The manganese market is heading for a deficit sooner rather than later as high-grade ore becomes harder to find and long-running mines enter the final stages of their operating lives.
Brendan Cummins, Managing Director of manganese explorer Black Canyon (ASX:BCA), expects the market will likely remain in an oversupply or balanced through 2025-2026.
But he notes that by the late 2020s, especially if supply struggles to meet growing long-term demand through mine closures and/or supply chain challenges, the market could see a shift into a deficit, which would likely lead to price increases.
Disruptions are already starting to impact the market, with 2024 witnessing the suspension of a number of operations around the world.
One of the key events was the temporary suspension of one of the largest manganese producers in the world – the Groote Eylandt mine in Australia’s Northern Territory jointly owned by South32 (ASX:S32) and Anglo American (LSE:AAL).
The suspension was due to weather damage to critical infrastructure. While mining resumed in June 2024, shipments of manganese are not expected to restart until the third quarter of this year.
“This resulted in an estimated 15% shortage in global high-grade manganese units which saw higher prices achieved for the 44% manganese oxide and the 37% manganese benchmark as well,” Cummins tells Mining.com.au.
The flow-on effect was increased demand and pricing for high-grade products from Eramet’s (PA:ERMT) Moanda operation in Gabon.
“The loss of approximately 15% of world manganese units resulted in a dramatic price spike but also highlighted the vulnerability of global manganese supply chains,” Cummins explains.
However, subdued demand from alloy smelters, mainly in China, in late 2024 and increased 37% manganese ore supply from South Africa culminated in an oversupply that forced Eramet, and South African producers, to cut production in a bid to stabilise the market.
The largest consumer of manganese is the steel industry, which accounts for over 90% of demand, because of the commodity’s ability to improve hardness and strength.
For every tonne of steel produced, there is slightly less than 1% manganese used.
While global demand for steel, particularly from China, was weaker in 2024, the World Steel Association expects to see a broad-based recovery globally, excluding China, following a three-year downtrend.
World crude steel production for the 71 countries reporting to the World Steel Association slipped 0.8% year over year to 1.88 billion tonnes in 2024.
Last year China was still the top steel producer, but reported a 1.7% year-over-year drop in annual production to 1 billion tonnes, according to the World Steel Association.
Meanwhile, global steel demand is forecast to rebound by 1.2% this year to reach 1.77 billion tonnes.
Cummins says the downturn in the Chinese real estate sector is expected to impact steel demand from the Asian powerhouse, resulting in a 3% decline in 2024 and a further 1% retreat in 2025.
“However, there is a growing possibility of more substantial government intervention and support for the real economy, which could bolster Chinese steel demand in 2025,” he tells this news service.
“This will have a positive effect on manganese demand and potential for price increases.”
The Chinese government’s focus on infrastructure investment and easing fiscal policies, combined with the continued urbanisation drive, is expected to support steel demand and flow through to the manganese alloying industry.
“Further steel demand may come from China’s manufacturing sector, particularly in areas like automotive and heavy machinery in addition to predicted growth in Chinese steel exports,” Cummins notes.
There is expected to be a slight increase in overall demand out of China after the spring break in early 2025 with manganese ore stockpiles at all-time lows.
Manganese ‘incredibly attractive’ for battery makers
At the same time, the demand for manganese in batteries continues upwards.
Peter Allen, Managing Director of emerging near-term producer Firebird Metals (ASX:FRB), says manganese is incredibly attractive for battery cathode manufacturers as it can be highly cost effective against other cathode materials, like nickel and cobalt, and can provide improved energy densities.
“Cathode manufacturers are constantly looking to improve the combination of battery raw materials that will provide optimisation of the three key consideration battery parameters of safety, performance (capacity) and cost,” he tells Mining.com.au.
The two major cathode chemistries used in lithium ion batteries are nickel-cobalt-manganese (NCM) and lithium-iron-phosphate (LFP).
Allen says improvements have been made in LFP batteries over the last few years to extend range and boost performance.
“We believe LFP today has about 70% of the battery market share when you include both electric vehicles and energy storage systems,” he explains.
“The addition of manganese to LFP creates LMFP, which provides greater energy density thereby further improving range and performance, while maintaining the low-cost base and greater safety performance than LFP alone.
“LMFP also has significantly better cold weather performance than LFP.”
McKinsey & Company predicts that LMFP has the potential to account for 44% of the global battery share in 2025.
“We are seeing incredible interest and development of LMFP batteries in China, and we believe the rest of the world will eventually follow suit,” Allen notes.
“Some Chinese analysts are predicting that LMFP will become half of all phosphate-based battery production by the end of this decade, and by 2030 LMFP is forecast to be the dominant cathode for electric vehicle batteries and estimated to become a >US$20 billion ($32.3 billion) market.”
Firebird is working towards a final investment decision on building a battery grade manganese sulphate plant in China, with the aim of becoming a producer of manganese chemicals in the next 12 months.
At the start of this week, the company inked a non-binding memorandum of understanding with Eramet for the supply of manganese ore.
The ore will supply the first stage of the plant, with Firebird’s goal to produce 50,000 tonnes of battery grade manganese sulphate and 10,000 tonnes of manganese tetra-oxide each year using third-party ore.
The company has already received the necessary energy, environmental and safety permits to enable it to operate.
Firebird’s long-term strategy is to use manganese concentrate from its Oakover Project, located 85km east of Newman in the Eastern Pilbara region of Western Australia.
In Australia, the high-grade Groote Eylandt and Woodie Woodie mines have already been in operation for 30 to 50 years and potential mine closures are predicted within the coming decade, according to Black Canyon’s Cummins.
“In Africa geopolitical risk and infrastructure (rail/port) bottle necks continue to be of concern to manganese supply which has further emphasised the fragility of the global manganese market to sudden supply shocks,” he adds.
Black Canyon is advancing manganese exploration across its Pilbara-based Balfour Manganese Field, which hosts 314 million tonnes @ 10.5% for 33.1 million tonnes of contained manganese and is considered the largest manganese resource in Western Australia.
The Wandanya prospect has demonstrated strong potential for high-grade hydrothermal manganese mineralisation similar to the operating 1.6-million-tonne-per-annum Woodie Woodie Mine further north.
Manganese mineralisation has been traced for about 3km and a rock chip sampling program has demonstrated high grades of between 40% and 60% manganese.
Write to Angela East at Mining.com.au
Images: Mining.com.au, Firebird Metals & Black Canyon
