A silver lining for South Africa’s ferroalloys sector
South Africa is on the cusp of reviving its ferroalloys industry, but its progress depends on several reforms, including affordable electricity and fixing the country's logistics bottlenecks.
Speaking at the inaugural McCloskey Steel & Ferroalloys Conference in Cape Town, Menar’s Managing Director Vuslat Bayoglu highlighted South Africa’s (SA) strategic advantage in the ferroalloys sector as the world’s biggest manganese and chrome producer. The country is a leading supplier of these critical ores, which play a significant role in the global steel industry.
However, over the past two decades, SA’s ferroalloys sector has faced devastating declines, with the country’s smelter operations being mothballed or shut down due to high electricity costs and the lack of consistent power supply. “The demise of South Africa’s ferroalloys sector has greatly affected the country’s economy. While major steel producers like China import large amounts of our chrome and manganese ores, we are not beneficiating at the level we should be due to limited capacity,” he said. Bayoglu added that it was unacceptable that raw ores were being exported to China, where they contribute towards job creation while SA is not taking advantage of the same opportunities. “We need to work on this and bring the jobs back to SA,” he affirmed.
Bayoglu emphasised that this sector can be revitalised with reforms and innovative interventions to resolve power costs. He said Transnet Freight Rail’s (TFR) underperformance also added to a tough operational environment which was bad for exports. “For SA to regain its competitiveness we need to get reliable and reasonably priced services from TFR,” said Bayoglu.
Furthermore, the revival of SA’s ferroalloys sector will support reindustrialisation, contribute towards economic growth, and restore thousands of lost jobs. “South Africa’s ferroalloys sector has growth potential due to the increasing global demand for steel and other alloy products,” Bayoglu remarked. Crucial to the industry’s recovery is the acquisition of Samancor's Metalloys smelter complex based in Meyerton, Gauteng, by Khwelamet, a joint venture of Menar and Ntiso Investment Holdings. Khwelamet intends to bring the
ferromanganese complex back into operation. It had been under care and maintenance for a few years. The complex is situated at the centre of the Vaal industrial area, and its return under the Khwelamet brand symbolises a major boost to the economy.
Menar’s Chief Operations Officer, Clifford Hallatt, also spoke during a panel discussion about maintaining SA’s manganese sector's viability. Manganese is critical to the ferroalloys value chain. Hallatt said while efforts have been made to improve rail accessibility and affordability for miners, more needs to be done to optimise Transnet’s Manganese Export Capacity Allocation (MECA) project. Touching on other sector challenges, like financing, Hallatt pointed out that Menar’s business model was based on re-investing capital into new ventures. “Our model at Menar is self-funding our operations. We started mining East Manganese during COVID-19. All our projects are self-funded,” he remarked.
With the conclusion of mining at its East Manganese operations in the Northern Cape, Menar plans to develop a large underground manganese project, which will eventually feed into its ferromanganese business. Hallatt said there were lucrative opportunities for SA’s manganese producers despite the challenges.
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