The third Australian manganese operator in two months has closed operations as the commodity price falls.
Shaw River, owner of the Otjozondu manganese project in Namibia, has entered voluntary administration “as a consequence of low manganese ore prices”, which halved in 2015.
It follows fellow Australian companies OM Holdings – which closed its Bootu Creek mine in December – and Consolidated Minerals – which shut down its Woodie Woodie mine last week – in shuttering its operations.
Shaw River is placing “itself in a trading halt and then in voluntary suspension while the company pursued a restructuring of debt as a precondition of a fund raising to be initiated in the New Year,” it said in a company statement.
It explained that while it still has a credit line with its major shareholder available, “beyond an initial loan amount all additional drawdowns were at the discretion of the lender….late in the year, the lender informed the directors that its capacity to advance further funds was limited.”
Shaw River carried out an SPP last month to reduce debt obligations, however it failed to raise enough from its shareholders.
“Unfortunately the company has not received any assurance from a third part that is it possible to raise funds in the short term for a company such as Shaw River that operates in the resources sector or more particularly in the manganese sector, particularly while the stock markets are volatile.”
Shaw stated it has already ‘aggressively’ pared back operating costs “t o levels not previously thought possible”, however the fact that manganese ore has fallen to levels not seen since 2003 negated its efforts.
“These low ore prices are having consequences,” the miner said.
“Within the manganese ore market, production of internationally traded ore has been severely pruned with full and partial closures of mines in many countries including notably South Africa and Australia, and the closures announced continue at least through January.”
However despite the wide scale slaughter manganese operators are facing , Shaw River managing director Peter Cunningham does see a future for the commodity.
“These cutbacks are resulting in shortages of some grades of manganese ore,” he said.
“Spot prices in China are showing early signs of recovery.
“However, demand in China has been constrained in advance of Chinese New Year, and so stocks of ore in China ports have yet to decline significantly. Demand is expected to improve after Chinese New Year, and this improvement should provide opportunity for restructuring of Shaw River and its subsidiaries.”