SOUTH AFRICA LOCKDOWN: How Covid-19 is affecting ores & alloys supply [UPDATED]

Fastmarkets reviews the latest developments in South African ores and alloys supply following the lockdown order on Monday March 23 amid the spread of Covid-19 and the subsequent extension on Thursday April 9 by a further two weeks from the initial 21 days.

Mines and smelters across the country were ordered to shut down by midnight on March 26 and most of the existing lockdown measures are expected to remain in force until the end of April.

April 17

Vanadium pentoxide price jumps 25% after extended South Africa lockdown sparks supply concerns
The price of vanadium pentoxide in Europe jumped by more than 25% in the week ended Friday April 17 due to concerns over obtaining the material during the continued lockdown in South Africa.

Fastmarkets assessed the vanadium pentoxide 98% V2O5 min, in-whs Rotterdam price at $6.90-7.45 per lb on Friday, up 25.3% from the previous week’s assessment of $5.20-6.25 per lb and at a three-month high.

Prices have been moving up over the past month, with buyers struggling to find cheap prompt units due to increasing worries over future availability of material, market sources said. The pentoxide market is trading at its highest since mid-February.

April 16

South African government eases lockdown on miners
South African miners will be allowed to produce to a maximum of 50% of their capacity under a loosening of the country’s tight lockdown regulations.

Miners will need to gain permission to resume production from the minister of mineral resources and energy, Gwede Mantashe, and only after a series of conditions have been met, said Dr Nkosazana Dlamini Zuma, South Africa’s minister of cooperative governance and traditional affairs.

Once permission has been granted, regulation will need to be followed to prevent the spread of the coronavirus. A simple resumption of activity will be further hindered by the requirement to retrain workforce and logistical transportation issues in road and rail and at ports.

April 14

Tshipi wins right to partially restart manganese ore operations in South Africa
South Africa’s Department of Mineral Resources (DMR) granted approval for Tshipi é Ntle Manganese Mining to partially restart operations at the Tshipi Borwa manganese mine.

Miners could apply to the DMR for a partial lifting of restrictions if they can demonstrate they have taken sufficient precautions to prevent the coronavirus from spreading.

April 13

Chinese minor metal, ore and alloy market reactions to South African lockdown extension diverge
Chinese minor metalore and alloy markets had mixed reactions to news of an extended South African lockdown. Chrome and cobalt participants were calmer amid weak demand while the manganese market has been more responsive to the lockdown extension, with concerns about looming supply constraints during May and June now exacerbated.

April 8

Why is the seaborne manganese ore price surging while the chrome-ore price rise lags?
The lockdown in South Africa has sparked a sharp rise in seaborne manganese ore prices in Chinawhereas the chrome ore market lagged behind due to different end-uses, slower portside price movements and high stocks.

April 7

Vanadium prices rebound on South Africa lockdown but demand concerns persist
Vanadium prices in Europe have found support from reduced supply after the South African government-lockdown forced producers to place operations on care and maintenance, although worries that collapsing demand could offset supply concerns still persist.

April 3

Manganese ore prices soar as much as 14% on supply concerns
Fastmarkets’ manganese ore index 37% Mn, cif Tianjin jumped to $4.58 per dry metric tonne unit (dmtu) on Friday April 3 from $4.01 per dmtu on March 27.

Rising concern over supply among buyers in China, which pushed up Chinese port prices, primarily drove the surge, while South African miners held back amid the uncertainty and restrictions.

South Africa supply concerns push vanadium prices up
Supply concerns amid South Africa’s lockdown has pushed vanadium prices up after Glencore and Bushveld Minerals put their vanadium operations there on care and maintenance. The alloy price moved up to $23-24.95 per kg on Friday April 3, up 5% from the mid-week assessment of $22-23.65 per kg in an active spot market.

The vanadium pentoxide price moved up 2.7% to $5.20-6.25 per lb on Friday April 3 from the assessment of $5.05-6.10 per lb the week before, with buyers struggling to find cheap prompt units and rising worries over future availability of material, market sources said.

“Vanadium is tense due to South African closures,” a buyer in Europe said.

“On the V2O5 supply side, there’s China that’s waking up after a long sleep and doesn’t know where things are in the country,” the buyer said. “Outside of China, with South Africa out, only Brazil is left as a significant player, which means a big supply shock for the market.”

April 2

Merafe provides update, reveals delayed ferro-chrome benchmark
Merafe Resources, the chrome joint venture partner of Glencore in South Africa, revealed that the second-quarter charge and high-carbon ferro-chrome benchmark remains under review.

