South African state-owned logistics group Transnet has been plagued by a union strike since the 6th of October, which is expected to intensify after the tabled offer was rejected.

Kumba Iron Ore, one of the users of Transnet facilities to get its product to market, suggested that export volumes of its iron ore are less than half at present. Coal, manganese, and chromium are the other bulk mineral raw materials that represent key export opportunities for South Africa’s mining industry.

For metals such as iron, chromium and manganese, a lack of opportunities in the downstream industry (hampered in part by energy issues from state-owned energy utility Eskom), has meant that the South African mining industry has turned to international trade. South Africa is by far the leading producer of manganese and chromium ores, and even more so the key source of supply for the Chinese ferroalloys industry.

Prior to the outbreak of the COVID-19 pandemic in 2020, both chromium and manganese industries were in surplus supply. Logistic disruptions during and following the pandemic were a major feature that underpinned a tightening market balance and drove up costs and prices. Now the market is facing a challenging fourth quarter of 2022 and potentially well into 2023 with the global economy suppressing demand. Of the bulk materials, rail and port supply disruptions in South Africa will likely have the largest impact on manganese and chromium. With China expecting to see the fastest recovery for demand in Q1 2023 and South Africa as the main source of supply, the demand downside will likely not be enough to keep prices at bay.