Battery Metals

Transnet Freight Rail (TFR) is set to spend about R90-million on its yearly, large-scale maintenance shutdown on the manganese rail line from August 2 to 8.

The railway line, which spans three provinces – the Eastern Cape, the Northern Cape and the Free State – will be undergoing specialised infrastructure maintenance and upgrade projects.

During the yearly planned maintenance of any of TFR’s rail line, essential maintenance work that cannot take place during the normal occupational conditions, is performed.

This maintenance window presents an opportunity to catch up on the maintenance backlog, including replacing old and obsolete infrastructure and accelerating the major capital expansions in line with the expected volume growth on the manganese line.

Antwerp is one of the largest ports in Europe, where Millions of tons of cargo transit every year,

Its top trading partner is – by far – the United States.

Half of all EU steel exports to the US are shipped from these docks.

Donald Trump’s decision in June to impose a 25 percent tariff on steel imports had a lot of people worried.

But according to Wim Dillen, a port manager, so far the tariffs have had unexpected consequences.

“Quite surprisingly perhaps, we have exported more steel in the first six months of this year than we did in the first six months of last year,” Dillen says. “But I think that has to do a lot with companies anticipating what is going to come and filling their stocks in the US. But if this would last for a long time, I think it will become very negative indeed.”

Thousands of tonnes of steel from all over Europe are stored in Antwerp, waiting for a ship to carry them to the US. Antwerp’s experience in handling high end products makes it an ideal partner for American industries.

“On a daily basis there are between 150 and 400 people working here, directly handling the steel products for the US,” says Dennis Verbeeck, general dock manager at PSA Breakbulk. “And you know with all these kinds of import duties, or hamperings like we might call them here, locally, that might affect those guys. That might affect those people and those families.”

Antwerp’s dock workers are not the only watching the transatlantic trade talks. According to a steel sector representative, 20,000 European jobs depend directly on steel exports to the US.

How does an industrial city reinvent itself when its main industry disappears? That’s a problem that dozens of American cities have confronted over the past generation.

Consider Bethlehem, Pennsylvania, population 75,000. The city was once synonymous with the company Bethlehem Steel Corp. Iron and steel had been produced in Bethlehem since just before the Civil War.

But in 1995, the blast furnaces shut down.

“It was hot, dirty, dangerous, smelly, loud, obtrusive,” said Bruce Ward, who spent 27 years working in the Bethlehem Steel mill. “There were trains and overhead cranes and equipment moving all around you, all the time. And if you could keep yourself safe, that was the big challenge of the day, every day.”

Back in the heyday of the 1960s, Bethlehem Steel employed 31,000 people; 75,000 lived in the city. Think about that: that’s 40 percent of the city’s population (although not all the workers lived in Bethlehem, of course). But foreign competition, rising labor costs, advances in manufacturing and lower demand for steel all took their toll. The last workers in Bethlehem were sent home in the mid-1990s.

“You’re maybe a fourth-generation steelworker and you don’t have a lot of options, then you’re going to take your pension and you’re going to hope for the best and you’re going to maybe get a job as a bus driver,” Ward said, who was among those laid off in the 1990s.

The transition was made tougher because the steelworkers also lost half their pensions when the company went bankrupt.

Ward, who was approaching 50, retooled himself as a photographer, videographer and magician.

He showed me an impressive magic trick with a rubber band, doing the seemingly impossible — melting one rubber band through the center of another.

Ward now spends his days in an artist’s studio rather than a blast furnace. He’s grateful for that. But he said it has been “pretty rough” financially. He used to make a comfortable middle-class salary working in the mill. Now, he describes his financial situation like this: “You’ve heard the term, ‘starving artist?’”

Ward’s reinvention is not unlike the city of Bethlehem itself. The old steel mill has been repurposed as “SteelStacks,” a sparkling new entertainment venue for huge outdoor concerts, films and comedy shows built behind the industrial pipes and furnaces. The entrance is striking.

