Creating strength.

NERSA Presentation MYPD 4

January 2019

1

Creating strength.

• Introduction to Manganese Metal Co.

o 10 Key Facts About MMC

o Beneficiation Impact in South Africa

• 3 main issues

o 3 Year pricing without a strategy

o Short Term Framework

o Cross subsidies

• Proposal

• Final take away

2

Topics

Creating strength. 3

10 Key Facts About MMC

28,000 tpa nominal production, operating

at full capacity 1 World’s largest producer of

99.9%, selenium-free electrolytic manganese metal 2

Established 1974 44 years’ of industry

experience 3 600 Employees 400 permanent 4

100% locally owned and operated. 5 95% of production is exported, direct

relationships with all customers 6

ISO certification Quality Management

9001 and Environmental Protection 14001 7 Exclusive producer of electrolytic

manganese metal in Southern Africa 8

Beneficiation of 80,000t of Manganese

ore fines from Northern Cape 9 Consistent 40MW offtake from Eskom

with a exceptionally high load factor. 10

Creating strength. 4

Manganese Beneficiation for South Africa

Mbombela (Nelspruit)

Durban

Gauteng North West

Northern Cape

Eastern Cape

Western Cape

Kimberly Free State

Polokwane

Limpopo

Mpumalanga

Mafikeng

Bloemfontein

Bisho

Cape Town

Pietermaritzburg

Johannesburg

Pretoria

Maputo

Kwazulu-Natal

Hotazel

Main ports used: Durban &

Maputo

MOZAMBIQUE

SWAZI-

LAND

SOUTH

AFRICA $80m Exporting 28,000t ElMn

$10m Exporting 80,000t Mn Washer Tailings

Beneficiation

By processing 80,000t of Mn Ore

washer tailings to 28,000t of

Manganese Metal creates an

additional

R950M value for SA Inc

Creating strength.

MANNIKIN GENERAL TRADING CC

SIZANANE 7 CC

DIRARO LOGISTICS

SASOL OIL (PTY) LTD

SEMICONDUSTOR SOLUTIONS

S & R PROJECTS

LOESCHE SA

GREEN DOT PARTNERSHIP

ASM ANTON SMIT MAINTENANCE

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TITAN PROJECTS CC

ELECTRO SYSTEMS ELECTRICAL ENG

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REFRACTORY & FIBRE INSTALLATIONS

RJK MACHINES SERVICES C.C.

BUCO NELSPRUIT

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(PTY) LTD

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KSB PUMPS SA (PTY) LTD

YANKA LABORATORIES

ECHO CRANES & STEEL CC

NELSPRUIT RHODES ENGINEERING

MORRIS MATERIAL HANDLING SA

(PTY) LTD

STEWARTS & LLOYDS NELSPRUIT (P

SIZONKE TRADING (PTY) LTD

FREUDENBERG FILTRATION

TECHNOLOGIES

BEARING MAN GROUP

AJ DEETLEFS VERVOER

NEW COMMUNICATIONS CC

NTLEMO PROJECTS

DECATYPE (PTY) LTD

FILTAQUIP (PTY) LTD

JONES & WAGENER CONSULTING

CIVIL ENGINEERS (PTY) LTD

NEDA ENGINEERING GROUP (PTY) L

INDUSTRIAL FLUID CONTROL (PTY)

CHEMICORP CC

COLLIERY TRAINING COLLEGE (PTY)

LTD

MACROBERT ATTORNEYS

DRAUGHTING AND DESIGNS

BRUTES AIR SOLUTIONS (PTY) LTD

BABATA PUMPS (PTY) LTD

STEEL TECHNOLOGIES

PRAGMA (PTY) LTD

THE PUMPSMITH

LH MARTHINUSEN (A DIVISION OF

ACTOM (PTY) LTD)

KONICA MINOLTA SOUTH AFRICA

ELECTRONIC DESIGN

MACSTEEL TRADING (PTY) LTD

LOWVELD CRANES

GSR INDUSTRIAL PRODUCTS C.C.

