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Manganese miner needs islander support
BARRY FITZGERALD
April 6, 2010

A CONFLICT between mining and the desires of traditional owners to protect their country is building on remote Groote Eylandt in the Gulf of Carpentaria.

On one side there is West Australian explorer Groote Resources (ASX:GOT), which has its eyes on undersea extensions to the rich beds of manganese that BHP Billiton has been mining on the island since the mid-1960s.

On the other side are Groote Eylandt's traditional owners, the Warnindilyakwa people, who go by their language name (Anindilyakwa), and who are represented by the Anindilyakwa Land Council (ALC). Their agreement to GOT's exploration and mining plans is crucial under the effective veto powers of

the Aboriginal Land Rights (Northern Territory) Act 1976.

Although a little known part of BHP, the Groote Eylandt manganese operation - now owned in a 60:40 partnership with Anglo American - is fabulously profitable, underpinning BHP's total earnings from manganese operations in 2009 of $US1.4 billion.

Manganese is plugged into the Chinese-led boom in global steel production: the production of one tonne of steel in a blast furnace requires about seven kilograms of manganese. Like steel's other key raw materials, iron ore and coking coal, manganese prices are rising.

The prospect that a junior WA explorer could get some of the Groote Eylandt manganese action, albeit from under the gulf waters, has fired up investors' imaginations. So much so that GOT - it was formerly the sleepy uranium explorer Western Uranium - now boasts a market value of $80 million.

GOT likes to talk about itself as creating a ''new force'' in manganese by ''thinking outside the box'' when it comes to exploration. But all GOT has done at this stage is apply for exploration licences to look for manganese, mostly in the shallow marine terrain off Groote Eylandt.

It also likes to think it has got BHP worried, pointing out in company



presentations that when it lodged the exploration licence applications (ELAs) last year, BHP responded by surrounding GOT's offshore ELAs with its own offshore ELAs.

GOT hopes to be drilling offshore manganese targets by mid-year, while also acknowledging it will first need to negotiate with the traditional owners before any onshore exploration can proceed.

Investors in GOT like the story, running the stock up from 5.8 a share in November when the undersea manganese play was announced, to the 94.5 a share seen last Thursday. It has been a 1520 per cent gain.

But to date, little has been said about the attitude of the island's traditional owners to the prospect of an offshore manganese mining operation being added to the operations conducted by the BHP/Anglo American joint venture onshore.

The executive officer of the ALC, Richard Preece, told BusinessDay last week that there had been no ''formal discussions'' between GOT and the traditional owners. There has, however, been an informal meeting over lunch, after which the men from GOT went fishing.

Preece said that to say the traditional owners would support another mining operation because of the long existence of the BHP operation would be simplistic.

''What can be said is that people here see the benefits of mining. But they also have conflicts about watching their country getting mown down and mined.''

http://www.theage.com.au/business/manganese-miner-needs-islander-support-20100405-rn5j.html

Preece said the traditional owners' relationship with BHP, in terms of the people they see on a day-to-day basis, was ''fairly good''. But it was also complex, again because of the conflict between the economic benefits of mining and the damage it can cause.

And while GOT believes its offshore exploration plans do not require Aboriginal agreement, Preece said the waters around Groote Eylandt contained sacred sites, as well as fishing grounds, for the traditional owners.

It all points to a lot more talking and negotiations before GOT gets to be the new force in manganese.