“When people come to SteelStacks for the first time, what they see are five towering Gothic blast furnaces that have been rusting since they ceased operations in 1995,” said Kassie Hilgert, the CEO of ArtsQuest, a nonprofit which runs provides access to arts and culture, including SteelStacks. “When people first get here, it is like that first trip to New York where you spend most of the time with your neck craned skyward figuring out: What happened here?”

Hilgert said when Bethlehem Steel went down, people here felt a collective sense of failure.

“And why would you want to keep a visible reminder that you failed every single day? So we were early proponents of tearing everything down and starting over. But we went to northern Germany, and in northern Germany, they’ve turned these historic steel plants into cultural districts and real attractions. That was our aha! moment, to come back and say, ‘We’ve got a better idea to honor our past, but use arts and culture as our way forward.’”

ArtsQuest and SteelStacks now employ 70 full-time and 300 part-time workers. There’s also a resort casino on the property of the old steel mill that employs 2,300. The casino and art house jobs are welcome, but they’re a far cry from 30,000 steelworkers. Most casino jobs don’t pay as well, either.

Still, Matthew Tuerk with the Lehigh Valley Economic Development Corporation said the repurposed steel site serves a bigger role. His job is to attract business investment to the region.

“We’re looking to China, we’re looking to Germany, we’re looking to France,” Tuerk says. “We’re looking to Japan.”

Tuerk said when potential investors come to visit: “You take them to SteelStacks and it leads you to that natural story of, ‘This was the industrial heritage of the region and we’ve pivoted now to the 21st century.’”

The Lehigh Valley’s new economy includes finance, insurance, education and healthcare. Manufacturing, too: American, German, Chinese and Japanese companies are building trucks, plastics, medical devices and industrial valves.

“You have this really diverse economy that is kind of insulated against any kind of significant economic shocks,” Tuerk said. “We’re hard-pressed to say Bethlehem is an X. Bethlehem is a little bit of everything.”

Still, the city’s recovery is very much a work in progress, and people here readily acknowledge this. The city’s household income is lower than the national average and poverty is high. Yet among old industrial cities, Bethlehem is doing well.

Alan Berube with the Brookings Institution has been studying the economic performance of 70 older industrial American cities. He breaks them into four categories, from strong to vulnerable. He put Bethlem in the top category. He said “strong” cities — such as Bethlehem, St. Louis, and Waterloo, Iowa — share some common characteristics.

“The first is that they have an innovation engine,” he said. “In a lot of cases, the ability of them to grow new kinds of products and companies and jobs is tied to having a research university nearby.”

Bethlehem has Lehigh University and several smaller schools.

And point No. 2: Successful industrial cities have also reinvested in their downtowns.

“They’re bringing jobs and people back into the core after what was many decades of suburbanization and sprawl,” Berube said.

That matters to potential new businesses and residents. Downtown Bethlehem is teeming with shops and cafes — no boarded-up windows in this old steel town.

Berube cites another common thread among old industrial cities doing well: immigrants.

“So whether the immigrants themselves are driving those outcomes or the immigrants are attracted to places that are experiencing greater outcomes, you definitely see the ‘strong’ cities on the list experiencing a greater change in their foreign-born population over the last 15 to 20 years. In fact, many of them play a strong part in the entrepreneurial economy, repopulating a lot of neighborhoods that have been suffering from vacancy and abandonment.”

While many old industrial cities have suffered population loss, Bethlehem has held steady for 30 years. Indian, Chinese, Mexican and Dominican immigrants, as well as Puerto Ricans, have arrived over the past two decades to help replenish the population.

The last thing strong older industrial cities share, Berube said, is strong local leadership. The mayor of Bethlehem, Robert Donchez, a former high school government teacher, gave the credit to his predecessors.

“I would say maybe the vision for the future began in 1961,” said Donchez. “We’ve always been very fortunate to have very progressive mayors, regardless of political party.”

