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Manganese shores up black mining companies.

Despite lower global demand for most mining products, the black empowerment firms that have invested in South Africa's manganese sector over the past two years are making strong progress.

Most have formed joint ventures with the established mining companies that dominate an industry heavily dependent on a single area in the Northern Cape. To take one example, Ntsimbintle Mining, which represents local communities in the Northern Cape itself, works alongside industry giant Samancor Manganese in developing mines in the region. Samancor is owned by BHP Billiton (60%) and by Anglo American (40%),

Another key newcomer is Kalagadi, which has formed a joint venture with Arcelor Mittal of India to develop a R4.2bn ($41.5m) mining project near Hotazel in the Kalagadi Manganese Basin. First production on the 2.4m ton reserve is due in 2010, with commercial operation expected to continue for a minimum of 20 years.

Kalagadi is 80% owned by Kalahari Resources, a firm mainly owned by black female South Africans, while the remaining 20% is held by the state owned Industrial Development Corporation (IDC). Apart from mining, the joint venture will construct a sinter plant on site and a smelter plant at the new Coega industrial zone in the Eastern Cape.

African Rainbow Minerals (Arm), which describes itself as a 'diversified black empowerment miner', announced a plan in 2005 to double its production of manganese and other minerals by 2010. In December, Arm's chief executive Andre Wilkens confirmed: "We are on schedule with that. We have spent a lot of money, but the company is growing, and although there is a slowdown in the world, Arm is standing very strong."

After investing $79bn in iron ore, manganese, platinum, nickel, coal, and chrome projects over the past four years, it intends to commit more than $11bn of new funds over the next four years.

Wilkens commented: "We see that we have a very good stretch of commodities and in the current times, it is very good to have a spread of commodities like this. Some of them will actually battle now, and some will do very well--it makes the company very strong." Apart from supporting shareholders, the company has set up a trust to invest in a wide range of different development projects.

Yet there is no doubt that international demand for manganese is falling. In December, BHP Billiton revealed that it planned to reduce manganese ore production by 21% and alloy production by 23% during the course of 2009 in South Africa's Hotazel Basin and also at its Gemco mines in Australia.

The company's chief executive of ferrous and coal, Marcus Randolph, commented: "We will continue to monitor the situation and when we see a recovery, we expect to be well placed to restart our full production alloy capacity. In ore, the development activities and rebuilding of depleted stocks will also allow us to react quickly to any recovery in the market." NF
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Title Annotation:SOUTH AFRICA
Comment:Manganese shores up black mining companies.(SOUTH AFRICA)
Publication:African Business
Geographic Code:6SOUT
Date:Feb 1, 2009
Words:487
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