Kudumane rail issue limits junior manganese exports
Junior manganese miners are struggling to make use of the additional 2 mt/y in railing capacity awarded to them by Transnet amid a stand-off with Kudumane Manganese Resources over the use of its private rail link.
As was first announced by Transnet Freight Rail (TFR) in late 2022, the rail operator doubled its allocation to junior manganese miners to 4 mt/y as part of the Manganese Export Capacity Allocation (MECA) III process.
The allocations are on lines from the Northern Cape to the ports of Gqeberha and Saldanha, which have capacity to move 16 mt/y of manganese ore. Of that total, 14 mt/y was previously available to large manganese miners.
To help implement the additional rail capacity for juniors, Transnet reached a deal with Kalagadi Manganese to share its loading capacity at a rail siding at its mine located in the Northern Cape’s Kalahari basin. But only 318,000 t of the additional 2 mt has been used by juniors this year.
This is partly due to an impasse with Kudumane Resources, which operates at a neighbouring mine developed before Kalagadi.
Historically, Kalagadi has been allowed to make use of Kudumane’s private rail link in order to access the main manganese line, which moved product out of the Hotazel area, where higher-grade mines are located.
But Kudumane has declined to allow other juniors to use its rail access without a contract.
Kudumane CEO Thembelani Gantsho said the company is the owner of certain private rail infrastructure, which it developed and funded, the use of which in the normal course of business would be subject to an agreement between the owner and the user.
“Kudumane has since 2017 allowed Kalagadi to use its private infrastructure in terms of an agreement concluded between them. Any further third-party use of the Kudumane private infrastructure by the emerging miners will be regulated in terms of a use agreement to be concluded between Kudumane and the emerging miners,” Gantsho said.
Kudumane has an exclusive rail use commercial agreement with Kalagadi, which allows Kalagadi to use its private rail infrastructure to transport manganese to port.
But for several months, Kudumane said it was unaware that juniors were also using its private rail infrastructure by loading their material at Kalagadi and transporting it partly on Kudumane’s private rail.
“As part of the exclusive rail use commercial agreement with Kalagadi, quarterly reports are submitted by Kalagadi to Kudumane. The January 2024 quarterly report revealed for the first time that there were certain juniors who were loading at Kalagadi and who were utilising Kudumane’s private rail infrastructure without Kudumane’s knowledge and agreement,” Gantsho said.
Kudumane said it has shared a draft use agreement with the emerging miners and is awaiting comments from them.
Sources close to the matter said Transnet has tried to resolve the impasse, presenting several proposals to Kudumane, which have been rebuffed. Junior and emerging miners have apparently expressed reservations about having to deal with another party to gain rail access.
Kalagadi Manganese said its involvement in the situation is limited.
“Therefore, Kalagadi is not involved in any other manner except the use of its rail infrastructure for loading purposes and access to the Transnet main line. This matter is between the junior miners and Transnet,” it said. “Kalagadi is sensitive to the plight of junior miners, having been a junior miner itself, and hopes that a speedy resolution to this impasse is found.”
The timing of the impasse has been unfortunate, given the temporary spike in manganese prices earlier this year – particularly for higher grade ore, which is produced in the Hotazel area.
McCloskey understands that some junior miners are still able to rail some manganese ore out of the Postmasburg area, where lower grade operations are located.
Despite these issues, Transnet maintains it is on track to achieve the full contracted annual volume for juniors of 4 mt by the end of the current contract period.