Even when steel was booming in the 1960’s, Donchez said local leaders began thinking about what was next — and they began investing in industrial parks.

“And that began to attract large manufacturing companies, high-tech companies. So many people that lost their jobs at Bethlehem Steel found employment there,” said Donchez. “If it wasn’t for the industrial parks, I think you could make a pretty good argument that we could be a ghost valley.”

Now you simply can’t talk about former Pennsylvania steel towns in 2018 without mentioning President Donald Trump. He loves to visit them. And you could plausibly argue that voters around Bethlehem — swing voters in swing counties in a swing state — put Trump him in the White House. Reviving American steel has been one of his key promises.

And Trump has been touting his success recently, bragging about the positive impacts of newly imposed tariffs on imported steel and aluminum.

“Our steel industry is going through the roof,” the president said during a recent rally. “US Steel just announced they’re expanding or building six new facilities.”

That’s not true. US Steel did announce that it’s restarting two blast furnaces in Illinois, which is expected to create 800 jobs, but there’s no evidence to back up Trump’s claim about six facilities. The company did not return an email request for comment.

Most everyone involved with the steel industry agree: it’s too early to declare that steel is back. Yes, the tariffs are giving a bump to some existing mills like those in Illinois. But can steel actually come back to a city like Bethlehem?

“I don’t think so, no,” said Mary Beth Deily at Lehigh University, an economist who has studied the steel industry.

“They’re not going to be building integrated plants, I don’t think,” Deily said. “You’re talking hundreds of millions, even a billion dollars. I don’t see it happening, no. I don’t think Bethlehem would turn back into a steel town, and I don’t think a lot of the residents would want it to because there was a lot of pollution associated with it. Of course, there would be more pollution controls these days.”

Deily said tariffs should benefit existing US mills, but those are so-called “mini-mills,” which require fewer workers because of improvements in technology. As for the mammoth “integrated” mills, like the one Bethlehem used to have, there’s only one still operating in Pennsylvania and 10 throughout the entire country. And Deily points out: “Some of those owners are foreign corporations so it’s a little unclear who’s going to benefit.”

Ask former steelworker Bruce Ward what he thinks of attempts to revive steel here, for him, it’s just talk — too little, too late.

“Now that people are interested in the steel, if they had that same kind of interest before, the steel company would still be running,” said Ward.

Ward said the country needs to invest in its industrial base. For him though, that’s not pining for the past, it’s looking at how old industrial cities like Bethlehem can find their place in the global 21st economy.

Automakers have been reaping a windfall from a strong economy and sales of big, profitable vehicles for the last several years.

But the profit bonanza may be coming to an abrupt end amid concerns about escalating costs stemming from a global trade dispute. And consumers may have to pay the bill in the form of higher prices.

President Donald Trump’s sudden imposition of steel and aluminum tariffs and the possibility of tariffs on imported and exported vehicles threaten to undermine the industry’s finances and increase prices for consumers.

His tariff threats have drawn support from the United Auto Workers union, which represents hourly U.S. workers for GM, Ford and Fiat Chrysler, and from U.S. steel companies.

But automakers are losing sleep over trade fears. As Trump gets closer to a potential 25 percent tariff on Europe-imported vehicles, the tariffs he already has imposed on foreign metal are beginning to take a toll.

The rising cost of commodities – largely due to Trump’s 25 percent tariff on imported steel – took a bite out of General Motors during the second quarter. Although GM turned a $2.4 billion profit for the quarter, the company on Wednesday reported $300 million in increased commodity costs, worrying investors.

Ford said Wednesday it earned a profit of $1 billion during the second quarter, down nearly 50 percent from the same period a year ago amid sluggish sales in China, the effects of the Trump administration’s tariffs and the costly disruption this spring of F-150 pickup production due to a fire at a supplier’s plant. It said the tariffs resulted in $145 million in higher costs and could rise to as much as $600 million for the full year.

