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Thursday, 27 May 2010

Luapula Manganese, 3rd Edition

A useful update to the issue we have previously discussed here and here. Look for that huge margin quote between the production costs and the value of refined manganese :

New mining activities - a mixed blessing for Luapula, Hope Mwelaisha, CSPR Luapula, MS Zambia Newsletter (May 2010):

Manganese mining is causing trouble in Luapula. Photo: Lena Vind-AndersenLand degradation, deforestation, potential health related epidemics, raw material exhaustion, worn-down roads and losing out on an economic potential. This is the price that the people of Luapula are paying for the short term benefit of the mining boom in the province.

The last two years have seen an explosion of mining activities in Luapula. Genesis Procurement, who presently employs more than 200 locals in their large-scale mining for manganese, is the main actor on the new Luapula mining scene, but dozens of small-scale miners are also taking part in the search for the valuable mineral - manganese.

The Luapula Provincial Programme Management Team of the national Civil Society for Poverty Reduction has conducted a research on the effects of this mining activity, and the findings are both positive and negative. On the positive side, there are the new job opportunities created, either directly through the large scale mining operators, through individual small-scale mining or indirectly
through the following higher activities in shops, guesthouses and so on. This is providing an income for hundreds of families, and has undoubtedly reduced poverty in the district.

Also the activities in Luapula is re-enforcing the dependency of the Zambian national economy on mining, a dependency that has proved disastrous in the past. Finally, it must be said that the present operations duplicate a negative theme that as been recurrent throughout the history of Africa: The raw materials are being removed from the continent, with limited benefits to the people, and processed somewhere else in the world for the benefit of outsiders. For manganese, the price that local miners get for raw ore is US$ 52 to US$ 70 per tonne. The price for pure manganese on the international market US$ 1.653 per tonne. This value addition is what Zambia is losing out on, because the raw ore is transported through Tanzania to China for processing. So the super profits are reaped by foreign investors, in the same pattern that the European colonial powers used to follow.

Civil Society for Poverty Reduction acknowledges the short-term benefits that people in Luapula are enjoying from the mining, but urges the Zambian government to ensure that the economic boost is re-invested into sustainable economic growth and development activities in the province.

4 comments:

  1. Given that $1.653 is a lot LESS than $52, but the article talks about “value addition”, it looks like the author has got his units mixed up. I am guessing the $1.653 is the price per pound (not tonne). A quick search of the internet suggests a price for manganese of about $2,900 per tonne, implying a 50,000% mark-up roughly. Not bad.

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  2. Sorry, I meant 5,000%.

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  3. Dominic,

    Thanks for checking this.
    I think they simply got the $1653 wrong. It looks like a typo to me. $1.6 per pound does not work because that would be what the prices were in 2008.

    I have tried to clarify this here.

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  4. Yes Sir, the solution and answer to the Zambia manganese riddleis to have the mineral processed in Zambia. The returns are exponential but 5000%, I wonder.
    Once again the victim is Africa and great news, for once the perpetrator is not the previous colonial master or the ruthless South Africans but rather it is coming from the East. Watch this space…we are entering a new mercantilist system, reminiscent of the early colonies of 1700-1800, which is off-set by great soft loan by the ‘Power of the East’ to African governments.
    The other reality is that the calculated 5000% mark up would apply if the product were processed in Zambia. In this case, logistics is a big cost in order to get the ore to China, which only gives the Chinese a reasonable speculative return and not a super whopping return.
    I sincerely hope that when the manganese is eventually processed in Zambia it does not eat into Zambia’s carbon credits and is clean and safe for its population. Let’s never allow the dirty and cheap method of upgrading manganese ore to come to Zambia.

    MG

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