South Africa's Exxaro Seeks Cheaper Rail Route for More Manganese Exports

South African miner Exxaro Resources said on Monday it wants to haul more manganese to ports by rail rather than road to cut costs and improve efficiency at its newly acquired assets. The company is working with state-owned freight transport firm Transnet, which is opening parts of its network to private investment to boost freight capacity.

Exxaro CEO Ben Magara said the company and its peers were working with Transnet to increase freight volumes on rail. Hauling manganese by road is 37% more expensive than using rail, and Exxaro said logistics costs account for 43% of free-on-board costs for the bulk mineral.

The miner completed the acquisition of multiple South African manganese assets worth 10.6 billion rand ($645.68 million) in March as it diversifies away from fossil fuels. Exxaro, which is predominantly a coal miner, has been expanding into manganese as part of its broader energy-transition strategy.

South Africa holds 80% of the world's manganese resources and is the top exporter, accounting for 42% of global shipments of the metal, which is mostly used in steelmaking. Manganese also has increasing use in batteries, making it more relevant to renewable energy applications.

Bulk mineral exports from South Africa have been hampered by Transnet's chronic underperformance, which has been blamed on under-capitalisation as well as cable theft and vandalism of infrastructure. This has forced some exporters to curb output, while others have chosen the more expensive trucking option.

Exxaro's new Tshipi Borwa manganese mine exports 3.5 million metric tons annually, mostly to China. About 46% of the manganese is hauled to ports by road, and the miner said it wants a long-term strategy that shifts more of that volume onto rail.