JOHANNESBURG (miningweekly.com) – Giyani Metals is a company listed on the TSX Venture Exchange in Toronto, Canada. Through its wholly-owned Botswana subsidiary Menzi Battery Metals, Giyani is the owner of the past producing K.Hill manganese mining project in Botswana.

Giyani is now intent on producing battery manganese – high-purity manganese sulphate monohydrate (HPMSM) – at K.Hill, which is being developed as an integrated mining and processing operation.

HPMSM is on its way into battery electric vehicles (BEVs) and battery energy storage for good technical and cost reasons, with formulations increasingly including this manganese in batteries. If South Africa plays its cards right, local operations will be able to earn very important export revenues for this country.

But what has caused some bewilderment in South Africa is that Giyani has secured $16-million worth of funding from South Africa’s State-owned Industrial Development Corporation (IDC), ahead of South Africa’s own Manganese Metal Co (MMC) in Mbombela, Mpumalanga, which has a half-century of experience in adding value to manganese and has been engaging in far-reaching preparation for entry into the potentially colossal HPMSM market.

Trade & Industrial Policy Strategies (TIPS) senior economist Gaylor Montmasson-Clair describes the Mbombela company as “a South African industrial jewel” that could be much bigger than what it is today. He describes MMC as a one-of-a-kind company that should be supported on its growth trajectory.

TIPS, an independent, non-profit, economic research institution based in Tshwane, was established in 1996 to support economic policy development, with an emphasis on industrial policy in South Africa and the region.

All that stands between MMC and the construction of the battery manganese project in Mbombela is the finalisation of funding, which South Africa’s State-owned IDC has managed to achieve for Botswana to the extent that the Canada-owned Giyani has described the IDC funding as being the cornerstone of its $26-million funding package.

But funding from the IDC for construction of South Africa’s own potentially paradigm-shifting initial HPMSM plant in Mbombela is still undecided, after a year of contact between the State-owned entity and MMC.

The site of the Mbombela company’s existing 28 000 t/y high-purity manganese metal plant is being earmarked as the site for the construction of a 5 000 t/y brownfield plant to produce HPMSM, followed potentially by a 30 000 t/y greenfield project.

Though the Canada-owned Botswana-based operation’s demonstration plant will be built in Johannesburg, the commercial scale battery manganese plant that it will define will be built in Botswana.

Moreover, the arrangement is that if the IDC converts the $16-million to equity, then Giyani will list on the Botswana Stock Exchange to help Botswana develop its capital market.

This is being arranged at a time when South Africa’s shrinking Johannesburg Stock Exchange is going all out to attract new listings.

IDC’s funding of the Botswana project is also taking place at a time when a long and growing list of South African agricultural products are being denied entry into Botswana.

Amid South Africa being overlooked by a South African State-owned entity in favour of a Canada-Botswana business, Engineering News & Mining Weekly put these questions to Giyani Metals CEO Danny Keating. (Also watch attached Creamer Media video.)

Why has your Canada-owned Giyani Metals not opted to raise its own equity capital on the TSX Venture Exchange in Toronto and instead opted to secure $16-million worth of developmental finance from South Africa’s IDC, for an ultimate battery manganese plant that will not be built in South Africa but in Botswana?

