All images: South 32.




THE world’s largest and lowest-cost manganese ore producer is set to produce even more, as South32 launches a three-year drilling program at GEMCO.


South32 has continued to surge on the back of its Groote Eylandt Mining Company operation (GEMCO), with exploration plans underway designed to leverage even more value from the manganese mine.

GEMCO is an open-cut mining operation in the Gulf of Carpentaria, 50km from the Northern Territory mainland, producing high-grade manganese ore that is then shipped to South32’s Tasmanian manganese alloy plant (TEMCO) and around the world.

According to South32, GEMCO is one of the largest and lowest-cost manganese ore producers in the world.

Together, GEMCO and TEMCO form South32’s Australian manganese operations.

South32 holds a 60 per cent share in the operation, with Anglo American holding the remaining 40 per cent.

At its annual general meeting on 25 October, South32 chief executive Graham Kerr said the mining giant had delivered record production at its Australia manganese operations for FY18 and a 10 per cent increase in total manganese ore production, as the company responded to favourable market conditions.

South32 followed it up in Q1 FY19 with yet another quarterly record at GEMCO, producing 932,000 wet metric tonnes (wmt) of manganese ore – a 15 per cent increase year-on-year.

“Annual production guidance is maintained for all of our operations with Australia manganese achieving another quarterly record and total manganese ore production increasing by 8 per cent,” Mr Kerr said.

“We finished the period with a net cash balance of $US679 million and additional funds in our manganese joint venture as our key commodity markets benefitted from robust demand and pricing.”

During Q1 FY19, South32 reported it received net distributions of $US24 million from its manganese equity accounted investments.

The combination of strong operating performance and pricing saw additional cash build in its manganese joint venture, despite Australian manganese paying $US13 million in royalties in respect of the prior six month period.

According to South32, the primary circuit continued to achieve high utilisation rates while the Premium Concentrate Ore (PCO2) circuit operated at about 120 per cent of its design capacity, contributing 9 per cent of total production for the quarter.

The $US139 million PCO2 was completed at the end of FY16 and ramp up to full production of 0.5 million tonnes per annum (mtpa) was achieved in FY17, thereby increasing GEMCO’s capacity from 4.8 mtpa to 5.3 mtpa.

Manganese alloy saleable production decreased by 2 per cent or 1000 tonnes, to 42,000 tonnes in the September quarter.

FY19 production guidance remained unchanged at 3.35 million wet metric tonnes.




Despite record production already being achieved, South32 had even higher hopes for GEMCO, with aims to continue developing the mine further.

The miner has plans to drill 4800 holes over about 115,200 metres over the next three years, targeting an increase in reserves, as well as looking to reduce costs through improvements to the mine supply chain.

South32 awarded the three-year drilling contract to Utah-based company in October, which would provide 16 employees, including fitters and full-time drilling supervisors to operate two reverse circulation rigs.

Further mining was planned to begin within the eastern leases of GEMCO in about 2022 to 2023.

The lease areas are 2km east of the existing mine at their closest point.

Although drilling has previously been conducted at the eastern leases, according to South32, additional drilling was required before mining began to improve GEMCO’s understanding of the mineralisation on the leases, including ore quality and geological conditions.

The drilling would also support the further definition of the geological block model and the development of the mine plan.


The Bigger Picture


Plans to develop the mine came amid increased market volatility, however Mr Kerr remained confident that South32’s operations, including GEMCO, would continue producing strong results.

“Looking ahead, we are well-positioned for the future,” Mr Kerr said.

“We anticipate some price volatility in global commodity markets, driven by rising trade tensions and a strengthening US dollar.

“However, strong demand for higher quality raw materials is expected to continue as China implements policy initiatives to meet environmental reforms.


“Improved production from many of our operations, along with our continued focus on productivity gains and procurement savings, will allow us to further mitigate industry-wide inflationary pressure.”


Mr Kerr’s outlook was supported by the most recent Resources and Energy Quarterly Report, released by the Department of Industry, Innovation and Science.

According to the report, world steel consumption was forecast to rise to 1.8 billion tonnes in 2020, led by growth in emerging markets, while China – the world’s largest steel consumer – was forecast to reduce consumption by 0.5 per cent annually, driven by an expected slow-down in infrastructure projects and construction.

About 90 per cent of manganese goes into steel-making as it improves the strength of the building material.

Manganese can be added to aluminium for the same reason, however it was increasingly being used in next-generation battery and power storage applications.

The increasing demand for these technologies would also likely serve as an important driver in the demand for manganese.