Manganese: Transalloys declares force majeure at its manganese alloys plant

Transalloys has declared force majeure at its eMalahleni, Witbank plant on 22 August after a fire at its manganese ore storage facility affecting supply of feedstock to the plant’s five furnaces. The company decided to shut down all five furnaces with a view to resume part of the operation in late September. The company had already announced that it was cutting silicomanganese production by 30% to 120kt for 2020.

Transalloys is a silicomanganese producer based in the Mpumalanga Province in South Africa. The company was established in 2007 when Renova Group, a Russian diversified investment holding, acquired a majority shareholding in the Transalloys smelter in South Africa and a 49% minority shareholding in the UMK (United Manganese of Kalahari) mine, also in South Africa. Most of the company’s production is sold to the USA, followed by Europe, with the remaining portion sold to Asian markets.

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The Transalloys plant has faced, and still faces, a number of operational challenges this year, namely the disruption caused by COVID-19 lockdowns, unfavourable market conditions, power outages and high electricity prices. Specific to local electricity issues, Eskom announced stage 2 load shedding on 1 September this year, citing breakdowns of the grid at seven power stations. The closure of the plant for a second time this year highlights the susceptibility of the company’s manganese smelting operations and the wider energy intensive smelting industry across the country to intermittent power outages.

A weak market for ferroalloys already existed coming into the COVID-19 outbreak and some volatility in prices was expected as many ferroalloy producers were operating at a loss. US silicomanganese prices were down by 10% to US$0.54/lb (in-whs Pittsburgh) as of end-August from a 2020 high of US$0.55/lb over the period from March to May. While European prices have fallen by more than 15% to €850/t (US$1,000/t) as of end-August, from a high over the period from March to April, silicomanganese prices are likely to soften over the near term.

The effects of COVID-19 could result in further permanent shutdowns in the EU while the US steel industry’s future may depend on the infrastructure programme, subject to the outcome of the US elections in November of this year. The impacts of COVID-19 are likely to accelerate and exacerbate any market volatility over the course of 2020 and, to a lesser extent, 2021.

Roskill’s Manganese: Outlook to 2030, 16th Edition report will be published in October 2020 and provide up-to-date analysis on supply, demand, trade, prices, cost curves and forecasts. For more information or to subscribe, click here.

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This article was written by Ramsey Yavuz. Please get in touch below if you wish to discuss further:

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