Transnet seeks a private partnership to develop the Ngqura Manganese Export Terminal (NMET) project. 

South Africa's state-owned freight rail operator, Transnet, has renewed its search for a private sector partner to assist in developing its proposed 16Mtpy manganese export terminal at Ngqura port in the Eastern Cape, with an appointment expected by the end of 2025. The project encompasses an integrated rail and conveyor network designed for the efficient transfer of manganese ore. 

This renewed search comes after years of delays and changes in the region's export infrastructure. Commissioned in 2009, the development of Ngqura port necessitated the relocation of the Port Elizabeth manganese bulk facility, originally built in the 1960s for iron ore export and later converted to a manganese export facility following the commissioning of the Saldanha ore line. Since its inception in 2007/2008, the project has faced multiple delays, with areas initially designated for bulk operations eventually being rezoned for other purposes. 

Transnet has been faced with ailing infrastructure and vandalism relating to poor corporate governance during the state capture period, hindering its operations. As a result, many manganese ore producers have resorted to the more costly option of road transport. 

In the second quarter of 2024, manganese ore prices surged due to declining inventory stocks of high-grade GEMCO ores. By late June, Chinese domestic prices for 45% Australian ore had approached US$10/t, while 44% Gabonese ore was trading at around US$6.9/t. This price rally led to a more than 50% increase in market prices, which, for South African producers, helped offset the higher trucking costs. In May, South African manganese ore exports reached a new high of over 2.5Mt, marking a 26% y-on-y growth. 

Given that South Africa exports over 90% of its manganese ore, with more than 60% destined for China, the efficiency of export infrastructure is critical. However, growth in China's consumption of manganese ore is expected to slow as the government implements production caps on the steel industry, while being faced with increasing antidumping duties on its steel exports. The SiMn industry in China is already considering production cuts as high ore costs continue to squeeze profit margins, with inventory levels remaining elevated. The ore price rally has begun to taper off, with South African ore prices ending July 18% lower. 

While prices are expected to remain above H1 2024 averages, reliance on road transport remains an unsustainable solution for South African producers in the long term. Transnet’s recovery plan could offer much-needed relief to South African manganese ore producers, albeit only in two years time, which could turn out to be half a decade after China’s peak demand for bulk steel alloy materials. And the question is still out, if the state-owned entity succeeds in attracting private investors. In the meantime, port congestions may continue to contribute to elevated ore prices.