The stocks of GM, Ford and Fiat Chrysler fell 4.6 percent, 0.4 percent and 11.8 percent, respectively, on Wednesday.

German automakers are also at serious risk of losses, while Japanese automakers, including Toyota, have warned of the impact, as well.

“The big challenge we’re having right now is on raw materials, especially aluminum and steel,” GM Chief Financial Officer Chuck Stevens said.

Reports of an agreement between the Trump administration and the European Union to achieve concessions on trade helped ease some fears late Wednesday afternoon.

Trump told reporters at the White House that his administration had agreed with the European Union to enter talks to eliminate most “non-auto” tariffs, including recent retaliatory measures.

Until a deal gets done, however, fears of increased costs and prices will linger.

Although GM gets most of its steel for American-made vehicles from the U.S., global price increases sparked by Trump’s tariffs have been inescapable.

Unlike GM, Fiat Chrysler has contracts in place to acquire steel at a fixed price through the rest of 2018. But the relief is probably limited. Commodity costs are likely to rise in 2019, Chief Financial Officer Richard Palmer said.

Who will absorb the increase? The options are the automakers, their suppliers, consumers or a mix of the three.

The estimated impact on vehicle prices of steel and aluminum tariffs have ranged from about $200 to $300.

To be sure, that amount won’t hurt the industry too much. Automakers continue to profit as consumers abandon passenger cars in favor of more profitable SUVs, pickups and crossovers. The average transaction prices for a new vehicle in June was $35,511, up 2.1 percent from a year earlier, according to Cox Automotive.

But potential price increases from Trump’s threatened vehicle tariffs would likely be much more damaging: about $5,000 per vehicle, according to LMC Automotive analyst Jeff Schuster.

Trump threatened 25 percent tariffs on passenger cars imported from Europe, which would reflect a 10-fold increase. SUVs, crossovers and pickups imported from Europe already are subject to a 25 percent tariff.

U.S.-made vehicles shipped to Europe are currently subject to a 10 percent duty. Trump has argued the tariff imbalance is unfair. While industry leaders generally agree, they fear increased costs stemming from the trade rift.

“The European Union is coming to Washington tomorrow to negotiate a deal on Trade,” Trump said on Twitter less than a day before announcing the agreement to begin discussions to eliminate most tariffs. “I have an idea for them. Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies! That would finally be called Free Market and Fair Trade! Hope they do it, we are ready – but they won’t!”

Trump has already imposed a 25 percent tariff on vehicles imported from China, which affects only a few models, including GM’s Buick Envision. China imposed 40 percent tariffs on vehicles imported from the U.S., which recently prompted Tesla to raise prices there and has undermined the U.S.-to-China production model at Mercedes-Benz and BMW.

The threat of increased vehicle tariffs raises the possibility that automakers could shift production around the world to mitigate the financial impact. That could theoretically include moving production to the U.S. to avoid import tariffs. But analysts say more jobs would be lost than gained as increased prices hurt sales.

“We will have to evaluate ultimately whatever plays out and course correct from there,” Stevens said.

Most major automakers conduct final assembly of some vehicles in the U.S. But only Tesla makes all of its vehicles here – and that will change when the company opens a plant in China.

Ford imports only 21 percent of its vehicles, making it the leader in the percentage of vehicles assembled in the U.S., according to LMC Automotive. Honda is second at 37 percent, and General Motors is third at 39 percent.

By contrast, German automakers Volkswagen Group, BMW and Daimler import 84 percent, 70 percent and 58 percent of the vehicles they sell in the U.S., according to LMC.

To be sure, if negotiators resolve the trade rift with lower tariffs, it could ultimately benefit the major automakers.

The “trade overhang continues to drive volatility” for auto stocks, “but political solutions are possible,” Barclays analyst Brian Johnson wrote Wednesday.

THE Minister of Lands and Natural Resources, John Peter Amewu has threatened to withdraw the license of Ghana Manganese Company (GMC) if it continues to flout the Contract Agreement it has with the government.

