Minesite.com reported that BHP Billiton, the world's dominant producer of manganese, recently slashed the price of manganese for delivery to China by 14%, arousing the suspicion that the Big Australian is aiming to drive rival producers from the business and when Chinese steelmaking is expected to revive next year, corner a larger share of the market.

Ironically, the price action may also accelerate the exit of the Australian independent Consolidated Minerals from Australia, where costs are now close to the break even level, towards African operations.

The writing on the wall for manganese mining has been bad news for weeks. Chinese imports peaked in May and then again in September at almost 1.3 million tonnes per month. But Chinese steel mills, which require manganese to harden steel products, have cut their production in recent weeks.

Imports of manganese held steady at one million tonnes per month until Chinese steelmakers and traders began to lose their nerve. Inventories of manganese at ports, principally in the Qinzhou and Tianjin areas, climbed between September 2010 and May 2011, tailed off a little during the summer, and are now rising again.

Even if forecast Chinese steel production goes back up above 700 million tonnes per year by February, there is enough inventory in China and enough supply of manganese ore in global reserve to hold down a recovery in the manganese price and thus in manganese mining company earnings and profits.

The largest of the independent manganese miners globally are Consolidated Minerals and OM Holdings. Both have ties to African manganese reserves, though for the time being it is Consmin which is already operational in Africa. OMH is a minority stakeholder in Tshipi, a South African mining project which has yet to materialize. Around 55% of Consmin's total output comes from the Nsuta mine in Ghana, while 45% comes from the Woodie Woodie mine in Australia. For Consmin, total manganese resources in Africa comprise 56% of the company's total of 68.3 million tonnes. Consmin reports that in the third quarter it managed to lift ore output to 825,000 tonnes. That's up by 23% over same period in the corresponding period a year earlier. Meanwhile, sales doubled to 941,000 tonnes.

(Sourced from www.minesite.com)