Since breaking ground in May 2012 and shipping its
first ore in April of the following year, the Kudumane
Manganese Mine has established itself among South
Africa’s largest manganese miners, producing 1.8-2
million tonnes per year of ore.
The mine is operated by Kudumane Manganese Resources
(KMR) in South Africa’s Northern Cape Province,
80km northwest of Kuruman. The project has 250 million tonnes
of resources and includes an open-pit mine, a mobile crushing
and screening plant, and a chemical analysis laboratory. It
ships its ore from the ports of Durban and Port Elizabeth,
counting China, India and Russia among its export
KMR is headed by Thembelani Gantsho, a former
investment banker who swapped investment banking "glamour" for
the grit of manganese ore, a darling of South African mining
that imparts strength in steelmaking. A finance graduate of
Cape Town University in the mid-noughties, Gantsho has a varied
resumé, with stints at blue-chip banking and mining
giants, having alternated between those sectors for a few
"One gets lured by the glamour of investment banking.
And it is lovely to watch a mining project from the ground up
and navigate the difficulties of funding," he said.
After starting his banking career at
Barclays-affiliated South African bank Absa Capital, Gantsho
was eventually headhunted into Xstrata Alloys, a unit of
FTSE-100 listed mining giant Xstrata, which went on to merge
with trader-miner Glencore in 2013. In his two years at
Xstrata, he looked after platinum in a business development and
strategy role, setting the foundations for a mining career.
"That’s where I cut my teeth in mining. I enjoyed
it; it was great fun," he said.
He was later headhunted back to Absa and is candid
about finding his way back again to resources and a longer term
career at a miner, working his way up from head of sales,
marketing and logistics to the helm of the company.
"I did it for a while and banking was not for me, I
guess. Stroking egos to get business for the banks - I
didn’t really enjoy it," Gantsho said. "The mining
industry has given me vast opportunities to travel the world,
meet international players and network. It’s the
opportunities that it has given me that have kept me stable in
Gantsho readily reviews his career development, but it
is clear that what really impassions him is discussing the
wider manganese market and, even more so, the future of South
Africa’s mining industry.
His financial mind is ticking throughout the
conversation, but he is balancing miners’ funding
considerations and profit margins against how they fit into
South Africa’s wider strategy and future, which
comes with other responsibilities.
"Once you’re done, you need to leave a
lasting legacy," he said. "We must leave an impact and make
sure the community is better off. The benefit must not just be
to the owners, and the area must not be a barren land with the
community in abject poverty.
"KMR’s shareholders have set aside as
much as 10% of the economic benefit derived from the business
for the benefit of our employees and the local community. This
goes beyond our current requirements but embraces the spirit of
the latest Mining Charter," he said.
Surviving the pandemic
It is his workforce that is his first thought when he
expresses his relief at surviving the Covid-19
South Africa imposed two national lockdowns, the first
in March 2020 and the second in June this year. The first
lockdown triggered a series of force majeure
declarations across the country’s mining sector,
while mines were forced to temporarily close and staff were
unable to get to work.
For KMR, efforts to mitigate the effects of the
pandemic included fixing water pipes, providing water tanks,
serving healthcare centers and enabling online learning
for grade-12 students by providing computer tablets and data.
The company also directed its existing collaboration with other
Northern Cape miners, including rivals in the manganese space,
toward the Covid relief effort.
"Covid-19 forced us to be in survival mode because we
had to prioritize the safety of our workforce," Gantsho
"We were fortunate in that, as an industry, we were
allowed to operate, thus enabling us to safeguard jobs and be
in a position to meet our obligations to our employees. In
addition, we played our part in ensuring that we assisted our
local communities, focusing on improving service delivery
within the local water infrastructure and education," he
"We also partnered with our neighbouring mines Kumba,
Assmang and South32 under the Shared Value Initiative to
collectively direct our efforts toward having a meaningful
effect with our Covid relief initiatives," he said.
South African mining
Alongside his commitment to corporate social
responsibility, Gantsho recognizes a need for South African
mining to attract fresh capital, having lost some of its appeal
in recent years. He sees these priorities as inextricably
linked and in line with the South African Mining
The proportion of investment in Africa that goes to
South Africa has shrunk drastically in less than a generation,
Gantsho pointed out. "Over a decade to a decade-and-a-half ago,
South Africa used to get the lion’s share of
Africa’s mining capital investment. However, this
has shrunk to less than 5% based on Africa’s
latest mining capital internment figures. This is both for new
and prospecting projects," he said.