According to the Minister, GMC has failed to involve government in the pricing of the manganese ore that the company is selling to a Chinese firm.

He contended that GMC’s non-involvement of Government in pricing the commodity was a complete breach of agreement signed with the government.

At a meeting with management of the mining company at Nsuta last week Friday, Minister Amewu told them (GMC) that they had engaged in transaction with another firm, without the consent of government.

The minister said that government is being short-changed in terms of payment of taxes and royalties.

Minister Amewu directed management to furnish the Minerals Commission with details of the business transaction since government has 10 percent stake in the company.

Mr Amewu, was leading a delegation from the Ministry, Minerals Commission and Minerals Development Fund to Nsuta in the Tarkwa-Nsuaem Municipality of the Western Region, to familiarise himself with the operations of the GMC.

The Minister was unhappy with the performance of the firm regarding compliance with the local content laws and the Contract Agreement it signed with the government.

Turning his attention to other issues, Mr Amewu urged the Company to establish a mining refinery in Ghana to process the manganese ore locally to add value to the raw material.

Mr Benjamin Ato Quarshie, the Chief Operations Officer of GMC assured the Minister of management’s preparedness to comply with the directives and do the right thing, as spelt out in their contract with government.

He also pledged to support the government to rehabilitate Tarkwa-Agona-Nkwanta road, which had deteriorated due to hauling of manganese to the Takoradi Port.

He gave the pledge after Mr Gilbert Ken Asmah, the Municipal Chief Executive for Tarkwa-Nsuaem, had asked the mining company to rehabilitate the road from the Company’s site to Tarkwa Junction.

According to the MCE, the road has deteriorated because of its consistent usage by GMC to haul the ore to the Takoradi Port.

GMC produces about two million tonnes of manganese every year and intends to increase the figure to 4.8 million tonnes this year.

State-owned Transnet has signed a seven-and-a-half-year Manganese Export Capacity Allocation (MECA2) contract with Assmang as part of its strategy to secure 95% of manganese volumes on rail.

The contract, which will see the transportation of export manganese from pit to port, offers Assmang, the country’s largest manganese producer, a 90% allocation guarantee.

“The MECA2 project is gaining satisfactory traction and it also reinforces Transnet’s commitment in supporting the mining industry in South Africa,” Transnet chief business development officer Gert de Beer said in a statement.

The contract expires in March 2023 and is aligned with Transnet’s manganese expansion plans to create capacity ahead of demand in freight, ports, terminals and rail systems in the country.

Transnet’s manganese expansion programme will increase the commodity’s export capacity through the refurbishment of the rail network between the Hotazel area, in the Northern Cape, and Coega, in the Eastern Cape, and the provision of the new bulk terminal at the Port of Ngqura.

As part of the agreement, 15% of Transnet’s capacity is available to new entrants in the manganese export market.

“The 15% capacity allocation was made available to encourage new and emerging entrants to take part in mining activities in the country,” De Beer added.

The company’s MECA2 project will result in 12.5-million tonnes of manganese a year being transported mainly from the Hotazel area through the Saldanha and Port Elizabeth ore railway lines.

Through its capacity creation initiatives, Transnet has been able to increase the manganese capacity from five-million tons in 2012 to just over 13-million tons currently.

The new projects, which have come on line, include manganese exports through the Port of Richards Bay and the Port of Cape Town.

Transnet has also embarked on efficiency improvement projects, a part of which entailed providing hybrid bulk and container solutions to ensure better use of resources.

The first hybrid bulk and container solution has been activated at the NewCon manganese inland terminal in Newcastle, KwaZulu-Natal, wherein Transnet runs bulk manganese trains from the Northern Cape to the terminal and loads open-top container trains to the Port of Durban.

South Africa accounts for close to 75% of global manganese reserves. The project aims to retain the country’s position as the leading exporter of high-grade manganese ore.