Manganese ore prices likely to move up further amid improved demand
----Interview with Guo Dezhou
Manager
China National Geological & Mining Corporation
As a solely state-owned company, China National Geological & Mining Corporation (“CGM”) was once under direct administration of the former Ministry of Geological and Minerals and the Ministry of Land and Resources of China, and now it is a subsidiary company of China Energy Conservation and Environmental Protection Group. CGM devotes in the three main businesses, geological exploration, mining exploitation and mineral products trade. Engaged both in the domestic and overseas markets, its businesses have already covered Asia, Africa, Oceania, North and South America as well as major Chinese domestic markets.
Asian Metal: Thanks very much for taking our interview. Would you please give a brief introduction on manganese ore business of your company at first?
CGM: In the previous years we once dabbled in businesses on Australian, South African and some non-mainstream manganese ores such as Turkish and Kenyan manganese ores, but were unable to achieve good performance. And in the recent years we focus upon development, production and sales of Cote d'Ivoire manganese ores.
Asian Metal: Would you please give a brief introduction on manganese ore resources in Cote d'Ivoire?
CGM: Cote d'Ivoire boasts rich manganese ore resources, but its high-grade manganese ore deposits have gradually run out while its low grade ores have no potential of development. At present, of the two major mining enterprises in Cote d'Ivoire, one is an Indian company which has a monthly output of around 5,000t of grades of 42%min and most of its products are delivered via containers. The other company is us. We have a monthly output of 30,000-40,000t, all of which are delivered to China via bulk carriers. Grades of our manganese ore lumps are above 38%, while manganese ore particles, with a monthly output of below 20,000t, have grades of above 32%. As it costs more to transport manganese ore particles back to China, we mainly sell lump material at present. We are now striving to increase grades of manganese ore particles and believe that we will be able to transport to China manganese ore particles of around 40% in the near future.
Asian Metal: What are the advantages and disadvantages of Cote d'Ivoire manganese ores, in comparison to mainstream manganese ores?
CGM: Prices for Cote d'Ivoire manganese ores are relatively low and their indicators of utility are high. So they have a high cost-performance ratio, which is the advantage. As for disadvantages, the first one is that transportation system in Cote d'Ivoire is not effective enough and so transportation costs are high; secondly, dock depths of Cote d'Ivoire ports are quite low and so they are able to harbor only 20,000-tonnage bulk carriers as the most; meanwhile, loading/unloading and storage fees at Cote d'Ivoire ports are high and thus seaborne transportation costs from Cote d'Ivoire ports are much high than those for mainstream manganese ores, leading to much higher comprehensive costs of them than of mainstream manganese ores. When market conditions are unfavorable, production cost of Cote d'Ivoire manganese ores are more likely to increase to the threshold where producers have to suspend production, and therefore steady supply can be guaranteed.
Asian Metal: With the 19th National Congress of CPC and the winter season approaching, how do you think of prices for manganese ore in October?
CGM: Generally speaking, China’s economy has fared well on the whole so far in 2017, which can be seen from the spot markets for steel and manganese ores. With the 19th National Congress of CPC and the winter season approaching, I believe that there is one factor to be considered, environmental inspections. But in reality, Chinese government has been highly valuing this work over the recent years. So I myself feel that if China’s economy continues to go on smoothly, the manganese ore market will also run stably. From our overseas clients we can feel that they are also confident about China’s economy in the future.
Asian Metal: Chinese steel mills made juicy profits during the period from June to September and demand for manganese alloy increased dramatically. So how did this phenomenon affect your business?
CGM: We also benefited from it; but as we focus mainly in the futures market and spot business serves only as a supplemental part of our overall operation, ups and downs in spot prices have no impacts upon our controllable profits. But nevertheless, benefiting from the price upticks, we also strive to increase our outputs.
Asian Metal: How do you cope with sharp price downticks for manganese ores? When manganese ore prices move up dramatically, will you increase your imports of the material?
CGM: We hope to maintain steady production. But if prices drop to the level on a par with our production costs, we will choose to suspend production. If manganese ore prices move up dramatically, we hope to increase our import volume, but this depends upon our production capacity and the domestic transportation system in Cote d'Ivoire. Generally speaking, there is no problem for maintaining an import capacity of three carriers within two months.
Asian Metal: What is your development plan for the future regarding manganese ore business?
CGM: We will stick to the direction of focusing both upon resources development and trading business, and we are continuing to work in this direction now.
Asia Metal: Thanks again. Wish your company better and better!
CGM: Thanks!
