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Australian-listed OM Holdings has signed a R430mn deal with South African black-empowered company Ntsimbintle Mining for a new manganese mine to be built in the Northern Cape.
OM Holdings (OMH) has acquired a 26 per cent interest in Ntsimbintle Mining, which has a 50.1 per cent stake in Tshipi e Ntle Manganese Mining, a R1.5-bn manganese mine to be constructed near the town of Hotazel.
A feasibility study has indicated that the Tshipi Mine has the potential to produce between 2.2mn and 2.3mn tons of run-of-mine ore per annum. It is expected that the resource is capable of supporting a 60-year life of mine, with potential beyond that time period.
South Africa 'drawing investor interest'
OMH said that the deal reflected its positive global outlook and its interest in South Africa, which was drawing investor interest with its physical infrastructure, sophisticated financial sector, relatively low-cost energy, broad technological base, and support institutions.
"This investment serves as an excellent platform for OMH's entry into the South African manganese industry," OMH executive chairman Ngee Tong Low said in a statement on Monday.
He said the transaction allowed OMH to create a foundation to identify future South African and broader African manganese projects, while facilitating exploration and other development opportunities.
"The move adds to the growth potential of our existing smelting business, and supports the identification of expansion opportunities into energy-related commodities," he said.
OMH has a manganese mine in Australia and an alloy processing facility in China.
Ntsimbintle and OMH have also formed a joint marketing venture under which Singapore-based OMH will manage marketing activities for Ntsimbintle's share of production from the new mine.
Ntsimbintle chairperson Saki Macozoma said the deal - under negotiation since last year - would be a trailblazer for trade ties between South Africa and Singapore.
"OMH's strengths in project development, operations management and its China-specific marketing capabilities are a tremendous value-add to the partnership," Macozoma said in a statement.
He said Ntsimbintle was a broad-based empowerment company with strong representation from Northern Cape charitable groups, which would result in the local Northern Cape community benefiting directly from the venture.
'Very good deal for South Africa'
"The deal is a very good one for South Africa," Macozoma said. "OMH brings enormous expertise in the mining and marketing of manganese, and the proceeds of its acquisition of 26 per cent of the company puts Ntsimbintle into a position where it is now able to fully fund its portion of the R1.5-bn needed to get the mine into production," he said.
This would translate into jobs for the people of the Northern Cape. Macozoma said the new mine would initially directly employ 350 people, with many more indirectly benefiting from the provision of goods and services.
"Another positive facet of the deal is that we have an agreement with OMH to train previously disadvantaged South Africans in the marketing of manganese in their Singapore head office."
He said that front-end engineering design for the new mine was under way, and that options were being evaluated to determine the best way to provide rail transport for ore produced at the Tshipi mine.
"It is envisaged that mine production will reach market in 2013, although we are working to bring that date forward," he said.
Pallinghurst Co-Investors, headed by Brian Gilbertson, owns 49.9 per cent of Tshipi.
Monday's contract signing ceremony was witnessed by South African Deputy Finance Minister Nhlanhla Nene, Singapore's senior minister of state for foreign affairs, Zainul Abidin Rasheed, SA High Commissioner Simeon Ripinga and Australian High Commissioner Doug Chester.