Viti Mining Limited chief financial controller, Wilson Michael, in an interview with the Fiji Sun at the their office on Domain Road yesterday. Photo: JONA KONATACI
Compiled by RACHNA LAL and
RANOBA BAOA
Welcome to Hard Talk, where we pose questions to both top executives and budding entrepreneurs on some of the major issues involving business.
Often when we talk about mining in Fiji, gold mining is the first which comes into our minds because of the long number of years Vatukoula Gold Mine has been around.
But let’s not forget. Fiji also has other mineral resources besides gold, which although they may not bring in as much to our economy as gold, they have the potential to impact.
Manganese is one of these. We need to remember that the world market for manganese is growing as it is an essential ingredient for the production of steel.
Viti Mining Limited is a wholly locally-owned exploration and mining company and has been in the business of the exploration and mining of Manganese in Fiji since 2006.
Viti Mining has been granted a number of Special Prospecting Licenses for Manganese Ore exploration in Vunamoli, Votualevu, Namedre, Korovou and Tabuquto.
More recently, the company has been granted a mining licence to proceed with mining in Nasaucoko on its Vorovorobitu deposit site located in Navosa covering 120 acres.
Questions for Wilson Michael, chief financial controller of Viti Mining Limited:
1. What is the latest development on the manganese project?
The latest development for us obviously is getting Vorovorobitu into production. The next step is to continue with exploration so we can move the second mining to Buro (another deposit site on Nasaucoko) and the timeline for that is within the next 12 months. We anticipate the third mine at Vunamoli and the timeline is between 24 to 30 months.
So those are the future developments coming up. In addition to those specific goals is continuing exploration in all of our tenements because we know that from the work we’ve done so far, there’s potential for other elements like gold, silver and nickel. But we haven’t done enough work to evaluate it an economically-exploitable form. But there are very strong prospects for those elements that we’ve got.
2. How much has the company invested so far?
To date we’ve invested FJ$2.5 million since the principal began exploration – that’s only cash resources. It would probably be around FJ$1.6 million if we take account the consultancy fees.
3. How much more are you looking at investing?
Basically it’s open-ended. The nature of mining depends on how much we want to do to get the next two mine opened. The capital investment on exploration is about US$ 2.5 million (FJ$4.8 million) and the reason for that is that there are bigger deposits and there’s a lot more work.
The next phase, Vunamoli tenement, is going to cost us approximately US$1.6 million (FJ$3 million) for exploration. For Vorovorobitu, our capital equipment mining investment on order is around US $700,000 (FJ$1.3 million).
So that’s what’s going to cost us between now and December when the equipment arrives and exploration is about US$2 million (FJ$3.8 million).
What happens with mining is we have to spend a bit of money and carry out the field work. With the result of that, it tells you how much you’d have to spend to get to the next phase of whether you wasted your money. There’s no certain amount because everything is in terms of levels of confidence.
At this stage, we are highly confident that the resource is big. It’s based on testing from our different tenements and we make the assumptions that it’s related. The next phase is to prove it and that acquires hiring people with skills and expertise. Hiring a firm of geologists to do the analysis for us, those are what’s involved.
4. What sort of timeline are you looking at in terms of initial start of mining?
We’re looking at getting Vorovorobitu for production by January next year and production is expected to be at 5000 tonnes a month, after the equipment arrives. Once the equipment arrives and gets installed, we’ll get our people trained and hopefully get into full production by January.
5. Once full production mining commences, how much is Viti Mining looking at in terms of exports?
About 5000 tonnes a months and dollar value market or the current market price is about US$250 (FJ$477) per tonne and that equals US$1.25 million (about FJ$2.2 million) every month.
6. How would this contribute to the Fijian economy?
Firstly there are returns from export.
Secondly, it creates employment because we expect to employ about 50 more people.
7. How can you describe the industry at this point in time?
It’s really hard to make a statement on the state of the industry but it differs for different companies. But the opportunity for Fiji especially for locals is in small-scale mining and it’s worked successfully for other countries like Africa where there are opportunities for them.
A good example is, manganese exists in some form in some of the smaller islands in Gau and an island in Lau. And so the regulatory requirement will overwhelm a small scale operation.
The reality is that there are opportunities for small scale operations.
8. Are there upsides of manganese ore in Fiji or is it the same when compared to the rest of the world?
The upside for Fiji is that our ore quality is high. There’s no serious disadvantage given our geographical location because the rich mine bodies are far from their markets like Africa to China.
In countries where they have mining and metal industries they have advantages. Our market is the BHP TEMCO (Tasmanian Electro Metallurgic Company) manganese smelter in Tasmania, Australia.
So our advantage is that it is a lot closer to us and if we’re exporting in bulk, it’s a lot more convenient as opposed to trying to send shipments to China or Korea or even Japan.
9. What’s the reality of manganese in terms of world market prices and how is this affecting the industry in Fiji?
World market prices are plays a significant role for us. Manganese is a commodity and like all commodities, it is low prices and dependent on volume. Our key risk is slowing economies particularly China.
For the past few years, given that China has had a rapid economic growth, they’ve been driving demands for all metals. I believe China has probably accounted for 70 per cent of steel production and China’s growth was slowly demonstrated at the beginning of this year in that China’s forecast growth is slow by 0.3 per cent from eight per cent to 7.7 per cent. That was enough to cause mining companies in Australia to retrench. But that’s only forecast not the actuality.
10. What’s the risk with mining?
The biggest risk with mining as well is that the development process is long. So from exploration to mining could be as much as five to six years. If we start if the price is high and once the mining commences the price may go down.
However we are confident that there’s no substitute for manganese. China’s production fell at a stable level. We feel that the structure in Fiji, we would still survive. It’s not going to wipe us out. The only thing that’s going to wipe us out is a nuclear war.
Manganese is an essential component of steel making and regardless of what the growth trends are in the world, steel is still a basic commodity that’s required.
So there will always be a market for manganese it might be at a lower price in terms of the market aspect. The other is supply – there’s a lot more manganese that’s available.