ALPHA RESOURCES AFRICA CC

NELQUIP AGENCIES

ARAMEX SOUTH AFRICA (PTY) LTD

DANA TRAVEL AGENCY

ENVIROENG (PTY) LTD

LOWVELD SCALE SERVICES

ZIMCO ALUMINIUM (PTY) LTD

WEIR MINERALS AFRICA (PTY) LTD

CMS CONDITION MONITORING

SERVICES CC

DRIZIT ENVIRONMENTAL CC

AMD-ROTOLOK (PTY) LTD

LOWVELD GARAGE EQUIPMENT CC

ARB ELECTRICAL WHOLESALERS (PTY)

LTD

RS COMPONENTS SA LTD

HEWLETT PACKARD SOUTH AFRICA

(PROPRIETARY) LIMITED

HYTEC (PTY) LTD

THOMAS TYRES NELSPRUIT

COMMERCIAL

THE COMBUSTION GROUP (PTY) LTD

SIMAGUMBI TRADING CC

NELROH TRADING ENTERPRISES

INTO INSTRUMENTATION &

BEARING SERVICES NELSPRUIT(PTY)

LTD

MAN AUTOMOTIVE (SOUTH AFRICA)

NOSA (PTY) LTD

ELECTRO SURGE PROTECT CC

DEO WATER SERVICES (PTY) LTD

GKD BUISMET (PTY) LTD

ROCHELLE CHEMICALS & LAB EQ NT

RISKWORKS (PTY) LTD

MACSTEEL FLUID CONTROL A DIV OF

MACSTEEL SERVICE CENTRES SA

NELSPRUIT FASTENERS CC

BIDVEST CAR RENTAL (PTY) LTD

BROCOM ELECTRICAL

POWERFORCE HYDRAULICS

LOWVELD

BLASTRITE (PTY) LTD

EPOCH HYDRAULIC ENGINEERING

NATIONAL QUALITY ASSURANCE

CERTIFICATION (PTY) LTD.

UPAT SA (PTY) LTD

DEMAG CRANES & COMPONENTS

EURO STEEL

COMPAIR SA (PTY) LTD

JNR ENGINEERING (PTY) LTD

MAGNITECH (PTY) LTD

LAFARGE INDUSTRIES SOUTH AFRICA

EASTERN TRANSVAAL VALVE &

ENGINEERING

MPUMALANGA COPIERS (PTY) LTD

MANDLA AND VELISWA

CONSTRUCTION AND ELECTRICAL

VEGA CONTROLS SA

VOLTEX NELSPRUIT

PROTEA TYRES TRUCKENDEN (PTY) LTD

t/a THOMAS TYRES NESLPRUIT

JOHN CRANE (PTY) LTD

B T INDUSTRIAL SUPPLIES AND

BEARINGS 2000 PTY LTD

FLSMIDTH SOUTH AFRICA(PTY) LTD

LABSERVE ANALYTICAL SERVICES

PRO LAB SUPPLIES CC

SIEMENS

PRETORIA MR TRUST

ACDC EXPRESS

RODQUIN MANUFACTURING

T.I.S. TECHNICAL INDUSTRY SERVICES

(PTY) LTD

LOWVELD COMPRESSOR SERVICES

ACTOM ELECTRICAL MACHINES

REINFORCING STEEL CONTRACTORS

THE SURVEILLANCE FACTORY

IMP CALIBRATION SERVICES (PTY) LTD

ICAT ENVIRONMENTAL SOLUTION

FIRST CONSULTING ALLIANCE (PTY)

LTD

VITECH ENGINEERING & SALES

KARCHER

INTERWASTE (PTY) LTD

ERNEST LOWE

FILVENT (PTY) LTD

CAREL DE JAGER VERVOER TRUST.

MICRON LABORATORY SERVICES CC

MEGA PAINTS NELSPRUIT

SGS SOUTH AFRICA (PTY) LTD

MINUTEMAN PRESS

TYREHOUSE NELSPRUIT

ENSafrica

TOOL & PRECISION ENGINEERING C

CAPE MATERIAL HANDLING

QUIPMENTCC T/A CALLON SOLID

TYRES

FORMS MEDIA INDEPENDENT AFRICA

(PTY) LTD

TOYOTA FORK LIFT

ANGUS ENGINEERING

HANNA INSTRUMENTS (PTY) LTD

BEARING AND POWER TRANSMISSION

SUPPLIES

SIKHONZA VESTRA 89 CC T/A CHRIS

DAMES

FILING@WORK (PTY) LTD

LOWVELD VALVE & INDUSTRIAL

SUPPLY CC.

