The ripple effect from a tropical cyclone has breathed new life into a $650 million Perth-based miner that has just a handful of full-time employees on its books.
In March rough seas arising from tropical cyclone Megan pulled a bulk carrier into the Groote Eylandt island wharf, putting it out of action until the first quarter of next year — according to South32’s estimates.
The wharf is the export gateway for all of South32’s Australian manganese ore, comprising about 12 per cent of the world’s supply for the relatively inconspicuous commodity. Manganese is predominately used to give steel its strength and hardness.
The shipping curtailment sent the price of manganese up by more than a third, and thanks to Jupiter Mines’ status as the ASX’s largest pure-play producer of the metal its shares have surged over 80 per cent to last change hands at 33¢ a piece.
Jupiter’s managing director Brad Rogers told The West Australian he believes the commodity price “re-rate” still has legs, but did not put an exact timeframe on how long for.
“Prices had re-rated through April but only to six-year average levels, usually when this sort of supply interruption occurs prices will move into higher territory and we’re seeing that, so we expect prices to continue to increase,” he said.
Mr Rogers anticipates that Jupiter’s lean structure will help it substantially capitalise on the price resurgence.
“We here at Jupiter are looking to grow the business but what it is today is essentially an investor in a very good mine,” he said.
“At the moment you’ve got a board of directors, who apart from me are all non-executives, Melissa our CFO, a head of marketing in Johannesburg, someone helping out on business development, and apart from some part-time admin help that’s it.
“Hence, we’ve kept low costs and paid good dividends to our shareholders, since we listed five-and-a-half years ago we’ve paid 20¢ (per share) in dividends with 120 years of mine life (at Tshipi) to go.”
Jupiter’s core asset is its 49.9 per cent stake in the Tshipi mine, an operation in South Africa majority-owned and operated via a company formed by various black ethnic groups post-Apartheid.
Mining in South Africa has been under the spotlight recently amid the ongoing BHP-Anglo American takeover showdown, as BHP seemingly has little appetite for Anglo’s South African assets.
But Mr Rogers says while there are power supply and bulk infrastructure constraints in the African country, overall operations have run smoothly.
In recent years the manganese price has been largely subdued and the steelmaking industry is not poised for exceptional growth, leading the former Bis Industries chief executive to cast his eye beyond South Africa towards America.
Jupiter is looking to establish a plant in the US to process manganese ore and convert it into a high-purity product used in lithium-ion batteries.
“We looked at the whole world and said where in the world literally is the best place to put one of these plants, you’re weighing up logistics, grant funding and government support,” Mr Rogers said.
“We said the US makes the most sense for all of those reasons, we’re looking at locations that are close to inbound logistics — so somewhere south-east like Louisiana, for example.
“Our focus is on finding that right site and then developing it over the next few years to drive our growth strategy.”