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South32’s SA manganese expansion challenged by Transnet railing headaches

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South32’s manganese mine in Hotazel

SOUTH32 said the expansion of its manganese operations in South Africa’s Northern Cape turned on overcoming the capacity logjams of Transnet.

Speaking in an interview in June for Miningmx’s Mining Yearbook, South32 CEO Graham Kerr said the expansion of its South African manganese business, in which it had a 60% stake (the balance held by Anglo American), could be viable, however, as rivals failed to finance deeper reserves.

Transnet is the government-owned freight and logistics company. It has been under fire lately for poor rail utilisation caused by copper cable theft and vandalism. South32 said in its fourth quarter report it had used high cost trucking – a step made possible by the high price manganese – to transport ore to South Africa’s ports.

In the June interview, Kerr said: “Let’s say it takes up to somewhere between 10 and 12 hours to load some of our trains. That’s not going to make them as effective as they can be so part of the … study we’re doing is to say: ‘How do we turn these trains around quicker at our end which actually de-bottleneck some of their [Transnet’s] challenges’”.

He added that his company would be interested in a take or pay obligation that would assist with investment Transnet needed to make at its Saldanha Bay port. “I don’t think it’s all one side. We’ve got to think about we allow Transnet to align the network better.

“I still think that they will manage to squeeze another three or four million tons (a year) out of their network,” said Kerr.

The depletion of lower grade shallow manganese resources in the Northern Cape would create opportunities for South32. “If you think a time frame in 2026/27, you’re probably looking more at underground developments,” Kerr said of manganese output out of the Northern Cape.

“That will probably be a challenge for some of the producers today because they’re not really well-equipped to spend large amounts of capital development or shaft development or decline development to get to those underground resources.

“Nor would they necessarily have the resources to run them when prices go through the ups and downs that we see in manganese,” he added.

South32 reported a 3% higher production of manganese ore from its South African business coming in at 580,000 tons for the third quarter. This took full year production to 2.26 million tons – 21% higher year-on-year.

South32 is due to report its full year results on Thursday.

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