The company, which co-operates the Glencore-Merafe Chrome Venture with the trader-miner, said all its South African assets are on care and maintenance and it will declare force majeure if it becomes unable to perform on contractual obligations.

Exporters from SA warn of practical barriers amid conflicting rules
Exporters of minor metals, ore and alloys from South Africa have warned that regardless of conflicting rules on which minerals can be shipped, there are practical reasons why such exports are unrealistic.

Large miners have declared force majeure and put assets on care and maintenance due to the 21-day government-imposed lockdown because that means, for example, there is no transport to the ports or for staff to get to work.

Samancor calls force majeure
Samancor Chrome has sent a force majeure notice to its customers after South Africa entered a government-imposed lockdown in response to the spread of Covid-19, the South African chrome producer has confirmed.

Samancor produces about 3 million tonnes per year of chrome ore, according to its website and it has capacity for over 2 million tpy of ferro-chrome production following a series of acquisitions of smaller rivals in recent years. It announced in January plans to reduce annual chrome ore production by 29% and ferro-chrome production by 20% amid poor market conditions.

March 27

South Africa’s largest manganese miner declares force majeure
Miner Tshipi e Ntle declared force majeure on manganese shipments on Thursday, March 26. Its owner, Jupiter Mines, also confirmed on Friday, March 27 that operations and exports have been suspended for the period of the lockdown. Tshipi sold 3.5 million tonnes of manganese ore in its 2019 full financial year and become the country’s largest miner by export volume in 2017.

Tharisa declares force majeure
Chrome and platinum producer Tharisa declared force majeure on contracted chrome concentrate sales agreements on Thursday, March 26. The miner had already confirmed on Tuesday, March 24 it would cease mining and place its operation on care and maintenance. Tharisa recorded chrome concentrate production of 342,500 tonnes for the three months to December 31, 2019, including 81,500 tonnes of specialty grade chrome concentrate production.

March 26

Shutdown indirectly affects security of cobalt raw materials supply
As much as 70% of the world’s cobalt supply comes from the Democratic Republic of Congo, and much of that reaches South Africa for shipment out of Durban. The lockdown is forcing cobalt raw materials suppliers to either look at alternative ports with a connection to the DRC, or sit it out in the hope the lockdown is short-lived. Ahead of its implementation, there was already concern over the status of March and April shipments, with sellers prioritizing long-term obligations over additional spot inquiry.

“Durban has been cut to a skeleton crew, so there are personnel constraints that means you’ll be competing for discharging berths and loading capabilities, which have been cut down. Exports are competing with essential [medical] imports, and for warehousing time, so even if you can get a shipment, you might get bumped off,” one supplier source said.

Glencore puts its vanadium operations on care and maintenance
Glencore announced on Wednesday it was placing its vanadium operation in South Africa on care and maintenance in response to the lockdown. Glencore operates Rhovan, an open-cast mine and smelter complex located in Brits, which mainly produces ferro-vanadium and vanadium pentoxide.

In 2019, Glencore produced 20.2 million lb of vanadium pentoxide from its own sources.

Glencore puts its chrome operation on care and maintenance
Glencore’s South African chrome operations have been placed on care and maintenance along with a number of global operations. The company produced 1.03 million tonnes of ferro-chrome in the first nine months of 2019.

March 25

Bushveld Minerals stops mining
Bushveld Minerals confirmed on Wednesday, March 25 it would stop mining in response to the lockdown order. Bushveld owns Vametco and Vanchem operations, which will be put on care and maintenance. Bushveld Minerals currently produces approximately 3,000 tonnes per year of vanadium, Fastmarkets understands.

Two South African manganese miners declare force majeure
Two major South African manganese miners, United Manganese of Kalahari and Assmang declared force majeure on manganese shipments on Wednesday, March 25. UMK produces about 3 million tpy manganese ore, while Assmang produced 1.78 million tonnes in the first half of its 2020 financial year.

Afarak works on plan for its operations
Helsinki and London-listed Afarak confirmed its South African chrome-producing operation, Mogale Alloys, was affected by the country’s government-imposed lockdown, adding that a plan is in development. Mogale normally produces 110,000 tpy of ferro-chrome and continued to produce 4,000 tonnes per month of plasma charge chrome and 1,400 tpm of medium carbon ferro-chrome after idling furnaces earlier this year.

March 24

Transnet closes bulk terminal to minerals
South African state transport operator Transnet closed bulk terminals to minerals shipments on Thursday, March 26, after announcing it would do so on Tuesday, March 24. Essential commodities including grains, soya bean meal, fertilizer and wood chips are exempt from the restrictions, Transnet said.