Agreed, I don't see S32 selling the manganese smelters basically because nobody would want to buy them.
S32 has already shut down 3 Mn furnaces in South Africa and only one is still in production. It will undoubtedly shut later this year.
The power price is the problem and it will only get worse.
Eskom is bankrupt and is one of the most corrupt businesses in South Africa. Electricity prices to rise 9.4% this year, 8.1% next. The price of electricity will rise by 9.41%, double the inflation rate of 4.5%.
No smelter can withstand these ongoing increases. https://www.dailymaverick.co.za/art...hosa-answers-questions-on-eskom-in-the-house/
Whilst South Africa power prices are lower than those in Western Countries its still very high compared to the populations income. As shown in the link below.
S32 currently uses much of the Mn ore produced at GEMCO Groote Is is shipped to TEMCO in Tasmania to produce Mn alloys. TEMCO is also in the firing line to be closed down, the power prices are also a huge problem especially when they have to compete with the huge Malaysian smelters that have cheap power. My guess TEMCO is currently paying around US$0.06c/KWh which is very very cheap compared to power in other parts of Australia although its still double the cost of the Malaysian smelters. ( my calculation is from a Government announcement in 2017 so it could have gone up considerably since then)
"The Treasurer made a WEP order on 14 June 2017 setting the wholesale price at $83.79/MWh for the 2017/18 regulated retail tariff determination. Aurora Energy contracts with Hydro Tasmania for its regulated customer load at the WEP order price. " https://www.treasury.tas.gov.au/Doc... Pricing Framework - Final Interim Report.pdf
TEMCO faces more problems than just power prices, the furnaces are 50 years old and the quantity of power used is far more than modern furnaces and therefore needs substantial upgrading. If S32 were to upgrade the furnaces they would still be faced with expensive power compared with their major compeditors in Malaysia.
You may ask what am I getting at here, S32 needs a smelting facility, this is one way of capitalising on the Mn ore market and helps to control the Mn ore prices is you also have a smelter and therefore not just a price taker.
S32 would be wise to consider moving their smelter operations to Malaysia, or takeover an existing smelter in Malaysia.
S32 Price at posting:
$3.45 Sentiment: Buy Disclosure: Held
(20min delay)