Keating: As part of the overall financing, the IDC component, the $16-million, is one part and there's another $10-million that includes equity from Canada and different investors. Historically, about $30-million or $40-million of Canadian money has been invested. There’s been a lot of investment both into Botswana and into the South African part of the project over the last few years. Yes, it's come in from Canada but the money, the technology, the people that are, ultimately, benefiting from this are in Southern Africa. The IDC does have a larger remit. It isn't just South Africa. It’s the SADC region. Strong neighbours for South Africa are good for South Africa, and that's obviously part of their strategy. I can't talk too much for the IDC, they obviously talk for themselves, but I think that part of their overall strategy is how do they develop battery technologies within Southern Africa and driving that within South Africa. In discussion with them, what they’ve recognised is that the SADC region has the ingredients for battery metals. There's nickel, there's cobalt, there's now the manganese and the components. South Africa has a massive car industry, but there isn't that joined up bit in between and that's obviously where the IDC comes into play. Part of assisting and being involved in Giyani, and our projects in Botswana and in South Africa, is to help to drive that process forward. The money that we're receiving from the IDC is locked in on the plant in Johannesburg. Twelve and a half million of it in rands is dedicated to the demonstration plant. It's a rand investment that goes into development of that plant in Johannesburg, employing South African engineers and also fabricators who are putting all the bits and pieces together for that plant. There are some imported components but it's mostly local, and then a $3.5-million US dollar equivalent investment in Botswana to aid us in terms of getting the permits and licensing and taking that forward there. All of the money initially from the IDC stays very much within SADC. Then, as we move forward, if they convert into equity, then we would do a listing on the Botswanan exchange, again very much aimed at helping and assisting Botswana to develop its capital market. It's helping a neighbour as well as helping South Africa. Overall, we're very pleased with the investment. The IDC is a phenomenal partner, as you know, to get involved in the project.

How will Giyani get its battery manganese HPMSM product to market from landlocked Botswana?

We've looked at a variety of options through South Africa and also through Namibia. It's a high value product and so it does allow us to move it quite a distance. The traditional manganese that goes into the steel industry is much more high volume, low margin. It's just about moving many millions of tons, whereas we’ll be producing about 70 000 t or 80 000 t a year. It's very small but its value is very high, so transporting through South African ports or Namibian ports would be possible. When we come to the larger project, we have our capital that's just under $300-million. We’ll be using South African technology or people. A lot of the infrastructure in that spend will also make its way back into South Africa. That's our next phase, and that's why this project is so rooted in Southern Africa and I think that's where, again, I can't talk for the IDC, but I think that's where they see this sort of regional development as always being good for South Africa as well as for its neighbour, Botswana.

South Africa has a half-century of manganese beneficiation behind it, which has been taking place in Mbombela, Mpumalanga, since 1974. Engineering News & Mining Weekly has seen first-hand how intensely South Africa’s MMC research team is going about developing battery manganese. Does Giyani have a research team that is working on HPMSM intensely in Botswana?

We do. My CEO predecessor identified these projects, this manganese oxide, and considered the way in which it could be pushed forward in terms of basically taking this ore, which had been mined historically but was sitting dormant, and focusing it on the battery industry. Through various technology advances, using international consultants but then also the team helping us build the demonstration plant in Johannesburg – Met63 – a South African group of process engineers. They put their own business together and they're developing alongside us. The first stage of the development of the project is being done in South Africa in conjunction with our own process engineers, international engineers. All that knowledge is, in a way, making its way back to South Africa. The development of the technology is driven out of the plant in South Africa. It can be used elsewhere, I suppose, but the first application we have is into Botswana as that technology makes its way into the development of the main plant, the commercial plant, in the southern part of Botswana.

What are the timelines for the demonstration plant in South Africa and then the commercial plant in Botswana?

We've been working on the demonstration plant for about the last eight months. We want to accelerate that now with the new funding. Through the back end of this year, we had to slow it a bit because what we know is that you have to build and operate for a reasonable period of time. We're dealing with a customer base that's trying to take these very special materials that go into the development of these batteries. The chemistry within the batteries is changing. The car manufacturers are changing what their requirements are. It's an industry in flux. We want to be able to operate the demonstration plant for at least a year so that we can test not only our own process, but get more and more product to the customers, so that customers come to have comfort that our process works, can run continuously and that we can transfer ore into this product because obviously there's always variability in ore. We want the demonstration plant to operate through 2024. We then have to put a feasibility study together again, based on the data we've gathered from the plant. We have to update our capital and then through 2025 hopefully finish the project financing. I'd love to give a promise on when that would be finished but financing, as we all know, just takes that bit longer. The target would be mid-year of 2025 to have secured that money and then be looking to develop the commercial plant, which will be about a two-year build. From where we are today, we're hoping to be up and close to production within the next three and a half to four years, depending on the scale of financing.

