Assmang produces refined ferro-manganese at its Cato Ridge Alloys plant in the eastern province of KwaZulu-Natal and halted production last week.
The force majeure
declaration was made in the first week of 2021 after it became clear there would be a shortage of oxygen due to supplies being diverted to hospitals to help deal with the Covid-19 pandemic, the source said.
Oxygen is needed in medium-carbon and low-carbon ferro-manganese production to reduce the carbon content.
“It is unclear when Assmang will restart production,” the source said. “As long as the hospitals need whatever oxygen is available, then production will be stopped.
“An alternative source of oxygen was found [to maintain] medium-carbon ferro-manganese production at Cato Ridge in the first week of January, but that too was unavailable a week later,” the source added.
On January 11, South African president Cyril Ramaphosa extended coronavirus restrictions in the country, citing a “massive increase” in Covid-19 cases driven by a virulent new local variant, which was discovered in the country last year. The restrictions were due to expire on January 15.
Medical experts have said the second wave has yet to reach its peak in the country of around 60 million people, and worry that healthcare services in South Africa may struggle to cope with the influx of patients. And some believe a third wave may happen when winter comes in the southern hemisphere in May and June, and are worried that the existing vaccines may be less effective against the new variant.
In Europe, medium-carbon ferro-manganese spot prices moved up to €1,350-1,450 per tonne delivered on Friday January 8, up from €1,350-1,380 per tonne a week earlier.
European high-carbon ferro-manganese prices also increased.
Fastmarkets' high-carbon ferro-manganese basis 78% Mn max, standard 7.5% C, delivered Europe
was €980-1,020 per tonne on Friday, up from €960-1,000 per tonne a week earlier.
“South Africa exports some its production to Europe and the United States and it is a particular type of alloy containing only 0.10% phosphorous compared with European output,” a European trader said.
Producers in Europe - such as Eramet, Glencore and, occasionally, OFZ Slovakia - produce medium-carbon ferro-manganese containing 0.15% phosphorous.
“European prices may go up depending on how long the force majeure
lasts, but we think European steelmakers will be supplied with what they need in the short term,” the trader said. “However, [the crisis] will add support to prices in the near term, for sure.”
The US also imports refined ferro-manganese from Brazil and Asia, so the impact on prices in the US should be similar, European traders said.
Cato Ridge Alloys is a joint venture between Assmang, which holds a 50% share, Mizushima Ferroalloys (40%) and Sumitomo Corp (10%), according to the Assmang website. Cato Ridge currently has annual capacity to produce up to 60,000 tonnes of refined ferro- manganese.
Assmang is jointly controlled by Assore and African Rainbow Minerals, which each hold 50% of the issued share capital. Both shareholders are listed on the Johannesburg Stock Exchange (JSE). The bulk of the group's production is exported to Asia, Europe, India and the US.