Move over lithium, graphite, cobalt and copper: manganese is fast emerging as the next battery metal story to titillate investors.
The back story is similar: with manganese usage dominated by China and supply emanating from largely unattractive or unreliable geographies, western world car and batter makers are desperate to get their paws on the processed high-grade material.
For eons, manganese has been used as a strengthening agent in steel. Ninety percent of output is deployed in this way and given the strength of Chinese steelmaking – as reflected in record iron ore prices – this sector is attractive in itself.
However, investor focus is more on high purity manganese (HPM), which can be used as a cheaper substitute for cobalt in nickel-cobalt-manganese (NCM) battery cathodes.
At a time of heightened ethical investing awareness, most cobalt is sourced from the Democratic Republic of Congo and car and batter makers are keen to reduce their reliance on the material.
Manganese largely comes from South Africa, Ghana, Gabon, Brazil and Eastern Europe – so these are problematic locales as well.
Battery markets seek reliable jurisdictions for manganese feedstock
“A supply of manganese concentrate from a reliable jurisdiction like Australia is very much sought after by the market,” says Justin Brown, chief executive officer of manganese rising star Element 25 (ASX: E25).
(If you’re wondering about the name, manganese is the 25th element on the periodic table and the fourth most widely used metal).
In recent weeks, the battery maker Tesla and VW, the world’s biggest car maker has committed to cathodes with higher manganese content, no cobalt and reduced nickel for mid-performance vehicles.
German chemical giant BASF has unveiled plans to bolster investment in battery cathode materials, including … you guessed it … manganese-rich stuff.
“That’s obviously music to my ears,” Mr Brown said.
According to industry guesstimates, current HPM demand is running at 150,000 tonnes per annum, but this is projected to rise to at least 1Mtpa by 2040.
These numbers are based on the current chemistry of an EV battery, not the higher manganese content which could be four to five times the current levels.
“The growth curve is not just the function of electric vehicle uptake, it’s compounded by the fact the next generation of battery is going to be high manganese content so you get this growth on growth,” Mr Brown explained.
Investors take manganese positions
Reflecting the investor interest, manganese explorer Black Canyon (ASX: BCA) shares listed on the ASX on 5 May at a 50% premium to their $0.20 issue price, after a $5 million IPO.
Black Canyon has an option to acquire a majority stake in the Carawine Project, an 800 square kilometre landholding in East Pilbara manganese country.
Neighbours include the operating Woodie Woodie mine, run by the Chinese-owned Consolidated Minerals.
Black Canyon has also agreed to acquire Zephyr Exploration, which has dibs on 2,200sq km in the Lofty Ranges, close to Element 25’s newly commissioned the Butcherbird project.
In mid-March, Firebird Metals (ASX: FRB) debuted strongly, having been spun out of Firefly Resources.
Firebird’s gaze is on its Oakover project, which consists of 360sq km of manganese rich turf near Newman in the east Pilbara.
Australia’s new force in manganese
But Element 25 can lay claim to being Australia’s new force in manganese with its self-discovered and fully owned Butcherbird.
Butcherbird hosts the country’s biggest manganese resource, with a total of 263 million tonnes and a proven and probable component on 50.6Mt.
Element 25 currently is in ramp-up of its $20 million phase one, aimed at output of approximately 340,000t of concentrate a year over a 40-year mine life.
The company has locked in a five year, take-or-pay contract with Malaysian smelter OM Materials, a subsidiary of the ASX-listed OM Holdings (ASX: OMH).
The pre-feasibility study (PFS) cites a net present value (NPV) of $583 million (pre-tax), with an internal rate of return of 387%.
By spending a further $20 million, the company plans to increase this output to 1.02Mtpa with the NPV rising to $1.13 billion.
The company last month completed a $35.5 million placement to fund this second stage which, as with the first stanza is pitched at the steel market.
From PFS to commissioning, phase one took a mere 10 months. Similarly, investors won’t have to wait too long with phase two commissioning due in February next year.
Demand from the steelmakers remains strong, but Element 25’s ultimate ambitions lie with tweaking the plant to produce HPM for the battery market.
The relative pricing of the basic and high-purity manganese material shows why the latter is so attractive: while the steelmaking material, manganese sulphate changes hands for US$140-150 a tonne (A$180-195/t), HPM sells for around US$1,300/t.
Crucially, Element 25 claims the benefit of a simple processing method that requires simple leaching at room temperature, without the need for heating or nasty chemicals.
The company also notes a number of other cost and logistics advantages with Butcherbird. For a start, it’s on the highway to the nearest port of Utah Point at Port Hedland.
The deposit is shallow and above the water table, with minimal pre-stripping and no need for explosives.
Other ASX manganese plays
Other Australian miners have a deep footprint in the exclusive manganese scene, although the sector’s heyday was about a decade ago.
One to ‘czech’ out is the ASX and TSX (Canadian) listed Euro Manganese (ASX: EMN), which has just completed a $30 million two-tranche raising to fund its Chvaletice project in the Czech Republic.
The ‘mine’ itself is based on a low-cost tailings recovery operation. But the funds will also support the construction of a demonstration HPM plant, with an eye to supplying Western Europe’s burgeoning EV and battery market.
With mines in Australia and South Africa, BHP spin off South32 (ASX: S32) is the world’s biggest producer of manganese ore. In league with Anglo American, South32 operates the open pit Grooyte Eylandt mine in the NT.
The aforementioned OM Holdings is eyeing a re-start of its Bootu Creek mine, a few clicks north of Tennant Creek in the NT.
Along with Woodie Woodie, these projects are close to the end of their mine lives.
Jupiter Mines (ASX: JMS) has long been producing manganese at its Tshipi mine in South Africa and is eyeing a $100 million expansion.
Meanwhile, keep an eye on Wesfarmers (ASX: WES) which has turned its gaze to the renovation market with the left-field purchase of Beaumont Tiles.
But the conglomerate has an ongoing interest in battery materials, having tried to buy rare earths miner Lynas Rare Earths (ASX: LYC) and then acquired lithium producer Kidman Resources.
Wesfarmers is building a lithium processing plant at Perth’s Kwinana, which might come in handy for any broader battery ambitions.
On the junior end of town is Bryah Resources (ASX: BYH) with its 60% interest in the Bryah Basin manganese joint venture.
OM is funding exploration to earn up to 70% of the manganese rights to 600sq km of Bryah’s tenement package in the region.
The joint venture includes the Horseshoe South manganese mine, which is the region’s largest historic manganese mine.