manganese – the third electric vehicle metal · 2019. 6. 19. · between now and 2020, the...
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AISRESOURCESLIMITED–Manganese,thethirdelectricvehiclemetalnooneistalkingabout CONFIDENTIAL
Manganese–thethirdelectricvehiclemetalnooneistalkingabout
March24,2017|BaseMetals,BatteryMetals
Highlights•Manganeseisacriticalandirreplaceableelement
usedinsteelproduction;•Thesteelindustryispoisedtocontinuegrowing,
providingasteadysourceofdemandformanganese;•Significantadditionalupsidewillcomefromclean-
energyapplications;•Vertically-integratedcompanieswillbeprimary
driversoftheforwardmomentuminthemanganeseindustry,whichatthispointisconcentratedandinneedofdisruption.
Lithiumandcobalthavebeenonanabsolutetear,ridingthewaveofTeslaandthebroaderelectricrevolution.Thereisanothermetal,however,usedwidelyasabatterycomponentthathasreceivedlessnoticefromthemarkets.Thatmetalismanganese(Mn),achemicalelementthatisnormallyfoundtogetherwithiron.
Sincethebeginningof2016,cobalt’spricehasjumped120%,lithiumhasmovedup77%,andmanganesehasrecordeda42%gain.Whileallthreemetalshaveseentheirpricesriserecently,itappearsthatmanganesehasbeenoutshinedbyitstwofellowEVmetalcounterparts.
AISRESOURCESLIMITED–Manganese,thethirdelectricvehiclemetalnooneistalkingabout CONFIDENTIAL
Webelievethissituationwillchangequickly,asdemandformanganeseissettooutpacesupply,especiallyforhigher-gradematerialsfoundonlyinspecificcornersoftheglobe.
Introduction–ManganeseIsCriticalManganeseisanessentialingredientinsteel.AndaccordingtotheUSGeologicalSurvey’s(USGS)MineralResourcesProgram,theUnitedStatesiscompletelydependentonmanganeseimports;ithasnoproductionfacilitiesofitsown.TheUSneedsabout500,000tons(1.1billionpounds)ofmanganeseperyear,themajorityofwhichisconsumedbythesteelindustry.
Acutelyawareofthissituation,andthefactthatmostoftheworld’smanganeseisproducedbyjustafewcountries(someofwhichareriskyjurisdictions),theUSGShasdeemedmanganesea“criticalmineral.”Acriticalmineralisonedefinedasbeingessentialtotheeconomy,aswellasbeingatsignificantriskofincurringsupplyinterruptions.TheUSGShasalsosingledoutmanganesebecauseofitsimportanceduetoitsincreasinguseinemergingtechnologies.
SolidGrowthInDemandInsteelproduction,manganeseservestheimportantfunctionofremovingoxygenandsulphurwhenironoreisconvertedintoiron.Itisalsousedasanalloythatincreasesboththestrengthandflexibilityofsteel.Inoreproduction,about30%ofthemanganeseisusedtorefineoreandabout70%isusedasanalloyinthefinalproduct.
Manganeseisnotontheradarofmanyinvestors,butitiswidelyusedinmetallurgy.Infact,itisthefourthmostcommonlyusedmetalbytonnage–afteriron,aluminum,andcopper.Andduringthepasttenyears,theworldhasgenerallyproducedincreasingamountsofsteeleveryyear.
Betweennowand2020,theInternationalManganeseInstituteprojectsthattheglobalsteelindustrywillcontinuegrowingataclipofabout2%annually.
TheUnitedStatesisexpectedtoleadthewayin2017,withaprojected4.4%increaseinsteelproduction.ThisnumberisexpectedtosurgeevenfurtherasPresidentTrumpturnshisattentiontowardspushinglegislationfora$1trillioninfrastructureplan.
Inadditiontothesteelindustry,manganeseisalsoutilizedinanimalfeedandfertilizers,twosectorswithdemandthatwillcontinuetogrowinconcertwiththeworld’spopulation.
Movingforward,weseesignificantgrowthinthemanganesemarketduetoitsapplicationsincleanenergy.Morespecifically,weanticipatethegrowinguseofnickel-metalhydride(NiMH)electricvehiclebatteriesandlithium-ion(Li-ion)batteriestobemajorcatalystsformanganesedemand.NiMHbatteriesarepredominantlyusedinhybridvehicles,includingtheToyotaPrius.TheLi-ionbattery,ofcourse,takescenter-stageduetoTesla’snotorietyandloftyproductiontargets.
