Jupiter Mines, owner of Tshipi, has signed a 5-year agreement to export via Lüderitz Port in Namibia. The agreement is for 720ktpy of manganese ores. This new logistics channel is stated to deliver cost savings over the existing road channel and will help diversify and manage Tshipi’s overall logistics risk.
Manganese ores typically depart the manganese fields from Hotazel via a dedicated rail to Port Elizabeth, but growing volumes have been exported from all major ports in recent years. The availability of rail capacity and storage facilities constrains volumes amid growing supply from South African manganese mines. In the case of road freight, certain corridors become uneconomical depending on market conditions. The export via Namibia further diversifies the already overloaded network and illustrates the remoteness of the South African manganese fields.
Trade statistics show that exports of South African manganese ores in May recovered close to the 2019 monthly average mark of around 1.4Mt. This is an increase by a factor of nearly three times from April when South Africa went into full-scale lockdown. While mines have returned to production, exports have shown a similar sharp rebound.
There is anticipation of increased supply from South Africa over the coming months during peak mining season in the Northern Province, which will add to an already oversupplied market. Since the inventory highs of over 5Mt in February, port stocks in China have been on a steady decline into July; most notably, South African ores have declined by 13% since the start of May. This reflects the consumption of steel raw materials in China, as the industry rebounded quickly after its lockdown and benefits from domestic stimuli.
The standard grade (37% Mn) manganese ore market is heavily exposed to South African supply and prices have been volatile in response to output and logistical bottlenecks. To date, markedly lower production costs (producer currency devaluation against the dollar and oil prices) have lowered the steady state price level down 15% compared to average 2019 prices. If the cost floors hold as is, ore prices are likely to see more downside risk over the H2 of 2020. August delivery price offers from major manganese ore producers have fallen below US$4/dmtu amid healthy competition in China and weak consumption outside of China.
Roskill’s Manganese: Outlook to 2030, 16th Edition report will be published in September 2020 and provide analysis on supply, demand, trade, prices, cost curves and forecasts. For more information or to subscribe, click here.