Manganese: GFG Alliance finalises takeover of South32’s TEMCO manganese alloy smelter

Australian mining firm South32 has now sold its entire stake in manganese alloy smelter Tasmanian Electro Metallurgical Company (TEMCO) – previously run by Samancor Manganese joint venture, owned 60% by South32 and 40% by Anglo American – to GFG Alliance. The transaction comes as part of a broader move by South32 to restructure its portfolio away from secondary production of manganese products.

The TEMCO smelter holds four submerged arc furnaces, including a sinter plant, and has a production capacity of around 150ktpy of HC FeMn and 120ktpy of SiMn used in the production of steel. Elsewhere, South32’s Metalloys manganese alloy smelter in South Africa remains closed, with the plant unlikely to reopen due to high domestic power costs.

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The TEMCO smelter purchase will enable GFG Alliance, a UK headquartered conglomerate, to build a fully integrated manganese ore-to-steel supply chain structure. South32 has signed an offtake agreement with GFG Alliance to supply manganese ore from its GEMCO (Groote Eylandt Mining Company operation) mine in north-east Australia to TEMCO. Furthermore, TEMCO’s manganese alloy supply will be consumed by its Whyalla steel mill and other steel plants outside Australia.

However, the takeover deal is underpinned by a discounted manganese ore supply to the TEMCO smelter. When the new offtake agreement ends, GFG Alliance will ultimately have to compete with major manganese ore miners and integrated producers in a supply-driven market. In addition, the strengthening Australian dollar against the US dollar will play a significant role in GFG Alliance managing the smelter’s production cost base against the backdrop of a weak US dollar in the future.

Roskill’s Manganese: Outlook to 2030, 16th Edition report was published in November 2020 and provides analysis on supply, demand, trade, prices, cost curves and forecasts. For more information or to subscribe, click here.

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