IDC RESPONSES

Amid the IDC deciding to finance the Canada-owned Botswana-based Giyani ahead of financing the South African-owned Mbombela-based MMC, which turns 50 next year and which earned South Africa R2.28-billion in export revenue in its last financial year, Mining Weekly received these responses from IDC corporate affairs head Tshepo Ramodibe.

Why is the State-owned IDC opting to fund a Canada-owned HPMSM project while not giving a funding answer to the local HPMSM project developer?

While the holding company has foreign ownership, IDC will directly invest in two local companies for the project – one in South Africa for the demonstration plant, and the other in Botswana, for the mining operations. The IDC has been in talks with the local HPMSM project developer and is currently evaluating the project's potential benefits.

In the event of also eventually funding the local HPMSM project, why does the South Africa-owned IDC see fit to fund what will directly compete against a South African tax-paying local beneficiator?

IDC invests not only in South Africa but also in the rest of the continent, particularly in the SADC. Regional development benefits flow to both the host country and South Africa. The IDC’s portfolio of investment across the continent, outside of South Africa’s borders, is currently estimated at R27-billion (market cost) across 17 countries and spans several sectors of economic activity. With investment from the IDC, Giyani is planning to conduct an optimised feasibility study on producing high-grade HPMSM using manganese ore from the K.Hill project in Botswana. The current analysis shows that the combination of K.Hill ore, the proprietary flowsheet and the current fiscal regime with Special Economic Zone Status means that Botswana is currently the optimal location to establish the commercial plant. As part of the bankable feasibility study, these economics will be reviewed and confirmed.

Why is it the view of the IDC that beneficiation of locally mined manganese should not take precedence over beneficiation of manganese mined in a non-South African country?

This is not the view of the IDC. IDC will assess various projects on merit and formulate an investment decision based on rigorous analysis, taking all relevant factors into account.

CLEAN HYDROPOWER

For some time, customers have been buying South Africa's manganese metal to make HPMSM, which has prompted the extension into HPMSM by MMC itself.

In its last financial year, MMC paid R179-million to the South African fiscus in taxes.

In days gone by, MMC, which has 400 direct employees and 200 indirect contractor employees, was operated by a Samancor structure on behalf of BHP Billiton and Anglo American. Today it is owned by MM Holdings, held 70% by Bright Resources and 30% by To The Point.

Being clean and green will be key to the acceptance of HPMSM into a BEV market that is all about greenness. MMC has already secured 1.8 MW of hydropower from a power station on the Crocodile river and is engaged in circularity with its waste, which is turned into bricks for the benefit of the local community.

With the right incentives, commercial HPMSM plants would likely be built in South Africa because of the major endowment of quality manganese ore that the Kalahari manganese field hosts in the Northern Cape.

COULD BOOST SOUTH AFRICA

One would assume that South Africa’s half-century of manganese mining and refining would be recognised by a South African State-owned entity as a potential earner of valuable foreign exchange through the export of sought-after HPMSM.

With industrialisation of manganese-rich battery materials technology having already commenced, manganese for cathode active material will be a low-cost, recyclable and critical energy transition material.

Moreover, being more affordable and greener, cathode active material with higher manganese content is being pursued by key BEV manufacturers.

Production of HPMSM in Mbombela, together with its lower overall cathode cost, will be using only renewable energy, giving it a crucial lower carbon intensity.

Manganese ore is widespread and of much higher grade than nickel ore, the key input material for more expensive cathode active material; moreover, the use of manganese ore results in less mining waste being generated, which today's world is demanding.

While increased HPMSM production will increase total demand for manganese ore significantly, no new manganese mines are needed.

The incentive price needed for local HPMSM is calculated to be around $2 500/t to cover the cost of capital, cost of low-carbon emissions and cost of meeting European Union and North American environmental standards.

Once the Mbombela company's accredited HPMSM goes into the batteries of the world, it will be able to step out and put South Africa on the map, which is why the provision of South African development finance to a Canada-Botswana initiative ahead of a far more advanced local one is bewildering and more transparency would be most welcome.