Saldanha Bay, West Coast, South Africa. Stock image.
South African miner Exxaro Resources said on Monday it wants to haul more manganese to ports by rail rather than road to cut costs and make efficiency savings at its newly acquired assets.
Exxaro CEO Ben Magara said the company and its peers were working with state-owned freight transport firm Transnet, which is opening up parts of its network to private investment, to boost freight capacity.
Hauling manganese by road is 37% more expensive than using rail, Exxaro said. Logistics costs account for 43% of free-on-board costs for the bulk mineral, it added.
“We’re going to work with Transnet to see whether we can issue more on rail,” Exxaro head of metals Johan Meyer told analysts.
Exxaro, predominantly a coal miner, completed the acquisition of multiple South African manganese assets worth 10.6 billion rand ($645.68 million) in March, as it diversifies away from the fossil fuel.
Vital to energy transition
South Africa holds 80% of the world’s manganese resources and is the top exporter, accounting for 42% of global shipments of the metal mostly used in steelmaking. Manganese also has increasing use in batteries which are vital in renewable energy applications.
Bulk mineral exports from South Africa have been throttled by Transnet’s chronic underperformance, which is blamed on under-capitalization as well as cable theft and vandalism of infrastructure.
This has forced some exporters to curb output, while others opt for the more expensive trucking option.
Exxaro’s new Tshipi Borwa manganese mine has exports of 3.5 million metric tons annually, which is mostly bound for China. About 46% of the manganese is hauled to ports by road, the miner said in a capital markets presentation.
“We need to make sure that we have a strategy long term to say, can we not put everything on the rail?” Meyer said.
($1 = 16.4167 rand)
(By Nelson Banya and Olivia Kumwenda-Mtambo; Editing by Jan Harvey)
