The diversification strategy of private investment and management company Menar is very much in sync with the global push towards a greener future, says Menar MD Vuslat Bayoglu.
Speaking to Mining Weekly in an online interview for this Joburg Indaba Preview Feature, Bayoglu outlined how Menar’s existing South African portfolio of coal, anthracite and manganese will be diversified with the right mix of minerals, including those that are required for the production of greener energy.
“We are on the lookout to have a very diversified portfolio in the medium- to long-term,” says Bayoglu, who is also aspiring to be in iron-ore and chrome in South Africa.
Outside of the country, Menar is in nickel-cobalt in Turkey and could well emerge as a gold junior in Kyrgyzstan.
Meanwhile, as things stand, supportive of the move towards a greener world is the coal that continues to be needed for the manufacture of steel for use in wind turbines and solar panels.
“This is the nature of the transition,” says Bayoglu. “It’s complex.”
In addition to operating the new East Manganese mine, Menar is scheduled to begin drilling at the end of September to confirm the viability of a project in an area known to be manganese rich. Should it be successful, Menar’s exposure to manganese will be scaled up at a time when the current upside in the commodity cycle is forecast to be sustained.
Mining Weekly: What is Menar’s diversification strategy?
Bayoglu: Our diversification strategy has the following pillars. The first pillar is to continue operating our existing predominantly coal mines and bringing existing rights into operations.
This leads us to the second pillar: generating capital for diversification. By managing our current operations prudently and bringing into operation existing rights, we will generate capital that will enable us to take advantage of opportunities that are in line with our goal to be a miner with a diverse portfolio. The third pillar is to successfully operate our East Manganese mine, which is our latest development intended at reaching our diversification goals. The fourth is being on the lookout for acquisition targets – either in operation or in need of development – in manganese, iron-ore and chrome. For those that are in operation, we are looking at those in need of capital injection, technical ingenuity and managerial turnaround to scale up production and improve efficiencies. These are all areas in which we have a proven track record.
We are in conversation with a few potential partners with interest in manganese. We have signed a deal with a rights owner in an area known for its rich deposits of manganese. We will begin drilling to confirm the viability of the project at the end of September 2021, should it be successful, we will significantly scale up our exposure to manganese. It will place our company in a totally different league. And we will consider making an announcement at the right time.
To what extent does the strategy dovetail with the world’s current need to go green?
It is very much in sync with the global push towards a greener future. As things stand, coal production and coal beneficiation is, ironically, important for the manufacturing of steel for usage in wind turbines and solar panels. Until such time that most countries are able to manufacture these products without coal energy, it is not entirely counterproductive to use coal to produce the means that will enable the world to reduce carbon emissions. So, our first pillar is, in a very pragmatic way, supportive of the move towards a greener world. Of course, we are hoping that at some point cheaper, easy-to-apply and more effective cleaner coal technologies will come on stream and get support. But the importance of coal in helping us achieve a greener future cannot be underestimated. It’s very much like what we saw in the beginning with the solar independent power producer (IPP) bid windows at Eskom. Revenue earned from coal-fired power stations that were producing cheaper energy was subsidising the expensive wind and solar IPPs at the time. This is the nature of the transition: it’s complex. It’s not as straightforward as some people would like to think it is. Over time, our portfolio in South Africa will be diversified with a right mix of minerals, including those that are a requirement for the production of greener energy. We have already started with manganese, which is a key input in steel manufacturing, and we are in the lookout to have a very diversified portfolio in the medium- to long-term.
What is the timeframe for Menar’s diversification?
We are currently at a phase of being actively in the lookout and talking to potential partners. If all goes well and the drilling results are positive and geology allows, we’ll be ready to start clearing the ground of the new potential manganese acquisition within six to 12 months. Unfortunately, due to confidentiality issues, we are not able to disclose the name of the project yet. We have also been eyeing an iron-ore project, but we are not clear as yet when the owner of the resource might be willing to consider and accede to our comprehensive offer. So, it’s difficult to put a timetable on it, but I can confirm that we are currently on a diversification mode.
What demand does Menar foresee that will drive that strategy?
Decarbonisation, post-Covid global economic recovery plans, a resurgent China and the US, emerging market economies like India aggressively playing an industrialisation catch-up. All these provide a clue of the kind of mineral resources that will be required. All these trends will fortunately sustain the current upside in the commodity cycle. We therefore think that our strategy is in line. We just need to quicken the execution.
What market shares does Menar view as being ideal within a diversified portfolio?
We are a medium-sized player in coal and anthracite in South Africa. We are a growing player in manganese. We would like to be a player in chrome and iron-ore. With our nickel-cobalt asset in Turkey, we would like to be an active player looking for base metals opportunities to develop. And we are, potentially, a junior player in gold.