PPE TECHNOLOGIES CC

RENOLD CROFTS SA (PTY) LTD

PARSLEY STUDIOS CC

EZEE-DEX

TWEEDIE AUTO ELECTRIC CC

ACTOM ELECTRICAL PRODUCTS A

DIVISION OF ACTOM (PTY) LTD

POWERMAN SALES C.C.

DRAGER SOUTH AFRICA (PTY) LTD

MOPANI PHARMACY

PRO PLASTIC SIGNS

ASTORE AFRICA (PTY) LTD

AFROX LIMITED

ANALYSERS ON-LINE CC

INDUSTRIAL COOLING TOWERS EMP

(PTY) LTD

AGRI-ENVIRO SOLUTIONS (PTY) LTD

CHICK HENDERSON DIV OF INMINS

TRADING (PTY) LTD

MICROSEP

Bambanani Hydraulics

KLINGER MZANSI PTY LTD

SEMICONDUCTOR SOLUTIONS

MAN DIESEL & TURBO SOUTH AFRICA

(PTY) LTD

GREEN DOT ADVISORS (PTY) LTD

BRELKO ENGINEERING CC

MEGA BAGS GROUP CC

MMD TECHNOLOGIES (PTY) LTD

Mikrons Presisie Komponent

Vervaardiging

LASEC SA (PTY) LTD

M BULK SOLIDS HANDLING CC

BRAYSHAW AUTO ELECTRICAL

THERMO FISHER SCIENTIFIC

WASA (PTY) LTD

EAGLE BURGMANN SEALS S.A.

TEMPLE WASTE CC

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CONTACT COMMUNICATIONS

NELSPRUIT

PRO.COM

LABOTEC (PTY) LTD

KLERKSCALE (PTY) LTD

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SACKSPACKAGING

MERCK MILLIPORE (PTY) LTD

MANDLAKAZI ELECTRICAL TECHNOLO

PANALYTICAL (PTY) LTD

INDUSTRIAL ANALYTICAL (PTY) LT

SPECTRUM COMMUNICATIONS (PTY)

LIFT & SHIFT

DAWSON & DOBSON (PTY) LTD.

PRO PRESENTATION CC

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COMPAL INDUSTRIES

CROCODILE FIBREGLASS (TVL) CC

CHAPMAR INDUSTRIES CC

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FORKLIFTSPARES SPECIALISTS

MICHEM CLEANING SUPPLIES

DIESEL ELECTRIC

NELSPRUIT BRAKE & CLUTCH CENTR

WURTH SOUTH AFRICA CO (PTY)

SABS COMMERCIAL SOC LTD.

INCLEDON DPI (PTY) LTD.

KWATANI (PTY) LTD

BALTIMORE AIRCOIL CO SA (PTY)

BIATON PAVING

TRU-TRAC ROLLERS (PTY) LTD

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NUSAFRICA BEARINGS AND

BULKMATIC SOLIDS MACHINERY (PTY)

LTD

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ELEN ELECTRICAL ENCLOSURES

MACSTEEL VRN (PTY) LTD

NATIONAL SEPARATIONS (PTY) LTD

GIJIMA AST GROUP (PTY) LTD.

