Young Manngwe Mining set to escalate output
Junior mining firm Manngwe Mining is aiming to increase its iron ore output more than sevenfold within the next five years to almost 5 million tons.
Speaking to City Press during the official launch of the company’s R180 million Assen Iron Ore mine in Brits, North West, this week, Manngwe CEO Matodzi Nesongozwi said the company, which started production earlier this year, was set to mine about 700 000 tons a year.
The mine will produce four grades of iron ore. It is currently only producing detrital ore and is set to mine and blend the high, medium and low graded ore to client specifications.
ArcelorMittal SA CEO Wim de Klerk said the company was proud of its partnership with Manngwe, a seven-year-old black-owned and black-run company, and wanted to seal similar deals with junior mining houses.
“It was only last year that we got our black economic empowerment partners,” De Klerk said.
ArcelorMittal SA spent R40 billion a year on buying different commodities and only a few billion rand of that went to “real black entrepreneurs”.
De Klerk said that, out of all its providers, the deal with Manngwe gave ArcelorMittal SA the best quality iron ore at the cheapest rate, and he hoped the company increased its production as planned.
According to Nesongozwi, who is a mining engineer turned entrepreneur, the site in Brits was acquired from Kumba Iron Ore.
Aside from the shareholders raising some of the capital themselves, the Anglo American Sefa Mining Fund pumped R40 million into the project, half of which is a loan and the other half in equity.
The off-take agreement with ArcelorMittal SA also advanced a large amount, while DRA Mineral Projects also came on board with a significant loan.
The Anglo Sefa fund was started in 2003 to invest in junior mining companies. Individual investments range from R1 million to R30 million per project.
“ArcelorMittal SA wants to find an alternative market to their predominantly Northern Cape market, so it was also a good deal for the company because it means the ore is closer and cheaper,” Nesongozwi said, adding that the company was trucking the ore to ArcelorMittal SA’s steel plant in Vanderbijlpark.
The life of the mine is projected to be 12 years and the breakeven point should be reached within 13 months.
“In the next five years, we should be able to supply ArcelorMittal SA with a few million tons of ore from the northern region [North West and Limpopo],” Nesongozwi said.
He pointed out that, during the same period, Manngwe also wanted to acquire a number of assets from major mining houses and greenfields.
“The price of iron ore is more than $65 per unit. Our delivered price is less than $35,” he said.
The company also has plans to commission a feasibility study within the next three years that will focus on the possibility of extracting iron ore from the mountainous areas near the mine.
The chairperson of Manngwe, Mathatha Tsedu, said that the mine employed 220 people, including 50 from local communities. The area has an unemployment rate of more than 50% and a high rate of illiteracy.
Tsedu also said the mine would be building a school for the local community in future and had, in the meantime, managed to supply transport for pupils.
“We are a company that is aware of the environment in which we operate. The community around us is seriously depressed, so we will do what we can to generate upliftment in the area,” he said.