"We have a sense that mining is a sunset industry, but
there is lots of opportunity for it to be a sunrise industry.
For mining to grow, you need to invest in prospecting. South
Africa creates great opportunities, but capital has dried up,"
He blames the capital drought on frequent changes to
the regulatory framework, which continue to spook investors
despite the country being relatively stable
South Africa’s Mining Charter aims to
radically improve black economic empowerment (BEE), community
benefits and competitiveness under a number of transformation
goals. It has been revamped twice, most recently in 2018, and
although the government frames the charter’s
evolution as progression and agility, many, including Gantsho,
believe that the changes have meant uncertainty for investors,
even though the intention was right.
"It’s to do with regulatory uncertainty,
constant changing of the rules," he said. "We are on our third
iteration of the Mining Charter; even ministers have admitted
some flaws, and that creates uncertainty. The essence of the
Charter is needed; it drives transformation and we need not be
apologetic about that. But there needs to be stability in the
The kind of fears some investors have around political
instability in some emerging economies, and potential loss of
assets, should not apply to South Africa, Gantsho added. "When
capital is deployed, it’s protected.
You’re not going to have assets taken by the
government," he said.
Recent unrest in South Africa – riots and
looting following the jailing of former president Jacob Zuma
– has drawn international concern and knocked the
value of the country’s rand down from its strong
recent performance among emerging market currencies.
Great opportunities still remain and investors can
look beyond the unrest to the growth in the Northern Cape in
particular, according to Gantsho.
"The recent unrest highlights the disgruntled state of
the masses with regard to the massive inequality and high
levels of unemployment and poverty in the country," he said.
"This does not diminish the opportunities that the country
possesses, only if they are supported by enabling policies and
a willingness from the government to execute those policies.
Mining still has great opportunities, especially demonstrated
by the massive growth in mining operations over the past decade
in the Northern Cape Province, where we operate."
South African mining – and downstream
industries in particular – also continue to operate
under the shadow of limited power supply and frequent load
shedding, which means controlled blackouts aimed at reducing
the pressure on the national grid.
This presents another challenge for government by
making added-value downstream manufacturing difficult to
establish or maintain. "Power is a constraint the country has
on any ambitions of the government for beneficiation," Gantsho
Gantsho shares the frustrations of many other senior
executives and marketing managers of manganese miners amid what
has long been seen as poor producer discipline on output
While commodity market participants elsewhere debate
the emergence of a new supercycle, many with stakes in the
manganese market fear exclusion from this kind of upside.
Gantsho believes that ifSouth African manganese producers
continuing to push ever higher volumes into an
already-oversupplied market, it will cost manganese a place
among the winners of any such event.
Gantsho stops short of declaring a new commodity
supercycle in today’s market himself, but he says
that manganese producers will be ruling themselves out of
significant upside as long as they continue to export at
"The South African producers are really pumping, and
we are going to miss an opportunity to benefit from any cycle.
The only way is to get stocks down and for South Africa to
exercise restraint," he said.
Stocks of manganese ore in Chinese ports have been
declining throughout 2021, but those inventories are still
about a million tonnes larger than they were 12 months ago, as
high as 5.67 million tonnes in mid-July this year.
Manganese ore prices have been relatively volatile
this year amid weather-related disruptions, logistical
constraints and soaring freight rates, and the market has
remained under pressure from the high stocks in China and
rising exports volumes from South Africa. Preliminary data
shows South African manganese miners exported about 2 million
tonnes of ore in June this year, up from 1.7 million tonnes in
May and 1.8 million tonnes in June 2020. As recently as the
second half of 2019, 1 million or 1.3 million tonnes was a
normal monthly volume.
Preoccupation among manganese miners with being the
top producer, or among the top producers, is leading to
decisions that weigh on market conditions, Gantsho believes.
"Producers need to see reason and not think about market
position. It’s a balancing act; we need to be
disciplined as producers and position ourselves to take
advantage of any cycle," he said.
Since January, prices for South Africa’s
37% semi-carbonate ore have risen by more than 11% on a cif
basis, reflecting higher freight costs, but have fallen by
nearly 12% on an fob basis to $3.10 per dry metric tonne unit
as of July 21, meaning producer netbacks are down.
