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ArcelorMittal and Kalagadi Manganese Move Ahead with Manganese Venture

09/04/2008 - Kalagadi Manganese and ArcelorMittal implement their previously announced joint venture for developing Kalagadi’s manganese deposits, following ArcelorMittal’s USD 432.5 million payment to subscribe for a 50% interest in Kalagadi Manganese.

Kalagadi Manganese and ArcelorMittal announced implementation of their previously announced joint venture for developing Kalagadi’s manganese deposits.
 
The transaction follows the satisfaction of all conditions precedent to its completion, as well as ArcelorMittal’s payment of its subscription amount to subscribe for a 50% interest in Kalagadi Manganese. The USD 432.5 million deal paved the way for establishment and implementation of the joint venture between Kalahari Resources, Industrial Development Corp. Limited (“IDC”) and ArcelorMittal.

"We are excited to have finalized the participation of ArcelorMittal in Kalagadi Manganese,” commented Daphne Mashile-Nkosi, Chairperson of Kalagadi Manganese. “The investment by ArcelorMittal, the world’s largest steel producer, provides Kalagadi Manganese with a solid platform to progress the implementation and operation of the project. We believe that over and above the capital injection, our new partner will add significant value to the business in respect of enhancing operational efficiencies”.
 
Implementation of the joint venture will lead to the development of a manganese mine, beneficiation plant and sinter complex in the Northern Cape Province in South Africa, and a smelter complex in Coega, in South Africa’s Eastern Cape Province.
 
“We are delighted to have concluded the subscription for shares in Kalagadi Manganese,” said Nku N. Nyembezi-Heita, ArcelorMittal nominee Director of Kalagadi Manganese. “This is an exciting greenfield project that will facilitate the ownership of previously disadvantaged communities into the manganese ore and alloy industries, resulting in employment opportunities in the Northern Cape and Coega areas, whilst bolstering export earnings for South Africa.
 
“We look forward to developing a world-class manganese operation together with our partners Kalahari Resources and IDC,” added Nyembezi-Heita.
 
Kalagadi Manganese's project is situated in the Kuruman / Hotazel district of the Northern Cape Province. The parties intend to establish a manganese ore mine and sinter plant at Hotazel that will ultimately produce 2.4 million tonnes of sinter product per annum. It will also see the establishment of a 320,000 tonnes/year ferromanganese alloy production facility in the Coega Industrial Development Zone in Port Elizabeth. Drilling to date has confirmed the presence of a high grade manganese ore resource sufficient to support a life of mine in excess of 20 years.
 
The project, which is due to come on-line in 2010, overlies the Kalagadi Manganese Basin, a world renowned source of manganese ore containing 80% of the world's known manganese resources. Following the unconditional implementation of the transaction, Kalagadi Manganese is 50% owned by ArcelorMittal, 40% owned by Kalahari Resources, with the remaining 10% held by IDC, the South African state-owned financier.
 
Kalagadi Manganese (Pty) Ltd, a company that was held, until recently, by Kalahari Resources (80%), a majority black-owned and women-led resources company, and the Industrial Development Corp. (20%), has been involved in the exploration for Manganese in the Kalahari Basin. The three farms on which the company holds new order mining rights are believed to overly some 960 million tonnes of manganese ore. The recent exploration program has identified 102 million tons of Mineral Resources.
 
Kalahari Resources, a majority black-owned company with women occupying leading positions, was formed in 2001 as a result of new mining legislation that gave historically disadvantaged individuals an opportunity to participate in the mainstream economy.
 
Kalahari Resources is a truly South African company committed to transforming society and the future. The company’s intention of gaining access to manganese resources was achieved in 2005 when the company was granted a license to prospect in the Kalahari Manganese Basin, specifically on the farms Gama, Olivepan and Umtu. Development started with Daphne Mashile-Nkosi’s injection of R12 million into the project to complete the prefeasibility study, which paved the way for a further R60 million injection by the IDC.
 
The IDC is a self-financing, South African state-owned national development finance institution that provides finance to promote industrial and entrepreneurial development. Its primary objectives are to contribute to balanced sustainable economic growth in Africa and to the economic empowerment of the South African population, thereby promoting the economic prosperity of all citizens of the African continent. The IDC identifies and funds projects in partnership with others and focuses on promoting and investing in viable new industries.
 
ArcelorMittal is the world's largest steel company, with over 320,000 employees in more than 60 countries. The company leads a number of major global steel markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and outstanding distribution networks. With an industrial presence in over 20 countries spanning four continents, the company covers key steel markets, from emerging to mature.
 
Through its core values of sustainability, quality and leadership, ArcelorMittal commits to operating in a responsible way with respect to the health, safety and wellbeing of its employees, contractors and the communities in which it operates. It is also committed to the sustainable management of the environment and of finite resources. The company also takes a leading role in the industry's efforts to develop breakthrough steelmaking technologies and is actively researching and developing steel-based technologies and solutions that contribute to combating climate change.
 
In 2007, ArcelorMittal had revenues of USD 105.2 billion and crude steel production of 116 million tonnes, representing around 10% of world steel output.