JOHANNESBURG (miningweekly.com) – Mining company Menar is very hopeful that trade relations between South Africa and the US are normalised very soon, and points out that if they are not, the US will also be adversely affected and not South Africa alone.

Menar MD Vuslat Bayoglu emphasised this dually adverse outcome when he spoke to Mining Weekly in a Zoom interview. (Also watch attached Creamer Media video.)

Menar is a private investment company with a portfolio of diversified minerals that include anthracite, coal, manganese and ferromanganese in South Africa, gold in Kyrgyz Republic and nickel in Türkiye.

“It is critical for the US to quickly settle the dust to prevent farmers, for instance, starting to look for alternative markets. The US and South African farmers have for years built this supply chain successfully, and they don't want to waste this relationship. The same applies to the mining industry.

“For ferromanganese, it's critical for us to be able to supply product to the US, but if we can't, then we need to look at alternative markets, maybe in the Middle East or maybe to some East European countries that are growing in steel manufacturing.

“Because China created its own capacity on ferromanganese, South African production will have no option but to go to either US or Europe or the countries that are trying to push their steel production.

“So, it’s a critical relationship and we’re watching it very carefully and hoping that the relationship goes back to its normal position,” Bayoglu outlined.

Menar is trying to bring Khwelamet, formerly Metalloys, back into production in Meyerton, Gauteng, and sees that its market is going to be mainly the US.

“We’re talking to potential customers to make sure that when we’re back into production, we'll be able to move our products,” added Bayoglu.

The US is an important trade partner for manganese and ferromanganese, and Menar’s awareness of that is why the company is watching what is happening between South Africa and US very closely.

“But the US relationship is critical for South Africa in the same way as South Africa's relationships with Japan, China, Germany, France, and the UK are critical.

“They're all critical because we’re living in a global village, and we can't afford to have a bad relationship with another country, and especially with United States, the biggest power in the world.

“We need to have the right relationship so that our business people are not affected, because we've got other challenges in South Africa to solve. This is a man-made challenge, and we can fix this problem, and then we can move on.

“We can move on addressing unemployment challenges, Eskom challenges, Transnet challenges, and the gap between rich and poor. All these things can be addressed, once we have smooth relationship with all of our trading partners, and United States is one of the important ones, because it's a massive market for our products, because there the consumption rate is high, the GDP per capita is high. From those perspectives, we can't afford to lose the US as a partner.

“But on the other hand, the Trump Administration also knows that if they push this too hard, then at the end of the day South African producers are going to look for alternative markets, and that would be bad for the US as well, because, let's say, if I am producing ferromanganese, and if they don't want to buy ferromanganese from me, then what am I going to do?

“Then I’ll go and try to sell my products to East European countries, be it Romania, be it Poland, be it the Czech Republic. Then when Americans want to buy ferromanganese, I’ll have to say, sorry, guys, I don't have ferromanganese, and then the US will have to go to China.

“Again, it will create more dependency for them on China, so while they have a friendly South Africa, I think they need to benefit from this relationship, and they should not stretch things too far, because if they do, everybody – manufacturing industry or farmers or miners or the smelters – will look for alternative markets.

“But I personally believe that this hurdle is going to be passed. I think President Ramaphosa and his team and the special envoy, former Deputy Minister of Finance Mcebisi Jonas, are going to do a good job, and we will eventually settle all these things, and then, hopefully, this tension will not result in our trade being adversely affected. So, I'm very hopeful about this, and I think we'll be normalised very soon,” Bayoglu highlighted.

Mining Weekly: What do you think are some of the major impacts of President Trump’s policy decisions on the global economy, and what implications does this have on the critical minerals sector?

