Changes in the CIS manganese market

Monday, 31 January 2005 12:29:00 (GMT+3)   |  
       

Changes in the CIS manganese market

The recent change of ownership of the Georgian manganese ore mine Chiatura Manganese can lead to a change of balances in the CIS ferro alloy supply situation. Under the recently held privatisation auction Chiatura Manganese, together with Vartsikhe Hydro Power Plant Cascade was awarded to the largest Russian steel producer Evraz Group against $132 million. This might mean that the Russian Group will have a significant power on determination of ore, alloy and electricity prices for supply. Obviously the group will also use this opportunity to secure raw materials for its own steel production at the first stage. According to the statement by the Evraz Group, a joint venture with the Georgian ferro alloy plant Zestafoni is planned, where Evraz will hold a 66% stake. Zestafoni is owned by Dekometal. Dekometal traditionally used to supply the US market, however offers into Turkish market has been made recently. This could possibly be due to the weak demand in the US however it might be best to observe for sometime to see the developments before deciding whether the company will continue supplying the Turkish market in the future due to changed circumstances. Chiatura Manganese is the largest producer of manganese ore. According to the official sources explored reserves of the company in А+В+С1 categories are equal to some 160 million tons of manganese ore. In 2003 the volume of ore extraction was 457'000 tons; some 140'000 tons of manganese produced. At the end of 1980s the company was producing some 3.9 million tons of manganese ore and some 1 million tons of manganese concentrates per year. Zestafoni Ferroalloy Plant is one the largest producers of ferroalloys in the CIS. In 2004 the plant produced 120'000 tons of ferromanganese and silicon manganese. During Soviet times, the plant's annual output was about 500'000 tons. Ferroalloy is a metal product commonly used as a raw material feed in steelmaking. The Vartsikhe Hydro Power Plant Cascade supplies electricity to Zestafoni, and will allow Evraz Group to control energy costs in the production of ferroalloy, as well as providing security of electricity supply. The hydro power plant is currently able to cover 100% of the energy needs for manganese production. Evraz Group includes several of the biggest Russian iron and steel plants as well as ore mining and processing companies, coal mines, transport and power generating assets, and trading and financial companies.

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