Road and rail
The use of more expensive road transport to boost
export volumes beyond South Africa’s constrained
rail capacity has been particularly controversial in recent
years. Manganese ore producers use trucks to ramp-up exports
when prices are high, but many in the industry complain that
these increased exports continue for too long after prices
"We still have guys who are dogmatic about putting
material onto trucks, and you have to question how
they’re making money. They’re focused
not on margins but on being the number one or two producer at
any cost," Gantsho said. "We don’t ship more than
our Transnet [South African rail] allocation. We have only
trucked one or two shipments since 2016."
The year when Kudumane stopped trucking was one of
unprecedented volatility that started with fob prices for 37%
semi-carbonate ore at $1.35 per dmtu and ended with a
three-month rally that took prices as high as $7.96 per
And the market has been vulnerable to rallying and
crashing, with little warning, ever since.
Although Kudumane has only trucked one or two
shipments since 2016, according to Gantsho, it started out with
trucking as its only transportation option before securing a
rail allocation. "We started out trucking ore and were offered
an opportunity with an entity in Port Elizabeth to partner, and
that’s how we got into rail. In 2015," he said,
"that’s when our railing kicked off."
Gantsho helped bring Kudumane into existence in
partnership with Dr Mandla Gantsho, former chairman of Sasol,
Kumba Iron Ore and Impala Platinum, and a relative of
Thembelani’s, as well as Hirotaka Suzuki, founder
of Hong Kong-based Asia Minerals Ltd (AML), the majority owner
AML provides technical and marketing services for the
mine, which also has a black economic empowerment (BEE)
partner, Afris Capital. "I partnered with Dr Gantsho," the CEO
said. "He knew funding and I knew mining. We invested in
Kudumane Manganese Resources and I moved up the ranks. Then we
partnered with Mr Suzuki of AML and the relationship has gone
from strength to strength.
"We found an asset we fell in love with. It came up
and we got to understand it and its applications. Once you
understand it, it’s easy to fall in love with it,"
he said. "You get to see the whole value chain; opening up the
pit, doing your first shipment. We had no Transnet allocation,
we had to find solutions. I started with no experience in
logistics, but we had a great team. We found operators ready to
work with us, and there was a big push to get Transnet
Securing Transnet allocation is always a huge step for
South African miners, which have to share the
country’s constrained capacity and often complain
that they would export much greater volumes by rail if they
could do so. Gantsho said that achieving rail allocation was
something he did through perseverance - "Being in their face
all the time until you build those relationships," he
Seeing the project through its early days has given
Gantsho a great appreciation for AML’s support,
which came at a time when the risk profile of junior miners was
unattractive to many investors.
"In the beginning, when the operation started, AML
still came to the party and funded from their own cashflows,
and they’ve been rewarded. The funding was a
challenge from the banks, but our partner stepped up and
allowed us to do it without debt from banks. Due to the risk
profile at the time, mining was not sexy for banks unless you
were a major," Gantsho said.
"I applaud AML; they bet everything on developing KMR,
having invested in excess of $150 million, and that investment
has paid off. It is thanks to Mr Suzuki’s
visionary leadership that AML ventured into manganese mining,
and that’s how KMR came to be," he
In handling Kudumane’s ore marketing, AML
has not been among those who Gantsho believes are pushing
volumes at any cost, he said, adding that a solid client base
has been established without such practises.
"I’ve enjoyed the partnership with AML
and I appreciate the mentality of AML; not chasing volume, and
clients are with us whether the market is down or the market is
up," he said. "They don’t look to play the market;
even when the temptation is there, they exercise restraint.
It’s not about what the market is doing,
it’s about what the business needs."
Gantsho believes his experiences rising through the
company have made him a better leader, better able to
understand the challenges of his workforce. He is also more
confident aboout letting them grow into their roles.
"Fernando Voges looks after our logistics. He is a
real treasure. He has done an exceptional job in that role to
ensure that we minimize our reliance on road hauling and grow
our rail allocation," Gantsho says.
"My experience in logistics allows me to understand
the challenges the guys have, and I am able to advise and
provide solutions," he concluded. "You see the mistakes you
made at the beginning. I’m privileged enough to
have had direct involvement with elements of the business and
allow them to be their own boss, and not stifle their