initial opencast phase is expected by year-end and project payback is expected within five years.

Privately owned manganese trader Asia Minerals Limited (AML) of Hong Kong owns 49% of both Northern Cape Manganese and Dirleton.

Funding will be by way of 40% equity and 60% debt from Standard Chartered bank.

AML's Japanese founder and chairperson Hirotaka Suzuki, who was present at the opening, was praised for sticking with the project from its initial prospecting phase through to final mine development.

Association of African Economy and Development president Tetsuro Yano - known as Mr Africa in Japanese diplomatic circles - urged more Japanese companies to follow Suzuki's example.

If economically feasible, a sinter plant will be constructed at the mine site by 2014 and, once power is available, the company will consider an on-site smelter for low-grade ores.

Up to 500 people will be employed during the construction phase and between 200 and 300 permanently thereafter.

Several small BEE companies own Northern Cape Manganese and anti-Apartheid struggle icon Zwelakhe Sisulu is the main shareholder of Dirleton and also Kudumane chairperson.

AML, which has equity in two smelters in China and which is building another in Malaysia, will buy one-million Kudumane tons a year for its own use and trade the remaining ore.

The Asian company, which is the financial and technical partner to both BEE companies, previously traded Assmang and BHP Billiton product.

Sechaba Letaba, a former GM of Assmang's Black Rock manganese mine, has been appointed CEO of Kudumane, which is scheduled to begin producing in the fourth quarter of 2012.

Project director is former Kalagadi Manganese technical director David Wellbeloved and AML South Africa director Schalk van der Merwe, an initiator of the project, will play the role of on-site project GM.

SRK carried out the full mining feasibility study to bankable standards and Bateman did the study for the process plant and the metallurgy.

Blue Chip Mining and Drilling, headed by Martin van Zyl, is the main mining contractor.

Kudumane will begin as an opencast operation and then go underground.

Ore will be trucked to Durban and railed to Port Elizabeth, in the Eastern Cape, with eventaul export from the proposed Coega manganese terminal, where South African port operator Transnet Port Terminals has again confirmed that it will relocate the current export manganese facility from Port Elizabeth to a new two-berth facility at the deep-water Port of Ngqura by 2015/16, which it says will also facilitate an expansion of South Africa’s manganese export capacity.

Van der Merwe sees the lack of rail capacity and the need to boost the economy of the Northern Cape as the business case for smelting inland.

AML, which trades about 200 000 t of manganese alloys a year, has also started construction of the Sarawak manganese ferroalloys plant in Malaysia, where production is scheduled to start in the third quarter of 2013 and reach 330 000 t/y production by the end of 2014.

AML customers include steelmakers Nippon and Kobe, of Japan, Hyundai of Korea and Bao of China.

AML has a right of first option to more Kudumane shares.

Other manganese mining projects currently under way in the Kalahari include the underground Kalagadi Manganese, owned 50% by ArcelorMittal, 40% by black women and 10% by the State-owned Industrial Development Corporation; the R1.7-billion opencast Tshipi Borwa project being developed by black-controlled Ntsimbintle; and the R1.2-billion Renova-backed black-controlled United Manganese of Kalahari.

Kalagadi’s planned mining and sintering segment of an integrated project is expected to absorb an overall capital cost of R11-billion, which also includes the proposed ferromanganese smelter at Coega.

Minerals processing and project management company MDM Engineering is also conducting a $500-million bankable feasibility study for exploration company Amari’s Kongoni manganese project in the Kalahari manganese field.

South Africa’s manganese story has been described as one of South Africa’s saddest mining stories, in that the country hosts 80% of the world’s manganese reserves and resources, but produces only 15% of the world’s manganese, compared with China, which produces more than 35% of the world’s manganese with less than 5% of the world’s manganese reserves and resources.

BHP Billiton has emphasised the point of South Africa’s “very significant” manganese resources in South Africa’s Kalahari basin on more than one occasion, as has the JSE-listed Pallinghurst.

Current major exporters of manganese from South Africa’s Kalahari basin include Assmang/African Rainbow Minerals and Samancor – run by BHP Billiton and owned partly by Anglo American.