Bayoglu: The biggest challenge that the global mining industry is having with Trump's policies is the investment environment of complete uncertainty that it creates. It's a bit chaotic, to be honest, because the minute that these tariffs start flying around at 100%, 200%, 300%, then people don't know what to do. They don't know what's going to be next. They don’t know whether trade is going to stop completely or whether it's going to slow down. The main issue is the uncertainty that Trump's policies are creating. But we see he's now settling down. He and his team have done a deal with China, which is great for the world, I think, and he was mentioning that he's expecting a South African team to talk to him about the matters between South Africa and the United States. These are positive things that are happening to settle the dust. But the reality is these tariffs created a massive chaos. To give you an example, we were supplying South African anthracite to a trader in the United States for use by steel mills. We created this market when we bought Zululand Anthracite from Rio Tinto, and it was working very well. They were buying three cargos a year, but for the last six, seven months, they have been completely quiet. They're not talking about anything. When we ask them, what is the next thing, they say, no, we’re waiting. We then had the courage to ask, okay, what's going on, why are you waiting, what are you waiting for, because we thought that Trump's 25% tariff on imported steel would actually boost the local steel manufacturing in the US, which would mean that they would need to use more anthracite. They said, no, you're right, steel manufacturers were very excited in the beginning, but then the uncertainty made investors wait instead of pushing for more US steel production. This is a very simple example and one arising from an experience we’ve had that shows me that the uncertainty is massive, and I think the Trump administration should consider settling all these things as soon as possible, so that we know where we're going. Because what Trump’s deciding is not only affecting the United States but it's affecting everybody in the world. Yes, our minerals, such as coal, manganese, PGMs, gold, and chrome are excluded from the tariffs, but a slowdown in the global automotive industry that's selling to United States is affecting PGM sales from South Africa to those countries, be it Europe, or be it China. The other thing important to know is that 76% of our minerals going to United States are PGMs. It's about R65-billion in 2024 and it's excluded, so that means it’s not going to be affected but the other countries that are buying PGMs to produce catalytic converters in the automotive sector, are affected by the tariffs, and we expect a further slowdown unless the tariff issues are sorted. So, my main message in this whole thing is that the uncertainty is bad for the world, because uncertainty means steel production is going to be slowing down, which means chrome, manganese, iron-ore, coal, anthracite, coking coal, have all been affected. We need the US administration to settle all these things and to ensure that the health of the economy of the world is restored, because at the moment, the economy is very sick. People don't know what's going to happen next. We need certainty and more consistency. Changing to a different policy every day is not helping any of us in the mining sector in South Africa.

Beyond the controversies, are there any lessons South Africa can take away from the Trump administration, especially regarding policies that promote national interests?

I think there's a lot to learn from this whole thing. We can learn a lot from the ‘Make America great again’ idea because they are talking about their independence from a country such as China, for instance, in terms of minerals like rare earths or the critical minerals they need to use for electric vehicle batteries or chip production for computers or any type of equipment. They realise that they have been depending on China heavily or certain countries in Africa heavily for critical minerals. For instance, the DRC is a critical country for them because of copper and cobalt and 80% of copper cobalt production in the DRC is controlled by Chinese companies. I think Americans are asking why did we lose the plot, why did we lose our competitive edge in DRC, and they’re trying to do deals, which is normal. I mean, I would have done the same thing if I was there. What we should learn as South Africans is, for instance, Europe is coming up with ideas of South Africa needing to do the just energy transition. We need to go from coal to renewable energy, plus gas. I think we need to be very careful with this, because every country has its own recipe for power generation. South Africa needs a lot of investment for the grid and for the battery storage and for renewable energy. Is this the right way to do these things? What happens if it doesn't work, and whole country’s in trouble, and we see the examples of this. We should not be dependent on other countries for funding or technology. We should rather depend on our own resources in South Africa. We can look at maybe exploring more for gas. We should look at how we deal with the bad gases coming out of Eskom’s chimneys. We need to deal with clean coal technologies, and then we need to look at how we can be independent from other sources, other countries for our energy industry, because without energy, we saw that we've been experiencing loadshedding heavily in the past, and we don't want to go back to those days. So what does what is happening in the US mean for us? People in America are supporting Trump because he's talking about making America great again, producing in America, being energy independent from any other country. Yet we are putting ourselves in a situation where we’re going to depend on another country for gas. If we don't have gas, what is the purpose of putting up gas-fired power stations? It doesn't make any sense. If we don't have enough money, what is the purpose of putting up nuclear power stations? That's the energy side. But on the mineral side, we have actually lost a massive competitive edge to China when it comes to ferrochrome and ferromanganese production. We have the largest chrome and manganese deposits in the world, and we have the cheapest chrome production coming from PGMs as a side product, and we’re not really benefiting from this. We lost the production capacity on ferrochrome and ferromanganese to China. Now we need to think about why and how we can restore these industries, because we still have the manganese and chrome. We're going to still carry on mining this for a century, and maybe beyond that. We need to think about how we can benefit as South Africans from these to create jobs and to get more GDP, by beneficiating in South Africa. This is a serious point coming from a mining guy, because I want to export my product. We export coal, we export anthracite. But when I export chrome and when I export manganese, I'm exporting jobs to China. We need to beneficiate these products in South Africa so that we can solve our 35%, 40% unemployment issue, because we don't have Silicon Valley, but we have a strong mining industry and we need to think about how can we benefit from these minerals, for the people of South Africa, because these minerals belong to the State and the State’s position is to create welfare for the citizens of the country. Twenty years ago, we had a thriving textiles industry. We lost everything to China. Now, everything that's sold in the shopping malls and textile shops, it all comes from China. But they used to be produced in Cape Town, in Durban, in Johannesburg, and it was used by the people in South Africa, and it was creating jobs for South Africans. South Africa is very open to do business with every country, but the South African government needs to start considering whether this means that South Africa eventually becomes a country that imports everything and exports only minerals. Is that something that we can live with? We talk about a 0.5% VAT hike. Instead we need to think with a different hat on. We need to ask the right questions, such as what is the right thing for the minerals industry, for South Africa? We have vanadium. What can we do with vanadium? How can we leverage for the minerals that we have in South Africa, and we need to look at using these things for the benefit of the country. If we can manage to strengthen our mining economy, that will actually be converted into political strength.

