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Industry well placed to respond to global demand

An image of Charles Young

CHARLES YOUNG Increased partnerships and cooperation between the State and the private sector is the key to unlocking significant opportunities for the manganese industry and other stakeholders who rely on its success

12th April 2024

By: Lumkile Nkomfe

Creamer Media Reporter

     

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African law firm Bowmans asserts that the local and broader Southern African manganese industries are well placed to respond to global demand for the commodity.

With increased activity in steel manufacturing and the growing demand for battery-grade manganese, South Africa’s extensive reserves, relative to the rest of the world, will ensure that the region remains a crucial player in this industry.

Owing to the size of South Africa’s manganese mining industry, the firm adds that the local manganese market has been steadily growing over the past decade, and notes that the sector is a net contributor to the country’s socioeconomic development.

The firm also highlights the growing role of manganese in the production of green metals.

Bowmans measures the size of this market according to the volume of manganese reserves, the size of the export market, employment, the life-of-mine of existing manganese operations and the rise in manganese exploration activities. These measures suggest that the industry is not at sunset.

The firm has identified logistics around local rail and port facilities, such as the Port of Gqeberha, in the Eastern Cape; and Saldanha Bay, in the Western Cape, as challenges in the manganese mining industry’s contribution to world markets. It notes the positive engagements between manganese mining companies and State rail company Transnet’s new management team to find ways of improving the bulk logistics situation.

“We believe that increased partnerships and cooperation between the State and the private sector is the key to unlocking significant opportunities for the manganese industry and other stakeholders who rely on its success,” says Bowmans mergers and acquisitions partner and mining law head Charles Young.

He stresses that the manganese mining sector could benefit a broad range of stakeholders and propel growth in many parts of the manganese-prolific region of South Africa, especially in the Northern Cape.

However, the firm contends that the current beneficiation policy and mining regulatory framework remain underdeveloped, owing to less than substantive provisions in Mining Charter III.

“Our hope is that the long-promised reforms to the Mineral and Petroleum Resources Development Act will ultimately create a conducive beneficiation regime that takes into account the interests of all the stakeholders,” highlights Bowmans mining, environmental and energy law partner Wandisile Mandlana

Compliance, Funding Matters

Amid the cyclical nature of mining, with varying commodity prices and investment patterns, the firm notes the challenge of mining companies to secure debt financing at levels that would be in accordance with their growth requirements.

As such, mining companies are increasingly accessing alternative sources of funding, including royalty and streaming arrangements; however, Bowmans banking and finance partner Jason Wilkinson highlights that Bowmans is yet to see bank financing challenges specifically related to manganese investments, in contrast to those facing the coal industry.

In placing environmental, social and governance (ESG) factors at the forefront of a sustainable manganese mining industry, Mandlana stresses the importance of all industry players committing to actively combating so-called greenwashing – the process of conveying a false impression, or providing misleading information, about a company's products being environmentally sound.

In this regard, he notes that failure to adhere to ESG commitments could lead to legal repercussions, owing to the increased scrutiny on greenwashing practices.

The firm also notes that resolutions to the energy crisis and other public infrastructure challenges could lead to considerable growth in manganese consumption and in the export market.

Bowmans asserts that a variety of global mining companies and private equity firms from different geographies are looking to invest in the manganese sector to expand and diversify their portfolio, with global investors remaining encouraged when assessing the local and broader Southern African manganese mining sectors.

Foreign investors continue to have a strong appetite for making significant inbound foreign investment in the manganese mining sectors of South Africa and the wider African continent, Young concludes.

Edited by Donna Slater
Features Deputy Editor and Chief Photographer

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