Black Canyon: manganese mining in a class of its own

The ‘Class of 2021’ for ASX initial public offerings (IPOs) was exceptionally strong.

The market recorded the highest number of new IPOs in a decade – and more than the previous two years combined. 

Among the 191 floats that year was Australian manganese explorer and developer Black Canyon (ASX:BCA). 

The Perth-based junior was one of 145 companies with a market capitalisation of less than $100 million to list. According to HLB Mann Judd, this was almost double the 5-year average, making the IPO Class of 2021 one to remember.

As Executive Director Brendan Cummins explains to Mining.com.au, with a resumé boasting the largest manganese deposit in Western Australia (second largest in Australia) in the ‘underexplored’ Balfour Manganese Field, Black Canyon is emerging in a class of its own.

“We raised $5 million (in the IPO) and we just went out exploring. I knew the assets we had at that time were prospective for manganese, but I didn’t know what we’d find – that is the excitement of exploration. 

About the second week after listing I jumped in the cruiser and headed to site to start kicking a few rocks at Flanagan Bore and got really excited about what I saw on the ground – a lot of manganese at surface and the right structural setting.

With that combination I knew we had a great chance to make a discovery and drill a lot of tonnes, so I really couldn’t wait to get the rigs out there.”

Getting the rigs out didn’t happen until later that year as it was a busy time for exploration, meaning rigs were hard to come by. Once a reverse circulation rig became available the Executive Director was quick to act.

“Nevertheless, I was out there on the rig with another geologist mate of mine in December 2021 and we drilled our maiden program. December in the Pilbara is not pleasant but I had my eye on the prize and it was critical to drill prior to the onset of the wet season where it goes from being just hot to hot and very wet so we would lose 3 months. The extra effort and hard work paid off dividends and we delivered 100Mt of indicated mineral resource off the bat.”

Fast-forward to 2024 and only two further RC drill programs Balfour Manganese Field (BMF) has now delineated a global Mineral Resource Estimate (MRE) totalling 314Mt @ 10.5% Mn containing 33.1Mt of manganese. 

In addition to the MRE the company has also estimated an exploration target across the Balfour Manganese Field as a range between 160-215Mt @ 11-12% Mn, containing between 18-23Mt of manganese. 

These large tonnages reflect the endowment of the BMF which was never explored seriously for manganese in the past and created the opportunity for Black Canyon.

Two-horse race

In the few short years since listing, Black Canyon has also consolidated a significant landholding of 2,400km-square in the Balfour Manganese Field, strategically close to the operating Woodie Woodie and Butcherbird manganese mines.

Cummins, who has 30 years’ experience as both a mine and exploration geologist, explains that Black Canyon now has a singular focus while pursuing a dual-track strategy.

“We’re basically running a two-horse race, to deliver a quality manganese concentrate and work towards producing manganese sulphate which is critical for batteries in EVs. We’ve not preferentially pushed one or the other yet as we progress both work streams in parallel.”

The quality of the company’s portfolio provides this optionality. 

Its tenements are prospective for manganese mineralisation, such as ‘Woodie-Woodie’ hydrothermal (high-grade manganese) and Supergene Balfour style shale hosted manganese deposits (medium-grade manganese/iron). These are capable of producing manganese concentrate and high purity manganese sulphate monohydrate (HPMSM) for the steel industry and cathodes of batteries used by electric vehicles (EVs) respectively.

Over the past few years, the team has been gaining a better understanding of the Balfour Manganese Field. Its emerging potential is evident, Cummins says, by the size of the geological basin, mineral resources identified to date, distance from port, and scope for shallow open pit mining. 

“That’s the beauty of bulk commodities like manganese, it’s similar to iron ore in that with iron ore you’ve either got a DSO product – 58% to 63% iron ore – and you’re basically mining it, crushing it, a lump and a fines product, putting it on a truck and exporting it to market.

With manganese, the only difference is that we’re planning on beneficiating the grade of the manganese through a DMS (Dense Media Separation) circuit to increase the purity of the manganese. DMS is a trusted processing route often used in mining and relies on the density of the manganese to separate it from lighter waste minerals. It is also applied to some iron ore mines as well.”

Potential partners

In 2024, the company will continue to gauge the level of interest of third parties interested in offtake or involvement in producing HPMSM and manganese concentrate products.

These third parties may include manganese concentrate end users such as alloying smelters or steel manufacturers but also battery suppliers to EV auto OEMs or possibly the EV OEMs themselves.

“This year we need to increase our branding and increase our engagement with interested parties and spend a lot more time travelling to promote the quality of our assets and what Black Canyon can deliver in terms of manganese concentrate and high purity manganese sulphate.  

“it’s a KPI I have set for our company this year to try and attract the right partner

That’s actually pretty key – it’s a KPI I have set for our company this year to try and attract the right partner to be involved in either the mining and the offtake for the manganese concentrate and the downstream processing for the production of battery grade high purity manganese sulphate.”

Part of these discussions will centre on Black Canyon’s capability to produce manganese concentrates competitively compared to other major producing countries like South Africa, which produces about 30% of global supply.

“And there are swings and roundabouts, Australia is not a low cost mining jurisdiction, compared to South Africa. So we have a lot of focus on understanding how we can be more competitive. One advantage we have in Australia is our proximity to Asian markets,” Cummins notes.

Shipping costs are cheaper from Western Australia than South Africa and there’s a geopolitical advantage of Australia being low sovereign risk, he adds.

Scope and scale

While engaging potential partners Black Canyon will update its manganese concentrate Scoping Study based on the expanded MREs. Aspects to be examined include single or multi-pit openings, a central processing plant, production rates, and transport solutions. 