HEWLETT PACKARD SOUTH AFRICA

(PROPRIETARY) LIMITED (INC)

STONE STAMCOR (PTY) LTD

BELL EQUIPMENT CO SA (PTY)

BIZ AFRIKA 925 (PTY) LTD

ASTORE KEYMAK

FESTO (PTY) LTD

PEST CONTROL SPECIALISTS (PTY)

ELEPHANT LIFTING EQUIPMENT (PT

MPUMALANGA CONSULTING

ENGINEER

SUPER BRAKE SERVICES CC

QUADRANT CHEMPLAST (PTY) LTD

ENVIROCON INSTRUMENTATION CC

POWERMITE AFRICA (PTY) LTD

TRANSVAAL RUBBER COMPANY (PTY)

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UNIQUE WELDING ALLOYS (PTY) LTD

KEMPLANT (PTY) LTD

SAFETYDOTCOM

BATTERY PRO

DU PAINT

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UPINGTON

CORRO PUMP MANUFACTURING CC

MONITORING & CONTROL

LABORATORIES (PTY) LTD

PUMPTEC

NELSPRUIT ARMATURE WINDERS C.C

DE KAAP ELECTRICAL CC

ARMCO SUPERLITE (PTY) LTD

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MERCURE NELSPRUIT

SPERO SENSORS & INSTRUMENTS (PTY)

LTD

JONET ENGINEERING & FIELD

SERVICES

BLANES PRESSURE SOLUTIONS CC

QOTHO LABORATORY SERVICES

BIDFOOD MPUMALANGA

HILTI (SOUTH AFRICA) (PTY) LTD.

CUSTOMER NO. 16818317

PEOPLE RESOLUTIONS

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DCD GROUP (PTY) LTD

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STAWIRE

ELLIS - SINGER

CERAMOX (A DIVISION OF

WONDERSTONE LIMITED).

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HP SOUTH AFRICA PROPRIETARY

LIMITED

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PROTEA CHEMICALS INLAND

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ELMADRE BUTCHERY

DUPLEIX LIQUID METERS

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AUTOMATION & CONTROL

SOLUTIONS

LOWVELD PACKAGING

LATTY INTERNATIONAL SOUTH AFRICA

(PTY) LTD

BIDVEST AFCOM (PTY) LTD

TEGNON (PTY) LTD

CRAWLEYS LOCKSMITHS

LOADTECH (PTY) LTD

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VITRAFORM GLASSWARE CC

GAS HANDLING SYSTEMS (PTY) LTD.

ANCHOR INDUSTRIES (PTY) LTD

TENOVA MINING AND MINERALS

SOUTH AFRICA (PTY)LTD

TAZCHEM (PTY) LTD

MPUMALANGA DUCT SHOP

VIPRO (PTY) LTD

I S L ENTERPRISES (PTY) LTD

DULUX (PTY) LTD

MPUMALANGA TIMBERS

CAMP AND GAS CENTRE CC

ALCO-SAFE (PTY) LTD

CECIL NURSE BUSINESS FURNITURE

RIDDS AQUA CENTRE (PTY) LTD

TEST AND MEASUREMENT

INSTRUMENTS

REPAIR AND METROLOGY SERVICES

(PTY) LTD.

INFRASPEC

HEWLETT PACKARD ENTERPRISES

INTRATEC DATA SOLUTIONS

THE INSTITUTE OF WASTE

MANAGEMENT OF SOUTHERN AFRICA

MPRTC RECRUITMENT

EASTERN TVL RUBBER STAMP CO

COASTAL HIRE NELSPRUIT CC

ROOIKAT WHOLESALERS LIQUER

PE CHEMICALS CC

CHICK HENSERSON DIV OF INMINS

TRADING (PTY) LTD

ADLAM ENGINEERING (PTY) LTD

WIKA INSTRUMENTS (PTY) LTD

RIEBA CLOTHING

SGS METLAB (PTY) LTD

NON-FERROUS METAL WORKS (SA) (

VAN WETTENS BREAKDOWN SERVICES

ROTHENBERGER TOOLS SA (PTY) LTD

AJM ENGINEERING SERVICES CC

MY OFFICE

MOMAR SALES & FINANCE C.C.

YOKOGAWA SA (PTY) LTD.

