[SMM analysis] would you like to have a false alarm? Rumor has it that Ghana manganese industry has been asked to stop production audit

SMM February 11: during the Spring Festival, the domestic electrolytic manganese market is running peacefully, but overseas is not calm, a rumor about Ghana manganese mining company (Ghana manganese company) has attracted the attention of people inside and outside the industry.

The exact nature of the news is not fully confirmed because it has not yet been publicly notified on the government website, but according to SMM's communication with industry insiders, at least Ghana Manganese Mining Company has been under pressure from the local government.

As of today, there have been no further reports from foreign media as to whether the Ghanaian mine has been shut down as required.

Since July 2018, foreign media have reported that there are some differences between manganese mining enterprises and the government over the pricing of manganese mines. It has even been rumored that the then Minister of Land and Natural Resources, Mr. John Peter Amewu, said that the government would not renew the mining lease of GMC. Because the company "flouted its mining agreement," although the problem was suppressed at the time and did not have a serious impact, it can also be seen from the incident that conflicts between enterprises and the government are inevitable in overseas mining investment. There is a need to continue to run-in and reach agreement in the course of cooperation.

SMM believes that the incident will not have a serious impact on the market price of manganese ore or electrolytic manganese in the short term.

1. The stock level of raw materials of domestic manufacturers is sufficient, and the main consumption channel of Ghana mine is relatively single.

The vast majority of Ghana manganese mines are exported to China's Tianyuan manganese industry for electrolytic manganese production. According to SMM, at present, both factory and port stocks are relatively abundant, enough to be used for a few months, so as long as the mine does not stop production for a long time, There is little problem in ensuring production. In fact, since the end of last year, due to the sharp increase in imports for several months, there is a certain surplus in the domestic manganese mine in Ghana. (extended reading: increase by 106%! Analysis of manganese ore imports from Ghana, China, 2018)

2. Tianyuan Manganese Industry has close cooperation with the Government of Ghana

In the transnational mining investment, the contradiction between enterprises and the government is inevitable. Historically, the manganese industry in Ghana has always had a relatively stable operation. In addition, starting in the second half of 2017, the manganese ore of United Mining in Australia has also resumed mining and normal and stable shipment by taking advantage of the good market for manganese ore. It has become one of the important suppliers of manganese oxide ore in China. It can be considered that Tianyuan Manganese Industry and its acquisition of Australian Union Mining have shown sufficient management capacity for overseas mining companies, but also ensured the relatively stable operating rate of its domestic electrolytic manganese plant. Therefore, most operators have good confidence in the successful settlement of this incident.

3. The incident will prompt enterprises to make more efforts in transparent operation.

Due to the different degree of familiarity with the industry, enterprises and the government need more communication to coordinate the relationship of interests. Taking pricing as an example, the price of manganese ore will vary greatly with different grades, and the pricing will be affected by many conditions, such as the market price of related varieties, the stability of cooperation, and so on. Therefore, enterprises need to enhance the transparency of market information in the future operation. To enable the Government or other stakeholders to have a clear grasp and adequate understanding of the situation.

Although SMM believes the incident will have little short-term impact, it remains to be seen whether the government will seek more say in the management of Ghana's manganese industry or introduce stricter mining policies after the audit. Tianyuan manganese industry is the largest electrolytic manganese producer in the world. Any rumors of manganese ore in Ghana have a great impact on the market mentality.

Background introduction: Tianyuan Manganese Industry, Australia United Mining (CML) and Ghana Manganese Industry (GMC)

In general, Ningxia Tianyuan manganese industry acquired a 90% controlling stake in Ghana manganese industry through the acquisition of Australia's United mining industry. The following is a specific introduction (extracted from the official website of Tianyuan Manganese Industry):

(Tianyuan Manganese Industry)

In November 2016, Ningxia Tianyuan Manganese Group formally signed a contract with United Mining Co., Ltd. (CML Company) to wholly acquire all the shares and assets of CML Company. Since then, Tianyuan Manganese Industry has taken the first step in mergers and acquisitions of overseas mines. Has its own high-quality mines abroad. United Mining is owned by Ghana Manganese Industry Co., Ltd. (GMC) and Pilbala Manganese Industry Co., Ltd. (PML), of which Ghana Manganese Co., Ltd., located in Ghana, is mainly responsible for the production and management of the Nsuta Manganese Mine in Ghana. Pilbala Manganese Industry Co., Ltd., located in Perth, Western Australia, is responsible for the production and operation management of Woodie manganese mine.

Ghana Manganese Industry Co., Ltd. (GMC) Nsuta Manganese Mine is located on the west side of Ensuta Town, Taguar County, 90 kilometers away from Takradi Port. It has been mining manganese ore for 101 years, and the average grade of manganese is controlled at 27.7%.

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