The world economy remains in turmoil amid the Covid-19 pandemic as new infections rise and in SA damage control is the only order of the day. Yet, in the middle of the sparse and arid Northern Cape, something unexpected is happening: a new mine is being built.
In the first week of August development of the East Manganese open cast mine near the town of Kuruman will begin. The operation is expected to produce its first manganese ore within six months.
“It’s a risk. We are doing it in the middle of the pandemic. But we realised we can’t wait,” says Vuslat Bayoğlu, MD of Menar SA, which owns East Manganese.
Manganese prices being volatile as they are, Menar aims to have East Manganese in production and ready to take advantage of the next price rise, he says.
Given the economic context in which this mine will be developed, Menar is aware of the need to keep costs down. Even so, it plans to invest about R250m in the open pit operation, which will create 80 job directly and a further 70 jobs indirectly.
There are only a handful of players in the industry, with South32 and Assmang being the biggest. SA is, however, home to 80% of the world’s manganese resources.
Manganese is an important contributor to the economy, supporting 10,800 jobs and bringing in about R47.6bn in revenue annually. Manganese is key in the manufacture of new technologies such as electric vehicles — a market with strong growth prospects.
Menar is a private investment company largely involved in coal in SA where it owns Canyon Coal, Kangra Coal and Zululand Anthracite Colliery. It bought the East Manganese asset out of pocket in September 2018. And with all the licensing and regulatory approvals now in place, development can begin.
The move into manganese is part of Menar’s diversification strategy. “We have too many coal projects; we thought we should look at other minerals in SA. We looked at chrome, manganese, this opportunity came,” Bayoğlu says.
While overregulation, bureaucracy and other complexities in SA are often seen as a deterrent to investors, Menar sees SA as a good investment destination.
Menar has a nickel project in Turkey, which is on care and maintenance due to low nickel prices, and is exploring for gold in Kyrgyzstan.
“I think every jurisdiction has advantages and disadvantages, I think in the case of SA it has got way more advantages than disadvantages. We look at things positively, we try our best and try to make it work,” Bayoğlu says. “I think a lot of companies give up very easily when they meet an obstacle.”
Bayoğlu does not see the department of mineral resources & energy as an obstacle for companies in SA. “I think they try their best to create economic value for the country,” he says. The department of water affairs, he says, would do well to improve its processes, which always take too long and delay projects.
Bayoğlu flags the department of environmental affairs as a particular hurdle “With this project there has been no problem, but in other projects we’ve had problems with the department. It started when minister [Barbara] Creecy came into power. This, I think, is a big problem for the mining industry.”
Another growing problem in SA is community unrest that affects mining and other operations. Maintaining good relations with the community is something East Manganese takes “very seriously”, Bayoğlu says.
To mitigate this risk, Menar is working to recruit workers from the surrounding areas and to provide procurement opportunities to locals. Initiatives included in the Social and Labour Plan, a regulatory requirement, will also bring benefits for the community.
But Bayoğlu does think the department of mineral resources & energy needs to provide some guidance on relationships between mines and communities, particularly in relation to the latest mining charter, which provides for greater benefits to mining-affected communities but which may also fuel unrealistic expectations.
East Manganese will have a short life of just three years, producing about 30,000 tonnes a month, but Bayoğlu says Menar is “actively exploring” more opportunities in SA manganese.
Correction: July 27 2020
An earlier version of this story incorrectly stated that manganese brought in about R4bn in revenue annually.
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