PENSAO GUEST HOUSE

LOWVELD CHEMICALS

THE U JOINT AND THE CV JOINT C

TRANSPHARM PHARMACEUTICAL

(PTY) LTD

NELSPRUIT GENERAL & AUTO REPAIRS

NBH SPRINGS NELSPRUIT (PTY)

LOWVELD AUDIO

MAIZEY PLASTICS

ENVIROSERV WASTE MANAGEMENT

(PTY) LTD

FIRE PROTECTION ASSOCIATION OF

DEMS (PTY) LTD

SCAW METALS GROUP

MAFUNYANE DISTRIBUTORS (PTY) LTD

MUSIC DEN

CLEAR EDGE FILTRATION S A (PTY) LTD

Tecsa (Pty) Ltd

TECSARECO

SAWSERVE (PTY) LTD

NKOMAZI FUEL & OIL

BEARINGS INTERNATIONAL CO LTD

TURFMASTER

5

Beneficiation Impact in South Africa – per Annum

R70m

R330m

200 Local

businesses

R70m

300 National

businesses

R180m

600 Employees

R140m *minimum wage R9,075pm

R44m

Creating strength. 6

How did MMC survive 2018

Rand Depreciation from R11.80

to R14.50

International Prices from

$1700 to $2,800. Back

at $2,100

NERSA 5.2% Increase

Use of Mn slime

deposits

Creating strength.

• The Eskom strategy was due in 2018

• Apparently it will be issued before the budget speech in February 2019

• Presidential task team has been appointed

Comments

• Increases for 3 years should not be approved without an appropriate strategy.

• The 19.5% requested is for Eskom to continue with “business as usual”

• A Presidential task team is confirmation that government has limited faith in current Eskom

Executive.

• RCA’s does not work for business – we can’t claw back from customers.

• Eskom should include claw back in price application so that the full impact can be

shown.

7

Issue #1 : Increases without a strategy

Creating strength.

Comments

• Unclear if Eskom still support this

• The turn-around time and administration is frustrating

• Markets are dynamic – this process is not

Proposal

• Consider new pricing for all large intensive users based on Short Run Marginal Cost

plus a margin

8

Issue #2 : Short Term Framework

Creating strength.

• Cross subsidies represents 14% of MMC’s electricity costs

• Eskom receives no benefit for cross subsidies

• This is an additional tax

• National Treasury must take an holistic view on whether this is the best way obtain

more money

9

Issue #3 : Cross Subsidies

R-

R500 000

R1 000 000

R1 500 000

R2 000 000

R2 500 000

R3 000 000

R3 500 000

R4 000 000

Ja

n-1

5

Fe

b-1

5

Ma

r-15

Ap

r-1

5

Ma

y-1

5

Ju

n-1

5

Ju

l-15

Au

g-1

5

Se

p-1

5

Oc

t-1

5

No

v-1

5

De

c-1

5

Ja

n-1

6

Fe

b-1

6

Ma

r-16

Ap

r-1

6

Ma

y-1

6

Ju

n-1

6

Ju

l-16

Au

g-1

6

Se

p-1

6

Oc

t-1

6

No

v-1

6

De

c-1

6

Ja

n-1

7

Fe

b-1

7

Ma

r-17

Ap

r-1

7

Ma

y-1

7

Ju

n-1

7

Ju

l-17

Au

g-1

7

Se

p-1

7

Oc

t-1

7

No

v-1

7

De

c-1

7

Ja

n-1

8

Fe

b-1

8

Ma

r-18

Ap

r-1

8

Ma

y-1

8

Ju

n-1

8

Ju

l-18

Au

g-1

8

Se

p-1

8

Oc

t-1

8

No

v-1

8

De

c-1

8

Indirect Cost

AFFORDABILITY SUBSIDY (ALL) ELECTRIFICATION AND RURAL SUBS (ALL)

Creating strength.

• Large Industrial users should not be required to pay cross subsidies.

National Treasury should look at the bigger picture

•Multi year increases without an appropriate strategy support “repeat of

yesterday”.

•Only inflation increases to be approved with Eskom taking action to

improve profitability

10

Proposal

Creating strength. 11

Actual Increase 70% after 3 years = R233M

R 330M R 330M

R 233M

0

100

200

300

400

500

600

FY 20 FY 22

RM

Creating strength. 12

Job losses if MMC closes

Direct: 586

Indirect: 2,353

Induced: 1,045

TOTAL: 3,984

Creating strength. 13

TAKEAWAY: Please help Eskom with their addiction to:

Surplus employees

Massive increases

Avoiding difficult decisions

Inefficiencies