Gulf Manganese secures power supply for Kupang smelting hub

Gulf Manganese (ASX: GMC) has secured power for its Kupang smelting facilities in Indonesia’s west Timor region after inking a memorandum of understanding (MoU) with the local state-owned power utility PT PLN (Persero).

The MoU is valid for 12 months and provides up to 20MVA power, with a power purchase agreement due next month covering technical implementation.

Gulf Manganese is developing Timor’s first ferromanganese smelting hub, which will produce a high-grade ferromanganese alloy. The hub will eventually comprise eight modular-designed furnaces to enable easier scalability at reduced costs.

The furnaces will be constructed over eight years, and in stages, to produce up to 155,000 tonnes of ferromanganese alloy.

Indonesia passed laws in 2009 ensuring minerals were upgraded within the country prior to export.

The company plans to purchase about 320,000 tonnes per annum of Indonesia’s high-grade manganese ore which it will smelter and sell to global markets.

“The securing of power supply to the Kupang facility is a significant achievement by the business which further de-risks the project’s near-term development,” Gulf Manganese managing direct Hamish Bohannan said.

“In addition to power, Gulf Manganese recently secured its initial ore supply from local miners and both of these agreements with key local partners are a testament to the skill and commitment of our in-country staff,” Mr Bohannan added.

The company’s smelter refurbishment in South Africa is due for completion by the end of the year. Once complete, e two smelting furnaces will be shipped to the Kupang site.

Manganese markets

In tonnage terms, manganese is the fourth highest consumed metal behind iron, aluminium and copper. More than 90% of manganese output is directed to the world’s steel manufacturing sector.

The commodity is also used in several lithium-ion battery formulations along with nickel and cobalt in the battery’s cathode.

Manganese in sulphate form goes into agricultural fertiliser, purifies water, health vitamins, gasoline and glass colouring.

According to the company, manganese demand is predicted to surge 40% in the next 10 years – driven by China’s ongoing industrialisation and increasing urbanisation.