Mittal, Kalagadi in R4.2bn venture

21 November 2007

Women-led junior mining company Kalagadi Manganese has entered a 50/50 equity partnership with ArcelorMittal, the world’s largest steel company, to develop a manganese mine and sinter complex in the Northern Cape Province and a smelter complex at the Coega industrial development zone outside Port Elizabeth, at a cost of US$630-million (R4.2-billion).

According to a statement issued by the two companies on Tuesday, the manganese ore mine and sinter plant, situated in the Kuruman/Hotazel district of the Northern Cape, will ultimately produce 2.4-million tons of sinter product per annum.

The 50/50 joint venture project, due to come on line in 2010, overlies the Kalagadi Manganese Basin, “a world renowned source of manganese ore containing 80% of the world’s known manganese resources,” the companies said. Manganese ore, an important component of steel production, is used to improve the quality of steel.

“Drilling to date has confirmed the presence of a high-grade manganese ore resource sufficient to support a life of mine in excess of 20 years.”

The 320 000 tons per annum ferromanganese alloy smelter to be developed at Coega “will account for at least 50% of ArcelorMittal’s needs.”

“This is a further sign of our commitment to South Africa, a country which forms an important part in our expanding global operations,” said ArcelorMittal’s Malay Mukherjee.

“The Kalagadi Manganese project will not only prove to be an important and competitive source of manganese for our plants but a notable contribution to the economy of South Africa.”

Kalagadi Manganese is 80% owned by Kalahari Resources, a majority black women owned and controlled company. The remaining 20% is be held by South African state-owned financier the Industrial Development Corporation (IDC).

Kalagadi Manganese chairperson Daphne Mashile-Nkosi said the deal was particularly important “as it comes at a time when we are spearheading the trend towards backward integration into raw materials.”

According to Mineweb, the planned smelter, which will beneficiates ore to alloys sold at more competitive prices, “is the first new smelter of this sort in South Africa in 30 years and requires heavy investment of R2-billion (US$310-million).

The deal represents a major coup for Mashile-Nkosi and her company which, according to Mineweb, “was forced to raise money privately for its manganese project … after it went from one financial institution to the next to raise funds with only a prospecting permit and determination to boot.”

Mashile-Nkosi told Mineweb that Kalagadi had to choose between giving up or finding a way to make the project work when, in the early stages, it had no money and wasn’t being taken seriously in the male-dominated world of mining.

“So I knocked on doors in my private capacity and raised R12.5-million to carry out a pre-feasibility study,” Mashile-Nkosi said. Responding to this study, the IDC bought a 20% stake in the project – then valued at R300-million – for R60-million in March this year.

According to Mineweb, the project is now valued at US$630-million.

SAinfo reporter

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