Tropical cyclone Megan’s devastating impact on Groote Eylandt Mining Company (GEMCO) in March 2024 sent shockwaves through Australia’s manganese industry. The storm’s fury forced GEMCO, a joint venture between South32 and Anglo American, to halt production, damaging critical infrastructure and disrupting transport and fuel supplies. The wharf, a crucial link in the manganese supply chain, was partially destroyed when a bulk carrier crashed into it. This event has sparked urgent discussions about Australia’s future in the global manganese market.
Australia, once the world’s third-largest manganese producer, now faces a significant challenge. The cyclone has led to a projected 32.1% decrease in manganese production for 2024, dropping to 4.6 million tonnes. This decline aligns with a broader global trend of production disruptions, including closures in Kazakhstan and operational suspensions in Ukraine. The setback at GEMCO, which accounts for 87% of Australia’s manganese production, has intensified competition from major producers like South Africa, Gabon, and China. Vinneth Bajaj, senior mining analyst at GlobalData, warns that if GEMCO’s production remains significantly impacted, Australia risks losing market share and its position as a leading supplier.
Almost a year after the cyclone, recovery efforts are underway, but the road to full operations is fraught with challenges. South32 has resumed partial production and is working on rebuilding critical infrastructure, including the wharf and haulage roads. However, the weather remains a significant risk, with construction work dependent on favorable conditions. South32 estimates capital expenditure of $125m in FY25 for repairs and upgrades, with external insurance payments of $250m received to date. Despite these efforts, the future of GEMCO and Australia’s manganese industry hangs in the balance.
The long-term outlook for manganese is promising, with demand projected to grow over the next five years. The increasing adoption of lithium-manganese batteries in electric vehicles and energy storage systems will significantly boost demand. However, Australia’s manganese industry faces a “looming production gap,” according to Bajaj. With no official closure date set for Groote Eylandt, the mine’s remaining reserve life is estimated at five years, potentially leading to a decrease in manganese production once operations cease. To maintain competitiveness, Australia must expedite the development of new projects and explore options for expanding reserves at existing mines.
The situation at GEMCO underscores the need for robust infrastructure and contingency plans in the face of natural disasters. The manganese industry must adapt to the increasing frequency and intensity of extreme weather events, which are likely to become more common due to climate change. This could involve investing in more resilient infrastructure, diversifying supply chains, and enhancing emergency response capabilities. Furthermore, the industry must address the looming production gap by accelerating the development of new projects and expanding existing reserves. This could involve streamlining regulatory processes, attracting investment, and fostering innovation in mining technologies.
The future of Australian manganese mining is at a crossroads. The industry must navigate the challenges posed by natural disasters, intensifying competition, and a looming production gap. However, with strategic investments, innovative solutions, and a proactive approach to climate change, Australia can maintain its position as a leading manganese supplier and capitalize on the growing demand for this critical mineral. The coming years will be pivotal in shaping the industry’s trajectory, and stakeholders must act decisively to secure Australia’s future in the global manganese market.
