Energy price volatility may push commodity prices higher, warns manganese producer UMK
Volatility in global oil markets, and the potential long-term effects on shipping and energy pricing, could have far-reaching consequences for commodity markets and South Africa’s mineral export sector, said United Manganese of Kalahari (UMK) chief executive Malcolm Curror on Wednesday.
Oil prices have surged sharply in recent weeks amid supply uncertainty linked to instability in parts of the Middle East. These movements in energy markets have already raised concerns across several commodity-dependent sectors, where fuel costs account for a significant share of operating and logistics expenses.
Curror noted that the mining sector is particularly vulnerable to sudden fluctuations in energy prices and maritime transport costs.
“Energy is embedded in nearly every stage of the mining value chain,” he said. “It runs from operating heavy equipment through to transporting ore by rail, road and ship. When fuel prices rise sharply, cost pressures ripple through logistics networks, freight rates and ultimately pricing. Mining operates within highly interconnected global supply chains, so movement in one part of the system tends to influence the entire value chain.”
Shipping markets are also responding to increased global uncertainty. Industry analysts report that vessels are being rerouted in certain regions, while freight insurance premiums and transport costs are rising.
“Adjustments in global shipping patterns can tighten available capacity and raise costs for exporters, in addition to higher fuel input expenses,” Curror said. “For a commodity exporter such as South Africa, logistics efficiency and energy pricing are crucial factors in maintaining competitiveness.”
The past week has seen significant market volatility, accompanied by increases in jet fuel prices of up to 70% in some areas, along with reported diesel shortages in the agricultural production sector.
South Africa is the world’s largest producer of manganese ore; a mineral widely used in steelmaking and industrial manufacturing. Much of the country’s production is exported to steel producers in Asia and Europe, making the sector highly dependent on global shipping routes and stable freight costs.
While commodity markets can sometimes absorb input cost increases during periods of disruption, Curror warned that prolonged volatility is not ideal for either producers or consumers of South African exports.
“Commodity producers prefer stable operating environments where energy costs and shipping routes remain predictable,” he said.
Curror added that the company will continue to monitor developments in global oil markets and maritime logistics closely.
“UMK will continue operating as a responsible manganese producer while limiting ore transportation by road where possible to reduce diesel exposure, despite placing pressure on export volumes.”