The numbers so far look impressive. A large resource base of 314 million tonnes and the prospect of having multiple pits to expand the scale of mining rate means Black Canyon could surpass the previous aim for a 1.8 million tonne throughput.

“It’s whether we start in one location and then have a mobile processing plant or just have one processing plant, and everything gets fed into that. So, there’ll be a bit of work to do on refreshing that Scoping Study to be more applicable now especially in the current pricing environment.”

The updated study will also focus on mine site cost structures and transport options. On the table is whether an owner-operator model is pursued, or a contractor used – or if a hybrid transport solution works best.

Cummins adds: “As with most mining projects the aim is to derisk the opportunity. Starting with the mineral resources. About 80% of the MRE is measured or indicated, we have derisked the processing flowsheet by applying DMS and have delivered a marketable concentrate above 30% Mn. Now we are focussed on transport solutions and routes from the minesite to Port Hedland with a number of options to consider. 

Whilst the mining risk is low we are examining some alternatives to traditional truck and shovel with an overall focus on reducing opex. We have been very efficient and cost effective in delivering substantial mineral resources and we hope to continue that approach as we advance the Scoping Study.”

Meanwhile, up-scaled hydrometallurgical testwork began last year with the collection of 400kg of sample material from the KR1 and KR2 deposits. These manganese oxide samples will be beneficiated and then we will confirm and further refine and optimise the initial battery grade HMPSM flowsheet design completed to date. 

The Executive Director says: “In 2024, we will continue to advance our flowsheet design for battery grade HPMSM, progress the base case HPMSM process development opportunity at an Australian site and further engage with customers seeking long term supplies of critical manganese compounds. 

All of this is against a positive backdrop of Australian and overseas government agencies aggressively mandated to induce independent critical mineral and material supply chains for midstream and downstream processing, boding well for companies like Black Canyon that are backing Australia first.”

A review on location options for a HPMSM within Australia with a focus on planned locations that provide synergistic advantages such as manufacturing hubs, infrastructure, access to reagents, waste management and low power costs is also continuing.

Naturally ubiquitous

In terms of locations, Australia is an attractive jurisdiction to mine and invest in a commodity that is as important but generally unrecognised. Currently, China dominates the HPMSM market, with more than 90% of global production coming out of the country. 

However, manganese is naturally ubiquitous in the environment and makes up about 0.1% of the Earth’s crust. It is the 4th most used in terms of tonnage, behind iron, aluminium, and copper with 60 million tonnes of ore mined annually.

And it has numerous applications – it’s used in objects made of steel, portable batteries, and even aluminium beverage cans. In each case manganese plays a vital role in improving the properties of the alloys and compounds. 

The International Manganese Institute notes that batteries are the largest non-alloy market for manganese, accounting about 3% of global manganese consumption. In this application, manganese – usually in the form of manganese dioxide and sulphate – is used mainly as a battery cell cathode.

Analysts forecast there could be a 9.3x demand for manganese required for batteries by 2030. 

Similar to other cathode precursor materials, the requirement for security and diversification of supply will become a material factor inducing the establishment of additional supply outside of China, primarily for the US and European car manufacturing industries.

The US government has a critical mineral list that the Biden administration identified for domestic energy, electronics, and defence that includes manganese. 

The Inflation Reduction Act approved by the US government and the Free Trade Agreement (FTA) between the US and Australia enables direct US investment into Australian critical mineral projects.

This has continued to positively impact US and European investment in the development of new cathode or battery pack production capacity in parallel with joint ventures between automakers and battery manufacturers to meet growing EV demand. 

The potential benefit to Black Canyon is the expansion of the manganese sulphate market beyond China and an interest from car and battery manufacturers in gaining access to long term physical supplies from a tier-one location such as Australia.

Yet Black Canyon remains buoyed by the continued global demand for steel products that require manganese (as alloys), which is non-substitutable and increases the hardenability and corrosion resistance.

This is supported by demand for iron ore from China and significant growth potential emerging from India. The World Steel Association forecasts a 1.9% global steel demand increase in 2024.

Cummins adds: “Global crude steel production is still around 2 billion tonnes per year, with slightly over half coming from China and whilst the Chinese economy is slowing it is a huge market and considering they did shut down for Covid last year for a few months – they still produced more steel than they did the year before. So whilst steel production has plateaued global demand for iron ore continues which is positive for manganese.  

People are starting to understand just how important manganese is to the cathodes in electric vehicle batteries with their initial utilisation in Nickel-Manganese-Cobalt cathodes

Manganese utilised in EV batteries is changing the dynamic slowly with demand for higher value downstream HPMSM anticipated to grow in parallel with consumers interest in driving electric vehicles. People are starting to understand just how important manganese is to the cathodes in electric vehicle batteries with their initial utilisation in Nickel-Manganese-Cobalt (NMC) cathodes. 

However the chemistry and design of the cathodes are evolving with a desire to produce a stable, higher energy density battery at the lowest cost possible. 

We witnessed the rapid and widespread adoption of LFP batteries in small cars and now with the addition of manganese the Lithium-Iron-Manganese-Phosphate (LFMP) batteries have strong potential to substitute for LFP in the small and medium car sector – which is the largest market in automobiles. There are also very high content manganese batteries emerging from Europe with Umicore developing the High Lithium Manganese (HLM) battery that has around 60% Mn content.  

The development of new battery technology is a really exciting aspect of the manganese market but the bread and butter of manganese is in steel. Either way, when you have the second largest manganese deposit in Australia, we’re expecting to see a little more interest come this way.”

Write to Adam Orlando at Mining.com.au

Images: Black Canyon
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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.