Despite a 25% quarter-on-quarter and 11% year-on-year decrease in production in the quarter ended March 31, ASX-listed Jupiter Mines’ 49.9%-owned Tshipi é Ntle Manganese Mining subsidiary remains on track to achieve guided full-year volumes of between 3.3-million and 3.4-million tonnes of shipped ore.

Quarterly production was 749 598 t.

The Tshipi mine, which is operated by Tshipi é Ntle Manganese Mining, sold 3% more product at 789 788 t, compared with the prior quarter, but sales were 16% lower year-on-year.

Jupiter says manganese ore prices rose in the reporting quarter from six-year cyclical low levels seen in the December 2023 quarter, with the average spot price for manganese grading 37% averaging $2.97 per dry metric tonne unit (dmtu), compared with an average price of $2.77/dmtu in the prior quarter.

The spot price since the reporting quarter ended, however, has averaged $3.04/dmtu, which is expected to bode well for the company’s next financial year.

Jupiter MD and CEO Brad Rogers says manganese ore prices have increased owing to concerns about supply shortages, particularly following cyclone damage at South32’s 60%-owned Gemco manganese mine, in Australia, which produces about 12% of global supply.

South32 has said it expects normal production at Gemco to be restored in the quarter ending March 31, 2025.

By April 29, the benchmark spot price was at $3.92/dmtu – a 29% month-on-month improvement.

Notwithstanding the sharp price increase in April, the current price is still only slightly above the six-year average of $3.88/dmtu. For comparison, Rogers points out that manganese prices reached a six-year high of $6.31/dmtu in April 2020 and a six-year low of $2.52/dmtu in November 2019.

The Tshipi mine’s earnings are sensitive to the manganese price. For every $1 increase in the price per dmtu, Tshipi’s earnings can increase by R1.8-billion, or A$146-million.

In the quarter under review, Tshipi generated net profit after tax of A$10.4-million, compared with net profit after tax of A$50.2-million generated in the same quarter last year.

In the year-to-date, net profit after tax totalled A$42.8-million.

MARKET VIEW

Rogers explains that the price of manganese alloys was under pressure during the March quarter as high stock levels resulted in supply and demand imbalances.

He adds that crude steel production in China increased through the quarter; however, pressurised steel mill margins, the overhanging alloy stocks and the resulting reduction in operating furnaces at alloy plants in China translated into downward pressure on manganese ore prices in March.

Lower manganese ore consumption rates in China were offset by lower manganese ore imports into the country during the reporting quarter. Lower manganese ore imports into China were the result of manganese ore production cuts and increased demand for material outside China.

Crude steel production in major regions outside of China generally showed growth on a quarter-on-quarter basis. Further growth in crude steel production outside of China is forecast in the second half of this calendar year, which should further drive manganese ore demand in major manganese alloy producing regions.

The multiple-month disruption of the Gemco mine will continue to support price increases through the near term, albeit not at levels higher than those recorded in 2020.