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Wednesday, 18 February 2009

Luapula Manganese

Sometimes you read something that just blows your mind away. Consider this exchange in Parliment earlier this month :

Hon Mukanga [MP, Kantanshi]: Mr Speaker, the hon. Minister has stated that the price of manganese is above US$1,000 per tonne, is he aware that the miners in Luapula are being exploited because they are selling manganese at US$70 per tonne and the Government is losing revenue? What is the Government doing about it?

Mr M. B. Mwale [Minister for Mines]: Mr Speaker, the challenge that we have, as a Government, is in terms of inadequate power supply in Luapula so that we could have smelters in place which could produce finished products of manganese. As of now, the product that is produced from Luapula Province, is not processed manganese, hence the low prices that are obtaining.

So let me get this right. The extraction cost of manganese is below $70 per tonne (for the local miners to make some profit from sweat), this when refined costs $1000 per tonne. To make it worse around February 2008 it peaked around $4,000. Of course the government never made money out of this because there's so "abnormal profit" that it makes commercial sense to process it outside Zambia. Someone out there is making some serious money and it not GRZ.

2 comments:

  1. Cho,

    Investment in processing of manganese ore within SADC seems like a good long term bet, if one takes into account several factors:

    1) While China currently accounts for 43% of all global refining activities, their own domestic supplies are dwindling and are expected to be effectively exhausted before 2030.

    2) 80% of the total known world supply of manganese ore, and an even higher percentage of known supply of high grade ore is contained within the South African portion of the Kalahari near Black Rock.

    3) The vast majority of refining operations are not especially high tech (though they can be heavily polluting if one goes too low tech), being very similar to iron smelting at somewhat higher temperatures (approx 1200C). Most of the refined product sold internationally for use in alloying with other metals is only 70-80% "pure" manganese, with acceptable amounts of iron, silicon, carbon, and other materials within easily obtainable ranges.

    4) Zambia should probably only invest in this sort of refinery if the South Africans persist in their plans to export increased amounts of raw ore via the new port facilities at Coega rather than refine themselves. The Kalahari deposits are likely to become increasingly strategic in coming decades, and access from within a SADC customs free zone could sustain a Zambian refinery going forward even if domestic supplies remain limited. If the S. Africans do get serious about refining their own manganese prior to export, then it might be a good investment for Zambian pension funds to consider at least.

    High Grade Mn Ore: Future Outlook for the Kalahari - Mr. Phil Crous (.pdf format of power point slideshow), International Manganese Institute 2008 Annual Conference Presentations, Sept. 2.

    ReplyDelete
  2. Yakima,

    Agreed. That said its obvious that with or without the refinery such huge rent exists which evidently are not taxable. How that is resolved is important.

    ReplyDelete

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