Manganese, while already an important battery metal does not get the level of hype associated with lithium and cobalt. However, that is set to change as EV heavyweights like Tesla adopt manganese-based battery technologies en masse.
Companies in the manganese resource sector have already seen interest rise dramatically including Ferroglobe PLC (NASDAQ: GSM), Glencore PLC (LSE: GLEN), BHP Billiton Ltd (NYSE: BHP), and Maxtech Ventures (CSE: MVT) (OTC: MTEHF).
Traditionally, lithium and cobalt have dominated the battery industry, but manganese promises to take a front seat. The value of manganese has so far flown under the radar presenting an opportunity for investors to cash in on future potential price rises.
International miners that produce manganese are gearing up to increase production including Ferroglobe PLC (NASDAQ: GSM), a leading producer of manganese, Glencore PLC (LSE: GLEN), a diversified major producer of manganese; and BHP Billiton Ltd (NYSE: BHP), one of the largest diversified mining companies mining manganese worldwide.
The more interesting prospect worth following is getting attention for its near term entry into manganese; Maxtech Ventures (CSE: MVT) (OTC: MTEHF). This junior miner could be the one of the next producers of manganese based on its excellent prospects in Brazil.
WHERE TELSA GOES, OTHERS FOLLOW
Tesla is the most high profile EV company to signal a switch to manganese in the near future.
Currently Tesla produces nickel-cobalt-aluminum (NCA) batteries at its Nevada gigafactory. However, the company may be preparing to switch to nickel-manganese-cobalt (NMC) batteries in the near future.
These batteries have a lower raw material cost, faster charging times and longer lifespans than NCA variants. Manganese is an extremely cheap material compared to cobalt -$1 vs $12 per pound- hence could make for some significant costs for Tesla, whose batteries account for half the price of their cars.
In the latest indication of a possible switch to NMC batteries, Tesla signed an agreement with renowned NMC researcher Dr. Jeff Dahn of Dalhousie University. The agreement will see Dahn work with the company to find ways of reducing battery costs for Tesla.
This shift is not isolated to Tesla, with other major battery consumers like BMW and General electric indicating a similar move in the near future. Additionally, gigafactories that could dwarf Tesla’s Nevada plant are coming up in China and India, and they have stated they are planning to use manganese in their EV batteries.
Currently, Tesla is heavily reliant on cobalt, but this presents a serious challenge. Cobalt is expensive and supply is fragmented, meaning that Tesla has to source its supplies from dozens of different mines.
A GROWTH TREND
Today, battery-grade manganese supplies almost exclusively come from outside the US, which means that American EV companies will have to play ball with foreign suppliers to drive the EV revolution.
Junior mining companies are keen to fill the existing supply-demand gap hence the search for manganese deposits in North America capable of supplying the domestic market is steadily picking up pace.
This endeavor promises some excellent returns for mining investors and commodity traders.
However, exploration in North America is yielding poor results and some companies are looking to secure reserves abroad for sale in the US. Between 2006 and 2016, the demand for manganese in China more than doubled, reflecting a worldwide growth trend.
The increasing demand is accompanied by a decrease in manganese ore supply, which makes for some interesting price action dynamics.
NEW JUNIORS EMERGE
With this growth in value having largely flown under the radar of big multinational mining companies, it is smaller companies that have been laying the groundwork, getting ready to capitalize.
Maxtech Ventures Inc. is just such a company, with its core exploration operations based in Brazil. Maxtech is a Canadian-based junior mining company with a pure play in the manganese market.
The company has future outlook for markets in Asia, Europe and North America. Morocco also offers attractive exploration opportunities due to its proximity to leading manganese markets like Europe and Asia.
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.
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.
The multiple fronts of demand growth for manganese make it a commodity worth watching for forward thinking investors. Already the price of manganese has doubled to around $2800 a ton since 2015 and further growth is expected in the near future.
With more vehicle manufacturers making commitments to turn a large proportion of their fleets electric in the coming years, it would be a mistake to bet against any battery metal and manganese is considered to be the metal with the most growth potential.
POTENTIAL COMPARABLES
Ferroglobe PLC (NASDAQ: GSM)
Ferroglobe PLC operates in the silicon and specialty metals industry in the United States, Europe, and internationally. The company offers silicon metals that are used in personal care items, construction-related products, health care products, and electronics, as well as used in the manufacture of silicone chemicals; silicomanganese, which is used as deoxidizing agent in the steel manufacturing process; and ferromanganese that is used as a deoxidizing, desulphurizing, and degassing agent in the removal of nitrogen and other harmful elements from steel. It also provides ferrosilicon products that are used to produce stainless steel, carbon steel, and various other steel alloys, as well as to manufacture electrodes and aluminum; silico calcium, which is used in the deoxidation and desulfurization of liquid steel, and production of coatings for cast iron pipes, as well as in the welding process of powder metal; nodularizers and inoculants, which are used in the production of iron; and silica fume. The company was formerly known as VeloNewco Limited. Ferroglobe PLC was incorporated in 2015 and is headquartered in London, the United Kingdom. Ferroglobe PLC is a subsidiary of Grupo Villar Mir, S.A.
Glencore PLC (LSE: GLEN)
Glencore plc engages in the production, refinement, processing, storage, transport, and marketing of commodities worldwide. It operates in three segments: Metals and Minerals, Energy Products, and Agricultural Products. The Metals and Minerals segment is involved in smelting, refining, mining, processing, and storing zinc, copper, lead, alumina, aluminum, ferroalloys, nickel, cobalt, and iron ore. The Energy Products segment activities include coal mining and oil production operations covering crude oil, oil products, steam coal, and metallurgical coal; and investments in ports, vessels, and storage facilities. The Agricultural Products segment engages in the farming, processing, handling, storage, and port facilitating of wheat, corn, canola, barley, rice, oil seeds, meals, edible oils, biofuels, cotton, and sugar. Glencore plc markets and delivers physical commodities sourced from its own production and third party producers to industrial consumers. The company was formerly known as Glencore Xstrata plc and changed its name to Glencore plc in May 2014. Glencore plc was founded in 1974 and is headquartered in Baar, Switzerland.
BHP Billiton Ltd (NYSE: BHP)
BHP Billiton Limited is an international resources company. BHP Billiton Limited discovers, acquires, develops, and markets natural resources worldwide. It operates through four segments: Petroleum, Copper, Iron Ore, and Coal. The company explores for, develops, produces, and markets oil and gas in the United States Gulf of Mexico, Australia, and Trinidad and Tobago. It also explores for copper, silver, lead, zinc, molybdenum, uranium, gold, iron ore, and metallurgical and thermal coal. The company was formerly known as BHP Limited and changed its name to BHP Billiton Limited in July 2001. BHP Billiton Limited was founded in 1851 and is headquartered in Melbourne, Australia. BHP Billiton Limited is a subsidiary of BHP Billiton Group.
For a more in-depth look into MVT you can view the in-depth report at Energy Metal News: http://energymetalnews.com/2018/01/01/riding-the-battery-material-boat-with-manganese/
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