Gulf to ship smelters from S. Africa for RI manganese project

By Ruli Setiawan

ASX-listed Gulf Manganese Corporation Limited (GMC) said Tuesday it has identified a pair of suitable smelters in South Africa which can be readily transported to West Timor, in Indonesia?s East Nusa Tenggara Province, where the company plans to build a manganese smelter hub.

?Final negotiations are underway regarding the securing of these smelters with a market update on progress anticipated early in the next quarter,? GMC said in a statement.

Following the review of manganese ore potential in Indonesia, which confirmed that there is a potential extractable manganese mineralization of 29 million ton for Production IUPs and 114 million tons for Exploration and Production IUPs as reported last quarter, GM said negotiations have commenced with local miners for the future supply of ore to the smelting hub.

To date, two agreements have been reached, one for ore from West Timor and another from Sulawesi both for a minimum supply of 1000 tons per month, which more than covers the needs of the first proposed smelter. ?Discussions are continuing with other potential suppliers in West Timor and neighboring islands,? the statement said.

GMC?s strategy is to develop an ASEAN focused manganese alloy business based in West Timor, taking advantage of the low cost of ore and labor, combined with modest power costs (these being 84% of total costs).

GMC said Targeted production will be a premium quality 78 percent ferro manganese alloy resulting from the unique qualities of the Indonesian high grade (greater than 50%) low impurity manganese ore.

Although manganese ore prices are trading lower than highs reached in 2012, high grade Indonesian ore converted into alloys can still maintain healthy margins, the company argued. Alloy prices in 2012 were $1250/ton and currently about $1050/ton, representing a 25 percent drop off. The long term average is projected to be $1100/ton.

GMC said its projected cost is about $800/ton, giving a margin of $250/ton (25% over costs) even in the current market.

Editing by Reiner Simanjuntak