Nearly 90% of the global manganese production each year is used in the production of steel. It’s no wonder then that prices of manganese and steel are closely tied together. South Africa accounts for 80% of the world’s manganese reserves while China, South Africa, Brazil and Australia are the leading producers of manganese.
One of the biggest challenges faced by South Africa’s mining industry is the lack of sufficient infrastructure, especially the rail network and the severe power crunch. Most of the manganese mined in South Africa is exported from Port Elizabeth. The railway networks that are used for transporting the ore to processing facilities or export destinations have become congested and haven’t kept pace with the demands of the country’s growing mining industry. However, the announcement of new rail capacity at the Port of Ngqura in the Eastern Cape has brought much cheer to the mining companies. In a recent development, a distributed power train with 208 wagons has been announced to increase the volume of manganese exports from Port Elizabeth and from Coega.
South Africa has to increase investment in new rail capacity and availability of economical power supply for manganese production in order to be competitive in the global manganese market.
Brazil accounts for around 18% of the global manganese production. The bulk of the country’s manganese reserves are concentrated in the Minas Gerais with smaller mines in Mato Grosso and Para. The biggest challenge for most Brazilian mining companies is poor logistical network, energy infrastructure and heavy rains. The country’s manganese production was severely impacted in April 2012 due to prolonged wet weather conditions. In the coming years, Brazilian mining companies could face a lot of heat from environmental groups due to the adverse impact of mining on the Amazon forests.
Vale, the most significant Brazilian mining company, accounts for 95% of Brazil’s manganese production. Originally state owned, Vale was privatized in 1997. Though the left-leaning government now owns only a 5.6% stake in the company, its national interest policy decisions are sometimes in contradiction to the company’s interests. The key to Vale’s dominance over manganese mining in Brazil is its ownership and access to vast infrastructure that includes more than 10,000 km of railroad, locomotives, ports and a huge shipping fleet. With the decline of the European markets, Brazilian companies are looking to export to the Asian giants and gearing up to face the cost pressures of shipping ore halfway across the world.
Manganese mines in Indonesia are logistically best placed to serve the Asian and European markets. High grade ore, proximity to shipping avenues and low labor costs make for low production costs. However, the country’s regime has imposed a steep tax on export of unprocessed minerals, including manganese, effective from May 2012. The tax is a move to increase investment in domestic ore processing facilities and is seen in some quarters as a precursor to a total ban on export of raw minerals and a means to weed out smaller players. However, foreign mining companies that have invested in Indonesia are concerned that the new policies will negate the advantages of low production costs. In recent years, powerful anti-mining protests that have erupted across Indonesia have put a question mark on the feasibility of operating mines in the country. The Islamic country is also very susceptible to unrest due to global politico-religious situations.