Marula Mining moves forward with five-year budget for Kilifi Manganese Processing Plant

Marula Mining PLC has taken a significant step forward in its expansion strategy by approving a five-year budget for its Kilifi Manganese Processing Plant in Kenya. This decision aligns with the company’s broader objective of securing its position as a key player in Africa’s battery metals industry. The budget approval comes shortly after a strategic supply agreement with Baosteel Resources South Africa, a major buyer of manganese, and a logistics contract with Scan Global Logistics Kenya, ensuring a structured pathway for manganese exports.

The planned investment is set to strengthen Marula Mining’s operational footprint in the region, with revenue projections reaching $182.5 million over five years. As processing operations prepare to commence in April 2025, the company aims to solidify its presence in a market increasingly driven by demand for high-grade manganese—a critical component in steel production and emerging battery technologies.

What Does the Five-Year Budget Mean for Marula Mining’s Growth?

The newly approved budget serves as a financial roadmap for Marula Mining’s Kilifi Manganese Processing Plant, providing greater clarity on anticipated costs, revenue potential, and long-term sustainability. The project’s economic model estimates a pre-tax operating cash flow of $63.5 million, while the net present value (NPV) at a 10% discount rate is projected at $48.3 million.

From a fiscal perspective, the operation is expected to contribute $20.1 million in taxes to the Kenyan government, reinforcing the mining sector’s role in regional economic development. The company has factored in a manganese price of $4.61 per dry metric tonne unit, benchmarked against Shanghai Metals Market data for 36-37% grade manganese ore traded through Tianjin Port in China.

With an internal rate of return (IRR) exceeding 100% per annum, the investment is poised to be highly profitable. However, success will largely depend on stable commodity prices, effective cost management, and streamlined logistics operations under the Baosteel Resources contract.

How Will Marula Mining Ensure Supply Chain Stability?

A key pillar of Marula Mining’s operational plan is securing consistent manganese supply. The company has already signed three agreements ensuring a steady flow of up to 20,000 tonnes per month of manganese ore to the Kilifi Manganese Processing Plant.

Under the five-year framework, 80% of contracted ore will be sourced from pre-existing supply contracts. All manganese material is verified through rigorous internal and third-party testing, ensuring compliance with international quality standards.

The logistics network, supported by Scan Global Logistics Kenya, plays a crucial role in efficiently exporting manganese ore to international buyers. Transportation costs and export logistics have been incorporated into the budget based on actual unit prices, reducing the risk of unforeseen expenses impacting profitability.

What Role Does the Kilifi Manganese Plant Play in Kenya’s Mining Industry?

The Kilifi Manganese Processing Plant represents a milestone in Kenya’s mining sector, which has traditionally been dominated by gold, soda ash, fluorspar, and titanium mining. The project’s execution highlights the country’s growing potential in manganese extraction and processing, a resource that has gained global significance due to its role in battery manufacturing and industrial steel production.

Kenya’s government has actively sought to boost investment in critical minerals, making the Kilifi project a strategic asset. By maintaining an 80% stake in the plant through Muchai Mining and Processing Kilifi Pty Limited, Marula Mining retains strong control over operations while ensuring compliance with national mining policies.

Beyond economic contributions, the project emphasizes local employment, with over 95% of current employees sourced from Kilifi County. Marula Mining has committed to hiring all casual and part-time workers from the surrounding communities, ensuring direct benefits to the local economy.

How Has Marula Mining’s Stock Responded to the Announcement?

Marula Mining’s stock has experienced fluctuations in response to the recent budget approval. As of March 26, 2025, shares were trading at 5.50 GBX, reflecting a 2.38% decline from the previous close. Over the past year, the stock has ranged between 3.625 GBX and 11.375 GBX, showcasing its volatility within the small-cap mining sector. The company’s market capitalization currently stands at approximately £13.74 million.

Market analysts view the Kilifi Manganese Plant as a significant asset, but investor sentiment remains cautious due to the inherent risks in commodity price volatility, geopolitical stability in mining regions, and execution risks tied to large-scale industrial operations.

Given the company’s strategic partnerships and planned production timelines, analysts currently recommend a ‘Hold’ position on Marula Mining’s stock. Investors with a high-risk tolerance may find potential opportunities as the company progresses towards steady revenue generation in battery metals markets.

What’s Next for Marula Mining?

Looking ahead, Marula Mining is considering expansion beyond its existing listings on AQUIS Stock Exchange (AQSE) in London and A2X Markets in South Africa. The company has expressed interest in seeking dual listings on the Nairobi Securities Exchange (NSE) and Johannesburg Stock Exchange (JSE), a move that could increase liquidity and attract regional investors.

The final stages of Kilifi Manganese Processing Plant modifications are nearing completion, with full-scale processing expected to commence in April 2025. The first 5,000 tonnes of manganese deliveries under the Baosteel Resources contract will serve as a test phase, providing key operational insights before ramping up to full production capacity.

With a strong pipeline of battery metals projects in Kenya, South Africa, and Tanzania, Marula Mining is well-positioned to capitalize on growing global demand. As manganese continues to play a critical role in electric vehicle (EV) battery production and steel manufacturing, the company’s long-term prospects remain closely tied to shifts in industrial and green technology markets.