Which Battery Metal Could Rise Most?

Estimated reading time: 6 minutes

The world's hunger for power storage, especially the new market for electric vehicles (EVs) and the sources that power them have sent prices for battery materials soaring. While it appears that lithium, the most prominent source, may have reached its ceiling, other vital metals in the group have had quiet growth. Top among these is manganese, which is now gaining favor.

Several public companies are in the manganese business and stand to benefit from the rise including Glencore PLC, Ferroglobe PLC, BHP Billiton Ltd, and Maxtech Ventures.

Lithium is the clear early leader in the race to provide Li-ion cells for EVs and in mass storage applications, but manganese is another vital battery component that is gaining ground on a steady curve.

According to a recently published peer reviewed report, Manganese is also one of several crucial metals headed for a supply crunch.

This puts the onus squarely on miners to come up with more manganese. The call has gone out for much more investment in exploration in order for supplies to keep up.

This could be a bright spot for investors, since international miners that produce manganese are gearing up to increase production including Glencore PLC, which is highly diversified, but major producer of manganese; Ferroglobe PLC, a leading producer of manganese, and BHP Billiton Ltd, a giant diversified mining company and likely the largest miner of manganese worldwide.

The large producers of manganese are taking the growth in stride, but one smaller mining company is getting attention for its entry into manganese; Maxtech Ventures could easily be the next near-term producer of manganese in Brazil.

No Reserves in the U.S.

Manganese is primarily used in steelmaking, accounting for about 90% of all demand. It is also used in the lithium-ion and other battery technology suited to the new applications such as electric vehicles.

South Africa and Australia are the primary suppliers of manganese imported into the United States for use in lithium-ion batteries.

The U.S. currently depends 100% on manganese imports from other countries and at present no producing mines. It also holds no official manganese reserves.

Rising Demand, Rising Prices

Last year, South Africa was the top manganese-producing country globally, reaching total production of 4.7 million MT. Australia came in third place with total output of 2.5 million MT. Brazil placed fifth among world suppliers.Several of the major producers of manganese are increasing their production and refining capabilities, but even they will not can keep pace with added demands for manganese, according to recent figures. Large producers are also not sensitive to local markets with specific needs.

Unlike steel demand, which is typically steady, the supply of manganese is declining.Last year, the USGS estimated that the world produced 8.6% less manganese than in 2015. Despite that fact, the difference between manganese production and consumption in China alone has been widening since 2001, with demand for imported manganese ore more than doubling in China from 2006 to 2016.

The price of pure manganese has risen to roughly US$2,800 a tonne, nearly double what it was in 2015. The demand for electrolytic flake manganese - the kind used in batteries - is now outpacing supply by about 25,000 MT.

There has rarely been more opportunity to enter the manganese supply chain than at this point.

Maxtech Ventures on a Fast Track 

Maxtech Ventures is a Canadian-based junior mining company with a pure play in the manganese market.

Its leading project is a land package of manganese mineral claims in the State of Mato Grosse, Brazil. At 540,000 hectares, the company's interest is expected to be one of the world's highest-grade, lowest-cost manganese operations.

Their target this year is a projected 11,500 tonnes of manganese. They expect to scale up to full production at 80,000 tonnes per annum by 2020 -perfectly timed to catch the upswing in global manganese prices.

To bolster its prospects, Maxtech has entered into an agreement with Maringá Ferro-Liga S.A., a subsidiary of Grupo Maringá (the second largest manganese ferroalloy producer in South America) to enable the joint evaluation, exploration and potential acquisition of project specific manganese assets in Brazil.

That positions Maxtech Ventures perfectly to produce manganese for its other major use: fertilizer.

Manganese has unique qualities that enable providers to earn up to a 25%-30% premium on average pricing for this application and Maxtech is in an ideal location to offer its manganese to the local producers in in Brazil. Maxtech's prospect is right in the heart of one of the world's leading soybean growing regions.

Maxtech Ventures has a smart play on its hands by moving quickly to the cash flow stage through tapping the fertilizer market locally, while at the same time growing its resource capacity to supply the growing power cell and storage markets on a global scale.

The flurry of activity in battery metals has reached a near fever pitch this year and the global expectation of a shift to electric vehicle fleets is becoming a real possibility. Obviously, this new reality is bearing on the associated materials. Lithium and cobalt may have pushed to new highs, but manganese has experienced somewhat of a quieter path, mostly flying under the radar. It's expected that will change in the very near future, making manganese the remaining battery metal with major growth potential.

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