Gulf Manganese has been sailing under the radar for a while, but this week the emerging ferro-manganese producer moved ahead 23 per cent without any news.

Managing director Hamish Bohannan reckons increased interest from investors is really just because Gulf Manganese (ASX:GMC) is now doing what it said it was going to do.

The company is about 60 per cent of the way through the construction of Indonesia’s first ferro-manganese smelter, which it expects to begin commissioning before the end of this year.

About 90 per cent of manganese goes into steel-making and Gulf will be producing ferro-manganese – a ferro-alloy with a high content of manganese used to deoxidize steel.

“Last week we announced that all the steel was on site and people have been on social media, snap-shotting it and showing our nice blue steel work now sticking up out of the ground,” Mr Bohannan told Stockhead.

“So I think there’s a recognition that we are doing it — there’s nothing stopping us now.”

Gulf Manganese (ASX:GMC) shares over the past year.
Gulf Manganese (ASX:GMC) shares over the past year.

In 2013 Indonesia introduced a ban on the export of certain raw minerals from the country in a bid to grow its domestic smelting industry.

With only three small silica-manganese smelters and no ferromanganese smelters, Gulf Manganese has been inundated with interest from local miners wanting to offload their manganese ore.

Here are some of the tweets showing progress of construction: 

 

“We’ve done 19 agreements with local miners to take their ore off them and we’re well down the track on the acquisition trail for a couple of mines in our own name,” Mr Bohannan said.

Gulf Manganese already has 60 per cent of its planned 40,000-tonnes-per-annum of ferromanganese production locked up in a supply deal with South Africa’s Transalloys.

The company is also in talks with several other major players about taking the remaining ferromanganese.

“We were at the manganese conference in Kuala Lumpur two months ago and we had a lot of strong interest from the major manganese players,” Mr Bohannan said.

“So I think it’s just that we’ve now come out and had our debutantes ball so to speak and people realise that we are going to be out there producing some of the best ferromanganese in the market.”

Gulf Manganese’s product is “significantly higher than anything else in the market”, according to Mr Bohannan.

“We’ll be explicitly producing ultra-low carbon ferromanganese alloy. There isn’t much out there in the market because not many people can make it.”

This means Gulf Manganese will be able to sell its ferromanganese product at a premium to low-carbon ferromanganese, which currently fetches around $US2000 per tonne.

“We would expect quite quickly to get a premium on top of that,” Mr Bohannan said.

Gulf Manganese is close to acquiring its own manganese mine in Indonesia, having already completed due diligence and now determining the ownership structure.

Foreign mining companies can only own a 49 per cent stake in Indonesian mines, so Gulf Manganese is now nutting out the details with its Indonesian partner PT Jayatama Tekno Sejahtera.