NEWYORK, July 29 -- Consolidated Minerals Ltd., owned by Ukrainian billionaire Gennadiy Bogolyubov, wants to raise annual manganese production by 25 percent to meet rising global demand from steelmakers.
"We're ramping up production at Woodie Woodie just as global demand for manganese is picking up," Chief Executive Officer Glenn Baldwin said in an interview at the mine site yesterday. Mine output was 603,000 metric tons in the first half, putting it on track to produce 1.2 million tons this year for the first time, he said.
Bogolyubov's Palmary Enterprises Ltd. acquired Consolidated in January 2008 for A$1.3 billion ($1.2 billion) after a bidding war. Demand for manganese, used to harden steel, recovered in the second quarter, according to BHP Billiton Ltd., which sees China's steel demand doubling by 2020 from 2008 levels.
The Perth-based company is spending A$40 million on exploration at the mine, in Western Australia's Pilbara district, this year. Production was 818,000 tons in 2008 and 961,000 tons last year, Baldwin said.
Baldwin said "discussions are ongoing" with OM Holdings Ltd. regarding a stake purchase in Woodie Woodie.
OM, a Singapore-based manganese producer, said April 19 it was in talks to buy a stake. OM was considering whether there are "strategic, operating and, or, marketing synergies," from owning part of Woodie Woodie. Consolidated has an 11.5 percent stake in OM through its Stratford Sun Ltd. unit, according to April data compiled by Bloomberg.
A purchase would make OM the world's second-largest producer of low phosphorous siliceous, high-grade manganese ore, OM said. OM produces manganese from the Bootu Creek mine in Australia's Northern Territory.
"There is no set timetable to make a decision," Baldwin said. He declined to comment on whether Consolidated would be willing to make a takeover offer for OM.
OM on July 23 raised its full-year manganese production target at Bootu Creek to 850,000 tons after reporting June quarter output of 195,756 tons, according to a regulatory filing.
Consolidated's 5,600 square kilometer (2,162 square mile) tenement at Woodie Woodie had reserves of 12.4 million tons as of Dec. 31, which Baldwin said will be "substantially added to" this year. The company is the largest independent supplier of manganese and claims the mine has the world's highest quality of the stainless steel-hardening material.
Demand for manganese is improving, led by China, since slumping at the start of the year, Baldwin said. Consolidated is not considering a relisting and is "keeping tabs" on potential takeover targets, he said.
BHP, the world's largest shipper of manganese, produced 1.73 million tons of the ore in the three months to June 30, more than double the output in the same period the year before, according to company documents.
Consolidated plans to restart its Coobina chromite mine, also in Western Australia, in October at a cost of A$6 million, Baldwin said. It's targeting annual output of 350,000 tons to 400,000 tons a year. Its Beta Hunt nickel mine will remain on care and maintenance, he said.