A diminishing supply of high-grade manganese is driving the price of the commodity higher, compounded by the continued suspension of South32’s (ASX:S32) 60% owned Groote Eylandt mine.
Junior manganese explorer Black Canyon (ASX:BCA) says the price of the 37% and 44% manganese benchmarks have risen as smelters compete for limited available high-grade ores.
South32 estimates the Groote Eylandt operations will not resume production until March 2025.
Black Canyon says in its second quarter report released yesterday that earlier in July, Eramet, la Compagnie Minière de l’Ogooué raised its August shipment prices for manganese ore to China.
Gabonese 44.5% manganese lump ore was priced at US$9.00 ($13.84) per dry metric tonne unit (dmtu) cost, insurance and freight (CIF) China. This is a US$0.70/dmtu hike from the previous month and up by about US$5/dmtu since the start of 2024.
Meanwhile, Black Canyon says Ntsimbintle Marketing and Trading, which supplies ore from the Kalahari manganese field, was offering 36.5% grade South African semi-carbonate lump at $6.30/dmtu CIF China for July shipments, up $0.15/dmtu against $6.15/dmtu for 35% grade in June.
“The price increases have been attributed to constrained mine supply and decreased Chinese inventories, signalling growing demand for manganese ore and a tightening market,” the company says.
Manganese is traditionally used as an additive to strengthen and harden steel, but it is increasing in demand for use in electric vehicle batteries.
Black Canyon is advancing the KR1 and KR2 deposits within its Balfour Manganese Field in the Pilbara region of Western Australia, which hosts a resource of 314 million tonnes @ 10.5% for 33.1 million tonnes of contained manganese.
The company’s projects span 2,100km2 in the east Pilbara, close to the operating Woodie Woodie and Butcherbird manganese deposits.
Work completed during the June quarter resulted in the release of a Scoping Study for the KR1 and KR2 deposits subsequent to the end of the quarter.
The study confirmed that the combined resources for the KR1 and KR2 deposits would generate $46.1 million in annual operating cashflow over a 16-year mine life at 3 million tonnes per annum for a total of 12 million tonnes of manganese concentrate.
The cash generation was based on a forecast price of US$4.60/dmtu.
Meanwhile, metallurgical testwork completed during the quarter has shown Black Canyon can produce manganese concentrates grades of 31.8% and 31.3% from KR1 and KR2 test samples respectively.
A heritage survey was also completed during the quarter, across the Wandanya manganese targets, where rock chip samples returned high grades of up to 58.5%.
Black Canyon plans to undertake reverse circulation drilling in the September quarter to follow up the results.
The company, which has a market capitalisation of $5.3 million, had $702,000 as of 30 June 2024 and no debt. Subsequent to the end of the quarter, the company added a further $850,000 from a placement to institutional and sophisticated investors.
Black Canyon is also conducting a share purchase plan on the same terms as the placement to raise a further $500,000.
Write to Angela East at Mining.com.au
Images: South32 and Black Canyon
