A major component in the creation of high-quality steel for many years, manganese is considered a “critical metal” by many nations around the world. However, it is its growing uptake by the battery sector that is set to see the metals’ importance continue to grow exponentially.
Unlike many of the critical metals tied to the electric vehicle (EV) future, manganese is not rare and is the fourth most used metal on earth in terms of tonnage behind iron, aluminium, and copper. The major manganese suppliers, which include China, Australia, and South Africa, currently hold 80% of the world’s reserves. It is estimated China produces more than 90% of the world’s manganese products, ranging from steel-strengthening additives to battery-grade compounds, according to a recent article by The Wall Street Journal.
Future growth
Manganese’s global production is projected to experience an increase of 28.2M metric tons by 2022, driven by a foundational increase in infrastructure enhancing projects, eco-friendly vehicles, and rapid urbanization. The steel industry remains the dominant user of manganese and is responsible for as much as 90% of its consumption.
According to a report by Market Research Future, the global steel market is expected to reach US$963.6B by 2027 with a compound annual growth rate (CAGR) of 2.5% over the forecast period. Rising steel demand is expected to be driven by several factors, including technological innovations and the growing need for sustainable, low-cost, and durable building materials.
Meanwhile, according to Mordor Research, the global manganese market is projected to grow at an even faster rate to a CAGR of over 4.0% between 2021 and 2026.
Much of this growth can be tied to EV demand. The disposable and rechargeable battery space is the second largest buyer of manganese today.
Manganese’s utilization by the battery industry is expected to continue to grow significantly with the make-up of modern batteries trending toward higher manganese content for safer, more cost-effective solutions.
There are reports that supply constraints and rising costs associated with cobalt may see manganese being increasingly targeted to meet the demand for projected EV growth. For example, Tesla and Volkswagen have revealed plans to mass produce a new battery with a high proportion of manganese and no cobalt. Manganese is around 1/20th the cost of cobalt.
Manganese X Energy Corp.’s (TSXV: MN) CEO, Martin Kepman, has described investing in Manganese is a future-friendly mining idea. Mr Kepman says Manganese X Energy Corp. expects to see a huge development in the manganese market because of its demonstrated value in clean energy applications.
“Moreover, we expect the increased proportions of manganese projected to be used for nickel-metal hydride (NiMH) and lithium-particle (Li-particle) batteries to be significant and will affect all future rechargeable batteries, EV[s], and hybrid EVs and energy backup power storage industries.
“We foresee greater demand for manganese arising from electric vehicle EV expansion, resulting in an upward price for manganese,” Mr Kepman stated recently. He highlighted a number of areas that are expected to lead to increased manganese demand in the EV market:
1) Tesla is projected to put into operation five new gigafactories around the world in the next five years
2) Six new gigafactories are planned by Volkswagen by 2030
3) Ford is using its signature 150 pickup truck series and launching their lightning EV 150 truck, which also converts into a generator, to lead the charge. Ford is forecast to invest US$22B by 2025 into their hybrid EV vehicle projects
4) General Motors is investing US$10B dollars in developing 25 EV models
5) China is planning to phase out the internal combustion engine by 2035
Mr Kepman says manganese’s key role in the steel industry will also see its demand continue to grow post COVID-19.
“As new infrastructure projects come online, like Biden’s new US$2T infrastructure plan that is being touted as the most important transformational effort of the 21st Century, manganese demand will continue to increase,” he added.
Supply chain security
With China being such a dominant producer of the world’s manganese products, significant concerns have been raised in several countries about potential issues with future demand. The U.S. government recently announced the establishment of a domestic supply chain for lithium-based batteries.
This National Blueprint for Lithium Batteries, developed by the Federal Consortium for Advanced Batteries, is aimed at guide investments to develop a domestic lithium-battery manufacturing value chain in America.
In Canada, a newly formed trade organization, the Battery Metals Association of Canada (BMAC), has also been formed. BMAC’s membership consists of battery metals entrepreneurs, explorers, developers, and producers working together to support a rapidly changing energy landscape.
The organization’s mission is to grow the battery industry in Canada and to expand the domestic supply chain through connection. From supporting key research and development initiatives to building a strong interconnected industry, while promoting new policy options – BMAC is dedicated to building a strong and enduring battery metals industry in Canada.
While Australia is well stocked with many of the critical battery metals, including manganese, the country continues to make moves to ensure it stays that way. Most recently, the Australian government released its first national Future Fuels and Vehicles Strategy backed by an expanded A$250M Future Fuels Fund investment.
Shipping issues
One of the major modern issues facing companies which choose to export manganese is the rising cost of shipping. COVID-related congestion has had a significant impact on global shipping tariffs in 2021, resulting in increased freight costs which directly impacted on the gross margins for manganese concentrate shippings.
New Australian manganese producer Element 25 Limited (ASX: E25) says shipping costs remain one of the key sensitivities in relation to costs and margins going forward until these macro-economic conditions ease over a sustained period. The company recently unveiled a revised shipping strategy which utilizes a Supramax vessel with a nominal cargo size of 47Kt of manganese concentrate. The contract provides for additional material to be included above this level at a reduced tariff if the laycan permits.
The ship has been booked at a rate in the low US$30s per tonne, a reduction of approximately 45% from the previous peak tariffs the company had been charged. The company is preparing to ship its third from the 100%-owned world class Butcherbird Manganese Project located in the Pilbara region of Western Australia. The ore will be delivered to the company’s offtake partner OM Materials (S) Pte Limited.
