bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

authorLocations

authors

paywallTypes

corrections

sponsorType

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Eric Ng

Citic Dameng Holdings, China's biggest manganese producer, is seeking to invest in mines in South Africa to help secure enough of the resource to meet the rising needs of the massive steel industry.
Citic Dameng deputy chairman Li Weijian said the company would consider acquiring assets from its second-largest shareholder, Guangxi Dameng, a Guangxi government unit that has a 60 per cent stake in a Singapore-based mining firm with ownership in some manganese and iron ore mines in South Africa.
 Li said that one of its goals was to find supplies to meet domestic demand, and China was short of manganese resources.
When Citic Dameng listed last November, Guangxi Dameng granted it a preferential right to buy the stake in the Singapore firm.
Manganese, a hard and brittle grey-white metal, is the fourth-most consumed element in the world after iron, aluminium and copper. Some 90 per cent of the world's consumption of the metal is in the steel manufacturing industry, which needs it to remove impurities and improve steel's strength, hardness and abrasion resistance. 
In 2009, China mined 10 million tonnes of manganese ore, which contained 2.4 million tonnes of manganese. It also imported 9.6 million tonnes of ore that year, according to Citic Dameng's listing prospectus. 
The nation accounts for 46.5 per cent of the world's steel output. 
Li said that increasing production of special steel, which contains around 11 per cent manganese, would raise demand for the metal in China at a faster rate compared to the roughly 10 per cent output growth of the steel sector. 
Special steel is processed steel and alloy often used in vehicle and machine parts. Crude steel only contains 1.2 per cent to 1.5 per cent  manganese. 
Special steel accounted for 15 per cent of China's steel output, compared to 20 per cent in Japan and the West, he said, adding that Beijing wants greater production of special steel to raise the competitiveness of the mainland's steel sector, which is energy-intensive, pollution prone, and lacks key materials iron ore and coking coal. 
Even though the mainland is the world's biggest producer of manganese, accounting for a third of global output, the nation only has around 7.4 per cent of the world's manganese ore reserves. 
High-grade ore, with over 44 per cent manganese, is mostly produced in Australia, South Africa and Gabon. Low-grade ore, with less than 30 per cent metal content, is mostly produced in China, Ukraine and India. 
One tonne of mainland ore can produce around 8.75 tonnes of electrolytic manganese metal (EMM), whose sales accounted for three-quarters of Citic Dameng's revenues last year, according to Li. 
Due to the higher manganese content in Gabon, only 6.32 tonnes of ore is needed to make a tonne of EMM there. 
Citic Dameng has two mines in Guangxi, where ore output is targeted to rise to 1.25 million tonnes this year and next year, from 1.07 million tonnes last year. Its recently acquired mine in Guizhou province will see its 200,000 tonne-a-year outdated capacity shut down, with 300,000 tonnes of new capacity to be completed next year.
In Gabon, the firm has just started production at a mine where output is expected to rise to 750,000 tonnes next year from 350,000 tonnes this year. It will mostly be shipped to China. 
Citic Dameng sold 94,600 tonnes of EMM last year, roughly 7 per cent of the fragmented industry's total output. The market price of EMM has risen to over 19,000 yuan (HK$22,860) a tonne, up 9 per cent from the start of the year and compared to Citic Dameng's average selling price last year of 15,786 yuan.
The firm last year posted a 371 per cent jump in net profit to HK$229 million, thanks to a 21.7 per cent rise in average EMM selling price and a 34 per cent jump in sales volume as the mainland economy recovered from the global financial crisis. This was partly offset by a 20.5 per cent rise in unit production cost due to higher labour and materials costs. 
 Beijing raised the retail power price in Guizhou this month by about 3 per cent but kept prices in Guangxi stable. Li said Citic Dameng would seek to cut power consumption through facilities upgrades. Electricity accounts for over a third of its production cost. 
The Guizhou plant to be rebuilt will be supported by a self-owned power plant, from which Li expects to save one-third of its electricity bill, or 1,350 yuan for each tonne of EMM output. 
 Li conceded that human resources shortages in Gabon, a central African nation with a population of just 1.5 million, were a challenge for Citic Dameng, which would seek to resolve the problem by working with the local government and offering training to local workers. 
The nation, one of the most prosperous in Sub-Saharan Africa with a per capita gross domestic product of over US$12,000, was relatively politically stable, he added.
10m
China mined this number of tonnes of manganese ore in 2009, yielding 2.4 million tonnes of the metal, according to Citic Dameng



Citic Dameng looks to S. Africa