Is South Africa, the world’s top manganese producer, playing right into the hands of China with its renewed call for local beneficiation?

Mineral and Petroleum Resources Minister Gwede Mantash wants to save the country’s dying ferro alloys industry by using Indonesia’s nickel playbook: Restrict raw ore exports and wait for addicted customers (mainly China) to come begging with their open wallets.

But the main reason South Africa’s once great ferro alloys industry is in its current sorry state is because of China’s takeover of the market. China produces nearly 70% of the world’s silico manganese and 40% of the high-carbon ferro manganese, making it nearly impossible for many to compete.

Ironically, Pretoria is now seeking Beijing’s help to revive a ferro alloys industry that China helped destroy.

“As the biggest importer of manganese and chrome from South Africa, and with the largest ferroalloys sector, we urge the Chinese investment community not only to share your insights on the creation of value-added products, but to also invest in local value addition to the South African ferroalloys sector,” Mantashe told Chinese industry officials late last year.

And in an update in March, the minister said that discussions were being formalized with China “to bring beneficiation, technology and industrial capacity into South Africa.”

The only way this makes sense is by banning manganese ore exports, since the world already faces an oversupply of ferro alloys production capacity, industry officials said. If China agrees to invest in South Africa’s downstream industry, then it will want control over the ore that goes into these new local smelters, similar to what has happened in Indonesia with nickel.

After banning nickel ore exports, Indonesia got what it wanted – billions of renminbi worth of domestic smelters. China, on the other hand, achieved long-term supply security by taking control of 75% of Indonesia’s refining capacity.

“This is what they [China] do. They overbuild, they sell below variable costs or at variable costs, they displace everybody, they occupy the market, and then they increase prices,” Ferroglobe CEO Marco Levi told McCloskey. “Their time horizon to do business is not one quarter like an American-listed company; their time span is 10 years.”

Given manganese’s importance in steel and energy storage, it would make sense for Beijing to want to secure the entire supply chain if given the opportunity.

China already controls the vast majority of the world’s manganese refining capacity but still depends on non-Chinese producers in South Africa, Gabon, and Australia for its ore. China consumes nearly 70% of the seaborne manganese ore market.

And if South Africa doesn’t follow through on its pledges, China could also achieve its manganese aspirations with No. 2 producer Gabon.

Gabon’s newly elected president announced this month that manganese ore exports would be banned by 2029 in order to promote local beneficiation. The announcement took its main ore producer, Eramet Comilog, completely by surprise.

“This is realpolitik. Manganese goes into everything that has steel, like tanks,” said an industry official with manganese operations in Africa. “With so many unknowns and geopolitical risks, it wouldn’t surprise me if China has something to do with this.”

Unlike South Africa, which has several manganese producers, Gabon would likely only need to contend with Eramet in banning ore exports, as Nouvelle Gabon Mining (NGM) is state-owned, and CICM Huazhou Gabon is a Chinese subsidiary.