Do you see the US as a viable partner for South Africa’s manganese and ferromanganese sector going forward?

Definitely. South African ferromanganese production was mainly destined to Europe and United States. It's critical for steel manufacturing. We are trying to bring Khwelamet back into production, formerly called Metalloys, and we see that our market is going to be mainly United States, because Europe is very slow at the moment economically. Because our main market is going to be United States, we’re trying to find out who the customers are going to be. We’re talking to potential customers to make sure that when we are back into production, we'll be able to move our products. US is an important trade partner for South Africa for manganese and ferromanganese, and we’re very aware of that, which is why we’re watching what's happening between South Africa and United States very closely. It's critical for us to have a good relationship for our business with United States, but in general also for the South African economy, especially for manufacturing, agriculture. You’ve got over 180 Fortune 500 fortune companies operating in South Africa, in agriculture, mining and manufacturing industries, and for some of the companies, the US is a very critical partner to move their products. It is critical for the US to quickly settle the dust to prevent farmers, for instance, starting to look for alternative markets. The US and South African farmers have for years built this supply chain successfully, and they don't want to waste this relationship. The same applies to the mining industry. For ferromanganese, it's critical for us to be able to supply product to the US, but if we can't, then we need to look at alternative markets, maybe in the Middle East or maybe to some East European countries that are growing in steel manufacturing. Because China created its own capacity on ferromanganese, South African production will have no option but to go to either US or Europe or the countries that are trying to push their steel production. So, it’s a critical relationship and we’re watching it very carefully and hoping that the relationship goes back to its normal position.

Given South Africa’s longstanding relationship with the US and recent tensions, how crucial is it to mend relations between the two countries? 

I see the tariffs issue, or President Trump making political statements about what's happening in South Africa, as being part of a negotiation. President Trump is a businessman, and I think he's trying to negotiate, and this is the way that he negotiates. Nobody is used to this kind of style, but I think people are learning. If you look at how China responded, and then eventually made a deal, South Africa needs to understand that there is a new chief in town, and we need to understand what he's looking for to work with us. Because when he makes a statement about bad things happening in South Africa, and that there's white genocide, we all know that that's not true. The people who are going or applying for refugee status also know that it’s not true. We all know that there is rule of law in this country. We all know that nobody's land is expropriated. We know that this is one of the best democracies in the world. We’ve got freedom of speech in this country. We all know this but why is a smart man like Trump making a statement like this? It’s because this is the way that he negotiates, so then we need to respond to him and politely ask, okay, how can we help you? What do you want? I think President Ramaphosa has been, has been managing this well so far. He appointed a special envoy, former Deputy Minister of Finance Mcebisi Jonas. I think it's a great appointment, and most of the country's businessmen are backing him with his efforts to go in and talk to the Trump administration and then find out how we can solve the differences and to solve what are seen as issues.