Two major electrolytic manganese metal producers in China will raise production capacity in 2014 despite weak steel fundamentals, said sources Thursday.
The Hongxin Group -- a major producer based in Hubei province -- will raise its production capacity to 190,000 mt/year, up 35.7% from this year, a company official said Thursday.
The company currently has three captive manganese carbonated mines in China's Hubei province with a total combined capacity of 600,000 mt of ore.
In July, the company had acquired rights to a Ukraine carbonated manganese ore mine located in in the southeastern Veliko-Tokmak region.
The mine is expected to have an annual output of 5 million mt of manganese ore. The company also plans to start up a 50,000 mt/year electrolytic manganese metal plant next to the mine at the same time.
Once it obtains operating rights from the Ukraine government, trial production of manganese ore is expected by February 2014, with the full mining operation starting by first quarter 2015, Platts has reported previously.
"Although we have a planned increase in production capacity for 2014, we have yet to determine if run rates at the plants would be at 100%," said the company official from Hongxin.
The company has maintained run rates at 35% for 2013.
Last year, the company produced 85,000 mt of electrolytic manganese metal. This year, it is expected to produce about 45,000 mt of manganese metal, down 47% year on year.
"Last year, we had excess manganese metal to sell for certain months. Hence, this year, we decided to be more cautious about our production output. By maintaining a steady output throughout the year, we are hoping to hedge against the risk of [oversupplying] the market," the official said.
The other major producer -- Tycoon Manganese -- based in South China's Shenzhen province will raise production capacity to 150,000 mt/year in 2014 from 50,000 mt/year currently.
The company plans to start a 100,000 mt/year plant at Wenshan, in Yunnan province, by April 2014. It has a hydroelectric power plant and a carbonated manganese mine with an annual output capacity of 1 million mt/year at Wenshan.
"We previously delayed starting operations at the new production plant by six months due to poor demand," said a company source. But as demand was expected to improve next year, the plant will be started up in 2014, he added.
The company will also be able to cut costs and secure power supply by using its own hydroelectricity.
About 6,500 kW of electricity is required to produce 1 mt of 99.7%-Mn electrolytic manganese metal, and power costs constitute one-third of the cost of production.
Electrolytic manganese is commonly used as an alloy agent for steel production. China is the largest manganese electrolytic metal producer in the world.
