Suspension at South32’s GEMCO manganese ore unit

Published on 5 May 2024

Introduction

In March, Tropical Cyclone Megan wreaked havoc on Groote Eylandt, a remote island in Australia’s Northern Territory. The cyclone caused extensive damage to mining infrastructure, affecting manganese ore exports from the region. Let’s delve into the details.

The Situation

• GEMCO Mine: Groote Eylandt hosts the GEMCO mine, operated by South32. GEMCO is a major global supplier of high-quality manganese ore, contributing approximately 15% of the world’s total production.
• Cyclone Impact: Cyclone Megan brought torrential rain (a record 681 millimeters) and wind gusts exceeding 100 kilometers per hour to the island. The mine’s haul road, bridge, and wharf suffered severe damage.
• Export Suspension: The MV Anikitos, loaded with 40,000 tonnes of manganese from GEMCO, was berthed at Groote Eylandt’s wharf during the cyclone. The cyclonic winds and 4-meter-high seas battered the vessel, rendering parts of the wharf unusable. As a result, South32 suspended mining operations and halted manganese exports.

Recovery Efforts

• Infrastructure Repair: South32 is diligently repairing mining infrastructure, including the wharf and haulage road bridge. Engineering studies are underway to assess restoration options and associated capital costs.
• Export Timeline: The company estimates that manganese exports will not resume until sometime between January and March 2025. Alternative shipping options are being explored to mitigate the impact of the wharf outage.

Economic Implications

• Financial Impact: South32 has not disclosed the exact cost of cyclone damage and the suspension of mining operations. However, GEMCO’s value to the company was approximately $1.5 billion in the 2023 financial year.
• Market Dynamics: Asian manganese smelters, facing supply shortages due to GEMCO’s closure, have driven up prices for both high-grade and lower-grade manganese ore. Emerging miners are eyeing this opportunity to secure market share.

Conclusion

Tropical Cyclone Megan’s aftermath has significantly disrupted manganese ore exports from Groote Eylandt. As South32 continues its recovery efforts, the industry watches closely for updates on when GEMCO will resume operations and restore manganese supply to global markets.