manganese gives minnows a new cred

Robin Bromby | December 03, 2007
EVERYONE seems to have become fixated on the tactics of the rival bidders for Consolidated Minerals, and the main reason behind all the interest in the company has faded into the background.

But we were reminded last week about the appeal of manganese, ConsMin's core mining asset. AusQuest said on Wednesday that it would make a placement of $2.02 million, then on Thursday upped that to $2.76 million "in response to very strong demand from an international institution".

Remember the time - and it was only a few years ago - when it was a rarity for institutions to give junior explorers the time of day, let alone any of their money.

Last week, we reported that another manganese play, the about-to-be-listed Spitfire Resources, had closed its IPO with a strong institutional showing.

It is still early days, but AusQuest had previously revealed that its first drill hole at the Table Hill project in the Pilbara had intersected high-grade manganese. That hole confirmed the presence of a 4m-thick manganese layer, with the assay coming back at 47.5 per cent manganese with low levels of phosphorous and iron.

That is encouraging and AusQuest clearly hopes it has found something big 200km east of Newman. Bigger, maybe, that ConsMin's Woodie Woodie mine.

But that is leaping a little too far ahead, given there's only one drill hole result.

About 90 per cent of manganese goes into steel, where it faces very little risk of substitution. British commodity analyst Roskill, in a report on manganese coming out this month, says global consumption of finished steel is on an upward trend and grew by an average of 6.7 per cent a year between 2000 and 2006. "That rate of growth is expected to continue in 2007 and 2008 and at only slightly lower levels until 2015. The manganese industry has a secure long-term future," according to Roskill.

The world's biggest steel maker, Luxembourg-based ArcelorMittal, is only one of a number of steel companies that are backwardly integrating - in other words, they are getting involved in the production of the raw materials that make up steel in order to try and control soaring prices.

Now ArcelorMittal has formed a joint venture with Kalagadi Manganese to develop a manganese mine and smelter in South Africa.