Thenewestup-and-comingtechnologytousemanganeseistheso-calledlithiatedmanganesedioxide(LMD)battery.AtypicalLMDbatteryuses61%ofmanganeseinitsmixandonly4%lithium.LMDshavenumerousbenefits,includingprovidinghigherpoweroutput,thermalstability,andimprovedsafetycomparedtoregularlithium-ionbatteries.
LMDsarealreadyinproduction,andarecurrentlyused
AISRESOURCESLIMITED–Manganese,thethirdelectricvehiclemetalnooneistalkingabout CONFIDENTIAL
inelectriccarsliketheChevyVoltandNissanLeaf.Thesecheaperelectriccars,asopposedtothenarrowerluxury-segmentthatTeslaoperatesin,shouldbeasignificantpartofthebuddingcleanenergyrevolution.
Finally,thereisagame-changingapplicationofmanganeseworthmentioning:off-the-gridpower.TeslaanditsPowerwallbatteriesarebreakinggroundhere,andthemarketisonlypoisedtogrow.
(Credit:InsideEVs)
Insummation,thereareseveraldriversthatshouldboostmanganesedemand,bothtraditionalandcuttingedge.
Manganesewillcontinuetobeakeyelementinsteelproduction,andtheindustryshouldcontinuetogrowatasteadypace.Steelproductionwillensurethatmanganeseremainsasoneofthemostwidelyusedelementsintheworld.Onthetechnologyside,electricvehicles,off-the-gridpowersystemsandotherenergystorageapplicationswillrequiresignificantamountsofhigh-qualitymanganese.
RiskyBusinessOnTheSupplySideMostmanganeseproductiongloballyisconcentratedinfourcountries:Australia,China,Gabon,andSouthAfrica.90%oftheworld’smanganesereservesarefoundinthesefourcountries,alongwithBrazilandUkraine.Remarkably,nearly70%ofglobalmanganesereservesarecontainedintheKalahariDistrictofSouthAfrica.
(Source:USGS)
SouthAfrica’sdepositstendtobehigh-grade.Australia,Gabon,andBrazil,however,featureevenhighergradedeposits.Thisbodeswellfortheexplorersanddevelopersoperatinginthesecountries.
(Source:Manganese.org)
IntheUnitedStates,therehasnotbeenanymanganeseminingactivitysince1970.Thereareafewareaswhereitispossibletofindmanganese-enrichedrocks(MaineandMinnesota),butthegradesaresubstantiallylowerthanwhatisavailablearoundtheglobe,sominingmanganeseintheUnitedStatesdoesnotmakeeconomicsense.Asaresult,theU.S.importsallofitsmanganese.
AISRESOURCESLIMITED–Manganese,thethirdelectricvehiclemetalnooneistalkingabout CONFIDENTIAL
61%oftheUnitedStates’manganeseimportscomefromGabon.Australiaisthesecond-largestproviderofmanganesetotheU.S.,with21%ofthetotal.SouthAfrica(7%)andBrazil(5%)arethethirdandthefourthlargestmanganeseexporterstotheUnitedStates.
China,meanwhile,istheworld’snumbertwoproducerofmanganeseandalsooneofitslargestconsumers.DemandforimportedmanganeseoreinChinamorethandoubledbetween2006and2016.Asof2016,almosttwo-thirds(62%)ofmanganeseoreinChinawasimported.ThegulfbetweenmanganeseproductionandconsumptioninChinahasbeenwideningsince2001.
China,liketheUnitedStates,importsmostofitsmanganesefromSouthAfrica,followedbyAustralia,Gabon,andGhana.
Unlikesteel,wheredemandisnotoriouslysteady,thesupplyofmanganeseisdeclining.In2016,theUSGSestimatedthattheworldproduced8.6%lessmanganesethanin2015.
(Source:USGS)
Thisisoneoftheimbalancesthatresultedintherecentupwardpriceactioninmanganese.Thepriceofmanganesehasrisenover42%sincethebeginningof2016.
Theestimateddemandformanganesein2022isforecastedtoreach28.2millionmetrictonnes.Comparethistohistoricalratesofmanganeseproduction,whichpeakedin2014at18.0millionMT.Clearly,thewideninggapbetweensupplyanddemandinthemanganesespaceshouldleadtoahealthypriceincreaseoverthenextfewyears.Webelievethatonemanganeseexplorer,inparticular,ispoisedtotakeadvantageofthisdynamic,anditsmanagementteamalreadyhasoneexitundertheirbeltinthemanganesesector.
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