Gulf Minerals plans to develop a high carbon ferro manganese alloy smelter facility in Indonesia with the aim of being a major ferro manganese producer by 2018. The company plans to take advantage of the low cost high-grade ore, low labour cost and moderate power costs offered by Indonesia.

The ASX-listed junior says the proposed facility will import ores from ASEAN-based operations for blending with local ores. The ore will be sourced through long-term supply contracts with local and overseas ore producers.

Gulf says discussions are under way to finalize contracts, with 75% of ore requirements coming from the local market and the remaining 25% from overseas suppliers.

The company proposes to build eight furnaces over a three-year period from 2015 for total capital investment of about $36 million, which will be partly funded through a $25-million initial public offering on the Singapore Stock Exchange in the second half of the year.

Each furnace will have annual capacity of 20,000 tonnes alloy production, with the first two furnaces expected to be operational by January 2016 and a further four to follow a year later. The final two furnaces would be commissioned in January 2018.

In 2016, the project is expected to require 90,000 tonnes of ore, increasing to 270,000 tonnes during 2017 and finally to 360,000 tonnes in 2018, when all eight furnaces are in production.

Electricity requirements for the smelting facility would be supplied by a third party on a user-pay basis.

Gulf has a major holding in the Indonesian-based high grade manganese ore producer Asia Minerals Corporation and a 70% joint venture in a copper exploration tenement in West Timor displaying grab sample grades ranging from 6.43% to 8.71% copper.

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