By Sherilee Bridge

Johannesburg - ArcelorMittal and Kalagadi Manganese announced a strategic equity partnership that will result in the R4.2-billion development of South Africa's first major greenfield manganese project in 30 years.

The companies said in a joint statement that the 50-50 joint venture to develop Kalagadi's manganese resources would lead to the development of a manganese mine, beneficiation plant and sinter complex in the Northern Cape province, as well as a smelter complex at Coega in the Eastern Cape.

Kalagadi's manganese resources are situated in the Kuruman district of the Northern Cape and the project area overlies the Kalagadi Manganese Basin, a world-renowned source of manganese ore containing 80 percent of the world's known manganese.

The companies said they intend establishing a manganese ore mine and sinter plant at Hotazel near Kuruman, which will ultimately produce 2.4 million tons of sinter product per annum.

As part of the project, a 320 000 tons per annum ferromanganese alloy production facility would be established in the Coega Industrial Development Zone in Nelson Mandela Bay.

Daphne Mashile-Nkosi, chairperson of Kalagadi Manganese, said the company was delighted to have attracted a strategic equity partner of the calibre of ArcelorMittal.

"The deal is particularly important as it comes at a time when we are spearheading the trend towards backward integration into raw materials," Mashile-Nkosi said.

ArcelorMittal, which was one of 16 potential joint venture partners from around the world that responded to Kalagadi's request for proposals, has agreed to buy 50 percent of the ferromanganese produced by the project at market-related prices.

"The Kalagadi Manganese project will not only prove to be an important and competitive source of manganese for our plants, but a notable contribution to the economy of South Africa," the steel giant said in the statement.

Kalagadi Manganese is 80 percent owned by Kalahari Resources, a majority black women owned and controlled company, with the remaining 20 percent held by the state-owned financier the Industrial Development Corporation.

Established in 2002, Kalahari Resources' shareholding comprises an array of BEE women's groups (40 percent), BEE groups 38 percent, an established listed metal and commodity trading company (10 percent) and individuals/management (12 percent) with a strong background in the manganese industry.

Manganese, a critical component in metallurgical applications, is used in the steel- making process and adds toughness, hardness and abrasion resistance to steel in the form of an alloying component.

About 90 percent of the manganese consumed in the world is used in manganese ferroalloys as well as manganese metal in the production of iron and steel.