Construction on R1,5 Billion BEE-owned managnese mine to start in Northern Cape

Saki Macozoma’s BEE mining company Tshipi é Ntle announced today that its board has allocated US$200-million (R1,45-billion) for the creation of a new manganese mine near Hotazel in the Northern Cape. 

Macozoma said construction of the mine, to be called Tshipi Borwa, will start in the first half of 2011 and that ore production will begin within 18 months.

“The development of this new mine is very positive for South Africa,” he said.  “It is a significant investment in terms of capital outlay. We are in partnership with Australian and Singaporean business organisations that have tremendous expertise and extensive international contacts. They bring international marketing expertise and access to reliable customers for our ore and by investing with us they have placed their faith in South Africa as a stable and reliable country with which to do business.

“We are very optimistic that Tshipi Borwa will make a significant financial contribution to the benefit of the people of South Africa.”

Macozoma said the Tshipi Borwa mine is designed to produce 2.4 million tonnes of top quality manganese ore every year for at least the next sixty years and that can easily be increased to five million tonnes per annum should economic circumstances warrant expansion. He added that the market for manganese is very positive. Even though the world is only slowly emerging from recession, steel production, for which manganese is critical, has continued to increase, driven by Chinese growth. The result is that several parties have expressed interested in taking our annual production,” said Macozoma.

Ninety per cent of manganese is used in steelmaking and therefore demand is driven by trends in steel production which has maintained strength throughout the recession because of Chinese production.  China produces 50 per cent of the world’s steel and is predicted to be a major customer for South African manganese which is of higher quality than that mined in China.

Macozoma said that initially 350 new jobs will directly be created by the new mine and as many as 2000 additional jobs created through the provision of goods and services.

He said that construction will begin as quickly as possible and that the necessary processes are underway including plans for the construction of a new rail siding which will be a modern, efficient rapid loading terminal designed to quickly load the manganese ore for transportation to the coast for shipping.

Tshipi é Ntle’s major shareholders are Australian-listed Jupiter Mines Limited which owns 49,9 per cent and South Africa’s privately-owned Ntsimbintle Mining which owns 50,1 per cent. Ntsimbintle is a braod based BEE structure. Jupiter, which is 85 per cent owned by Pallinghurst Co-Investors, announced last week it had raised $150 million (R1,083-billion) through a share issue part of which $100-million (R722-million) will be used to fund Tshipi Borwa. Jupiter director Priyank Thapliyal personally bought shares to the value of $1,5-million (R10.8-million). Ntsimbintle which is majority owned by BEE groups and has Australian listed OMH as a key 26% strategic shareholder, has used existing resources for its contribution. Many Northern Cape charitable groups will directly benefit  because they are Ntsimbintle shareholders.

Singapore-based OMH will manage marketing activities for Ntsimbintle’s share of production from the new mine. OMH is a world leading independent manganese focused producer, smelter and marketer. It already has a manganese mine in Australia and a sinter and alloy processing facility in China. “This transaction will considerably strengthen trade ties between South Africa, Singapore and China and will be beneficial for all partners,” said Macozoma.

Cynthia Mogodi, chairperson of the John Taolo Gaetsewe Developmental Trust which owns 15 per cent of Ntsimbintle, welcomed the news that construction of the mine is to begin. “It is very important for our area which is one of the most impoverished in South Africa,” she said. “It should be made widely known and celebrated in South Africa that this is a black-owned mine that will help provide a better future for the people of the Northern Cape and to generate tax revenues that will benefit all South Africans.

“The deal is a very good one for South Africa. OMH brings enormous expertise in the mining, processing and marketing of manganese and the proceeds of its acquisition of 26% of the company puts Ntsimbintle into a position where it is now able to fully fund its portion of the R1.5-billion needed to get the mine into production.”

Jupiter’s non-executive chairman, Mr. Brian Gilbertson, commented: “We are delighted at today’s decision to commence with the mine development at Tshipi Borwa.  This project, with its exceptional mineral resources, is expected to supply manganese into world markets for decades to come.”