Gulf Manganese Corp. Ltd. lost a A$10.8 million cornerstone investment for its Kupang smelting development after the new governor of East Nusa Tenggara told local reporters he would ban mining, and while Managing Director Hamish Bohannan believes that it will only apply to illegal operations, he is eyeing potential manganese ore sources elsewhere in Indonesia, Australia and East Timor just in case.
The junior said Oct. 17 that Indonesian businessman Low Tuck Kwong, founder and president of PT Bayan Resources Tbk., had told Gulf that he will not proceed with the proposed cornerstone investment "at this point in time," barely two months after making the deal, but was "open to revisit the investment proposal in the future."
"The main thing is that everything related to the mines would be stopped," East Nusa Tenggara, or NTT, Governor Viktor Laiskodat told reporters in Kupang on Oct. 9, adding that mines would be closed if they are deemed to affect the environment. "I don't want mining activities to damage the natural beauty of NTT."
Local environmental activist Aleta Baun applauded the governor's comments and said, "We have yet managed [activities] above ground, why do we have to spoil the underground?" local news reported her as saying.
The governor has not made a formal proclamation, but Bohannan said he expects a mining ban will "just be to stop illegal mining, and we only do contracts with legal miners — what they call 'clean and clear.'"
Bohannan said that while the governor "wants to see us in production as much as we do," he is still looking at other ore source options, including Australia, and is already in talks with some parties as a "contingency plan" — conversations he would be having anyway, given the company envisages bringing in ore from overseas once the Kupang hub grows.
While the ASX announcement said Gulf Manganese's board was investigating opportunities to source manganese ore from outside NTT, Bohannan told S&P Global Market Intelligence that there was the option of getting ore from places such as Australia, including South32 Ltd.'s Groote Eylandt Mining Co. Pty Ltd. operation.
"The ore in Timor and Timor Leste is a significantly better quality than Australia, though Australian ore is not bad, and it's obviously cheaper to get it locally than it is to bring it in from overseas," Bohannan said.
Having entered into a series of transactions with PT Jayatama Global Investindo and related entities to fund up to about A$15 million to build and commission the Kupang facility's first two smelters in West Timor, Gulf Manganese has since had the maturity date under the convertible note agreement to Oct. 12, and it said Oct. 17 that it has not been able to complete all the conditions precedent.
Though most of the conditions have been met, Gulf Manganese is still waiting on the direct shipping ore license, and Bohannan hopes to start trading again next week, pending discussions about an extension of the maturity date being finalized with PT Gulf Mangan Grup and PT Jayatama Global Investindo.