Bright Simons Writes: Pray When You See A Feel-Good Story From Ghana

Bright Simons Writes: Pray When You See A Feel-Good Story From Ghana

Advice: when you see a feel-good story from Ghana, DON’T PROBE! Just pray for all to be well.

I saw that a Chinese company has partnered the government to build a manganese refinery for $450m. I checked and the company is indeed a big refiner in China. I should have left it there.

But I didn’t. So I’m now all confused about so many confusions.

1. Let’s start with Ghana Manganese Company (GMC), the country’s only manganese producer. It has been 90% owned by Consmin, a Dutch-Ukrainian crew, since it was bought by the Jersey-based entity in 2007. 10% of GMC is vested in the State.

2. In 2017, Consmin itself was acquired by a Chinese company that had been its main offtaker for the manganese carbonate it mines in Ghana. A company called Ningxia Tianyuan Manganese Industry Group, or TMI.

3. In 2019, the Government of Ghana suspended operations at the mine for 4 days after investigative journalists prompted an audit that, according to the government, exposed Consmin as having cheated Ghana out of $357m. The govt said at the time that it changed its mind quickly because Consmin promised that it will operate above board going forward. Consmin’s COO simply disputed the charge of cheating and denied owing the State any money.

4. The government capped production of manganese at 5 million tons a year in 2019 after TMI announced its intention to boost production to 12 million tons a year. TMI went as far as to claim that Ghana has the world’s largest reserves of manganese (not true) and then promptly exceeded the production cap forcing another brief shutdown. It seemed to be in a hurry to haul all the manganese away. By 2023, manganese production had dropped to 3 million tons, however. Promises to renovate the Western Railway line and build a whole lot of infrastructure hadn’t been kept.

But here is where it gets interesting.

5. One of the charges the government laid against Consmin/TMI in 2019 was that it was arbitrarily discounting the price at which it sold manganese ore from Ghana to its Jersey Affiliates by more than $65 a ton. That practice continues. In 2023, Ghana’s manganese was sold at ~$60 a ton. South Africa, which has a slightly higher grade of manganese, sells at ~$140 per ton (FOB, 37% Mn). Adjusting for Ghana’s grade & the usual “payability” factors, Ghana’s manganese should indeed sell for about $125 (FOB Takoradi) at 2023 average prices (normally benchmarked to 44% Mn, CIF Tianjin). Strangely, like nearby Ivory Coast’s, it sells for much less.

6. Even more curiously, Consmin, until it was bought by TMI, used to report FOB prices above $200 a ton in its Australian reports (it had a listing on the ASX at one point).

7. The government has never explained to anyone how the issue of “transfer pricing” & “illegal discounting” was resolved exactly. Was Consmin manipulating prices or not?

8. Initially, the government announced that the company sponsoring the refinery is Consmin’s owner, Ningxia Tianyuan Manganese Industry Group (TMI), which is still the info being carried by the international press. Slight problem: this globally well-known company WENT BANKRUPT in October 2023, with massive unpaid debts.

9. Abruptly, the government invented a new entity: “Tanyun Manganese Industry Group”, still “TMI”.
Slight problem: no major Chinese manganese refiner goes by that name.

10. The whole saga now has me scratching my head. Which TMI is this? The bankrupt one? Or the shadowy one? What has happened to enforcing the right pricing to get the State the right amount of revenue even as the refinery gets built? Assuming it would be built.

Like I said, it doesn’t help to probe feel-good stories. You just get headaches. Best to pray and hope for the best.