Weekly reports | May 19, 2021
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Manganese: the next hot metal in the battery
By Tim Boreham, Editor-in-Chief, The New Criterion
Switch to lithium, graphite, cobalt and copper: manganese is rapidly emerging as the next “ metal battery ” story to titillate investors.
The story is similar: With the use of manganese dominated by China and the supply coming from largely unattractive or unreliable geographies, car and battery makers in the Western world are desperate to get their feet wet. high quality processed.
For eons, manganese has been used as a strengthening agent in steel. 90% of production is thus deployed and given the strength of the Chinese steel industry – as evidenced by record iron ore prices – this sector is attractive in itself.
However, investors are focusing more on high purity manganese (HPM), which can be used as a cheaper substitute for cobalt in nickel-cobalt-manganese (NCM) battery cathodes.
In an era of heightened awareness of ethical investing, most of the cobalt comes from the Democratic Republic of the Congo (less than ethical) and car and battery makers want to reduce their dependence on the material .
Much of the manganese comes from South Africa, Ghana, Gabon, Brazil and Eastern Europe – so these are problematic places too.
“A supply of manganese concentrate from a reliable jurisdiction like Australia is highly sought after by the market,” says Justin Brown, CEO of Rising Manganese Star E25 ((E25)).
(If you’re wondering about the name, manganese is the 25th element on the periodic table and the fourth most used metal).
In recent weeks, battery maker Tesla and VW, the world’s largest automaker, have committed to using higher manganese, cobalt-free, and reduced nickel cathodes for mid-performance vehicles.
German chemicals giant BASF has unveiled plans to boost investment in battery cathode materials, including… you guessed it… products rich in manganese.
“It’s obviously music to my ears,” says Brown.
According to industry estimates, the current demand for HPM is 150,000 tonnes per year, but is expected to reach at least one million tonnes per year by 2040.
But these numbers are based on the current chemistry of an EV battery, not the higher manganese content which could be four to five times higher than current levels.
“The growth curve is not just a function of the adoption of electric vehicles, it’s made worse by the fact that the next generation of batteries will be high in manganese, so you get that growth over the growth,” says Brown. .
Reflecting investor interest, explorer Black Canyon ((BCA)) listed on May 5 at a 50% premium over its issue price of 20 cents (to raise $ 5 million).
Black Canyon has an option to acquire a majority stake in the Carawine project, an 800 km2 land property in the manganese country of East Pilbara.
Neighbors include the operating Woodie Woodie mine, run by Chinese company Consolidated Minerals.
Black Canyon has also agreed to acquire Zephyr Exploration, which has 2,200 km2 in the Lofty Ranges, near the new Butcherbird E25 project.
In mid-March, Firebird Metals ((FRB)) made their debut with a bang, after being separated from Firefly Resources. Firebird’s gaze is on its Oakover project, which consists of 360 square kilometers of manganese-rich turf near Newman in eastern Pilbara.
But E25 can claim to be the new Australian force in manganese with its self-discovered, 100% owned Butcherbird.
The largest manganese resource in the country, the project has a total resource of 263mt and a proven and probable component of 50.6mt.
E25 is currently accelerating its first phase of $ 20 million, aiming to produce approximately 340,000 tonnes of concentrate per year over a 40-year lifespan. The company has entered into a five-year contract with the Malaysian foundry OM Materials, a subsidiary of OM Holdings ((OMH)) listed on ASX.
The Pre-Feasibility Study (PFS) cites a Net Present Value (NPV) of $ 583 million (pre-tax), with an internal rate of return of 387%.
By spending an additional $ 20 million, the company plans to increase that production to 1.02 million tonnes, with the NPV rising to $ 1.13 billion.
Last month, the company made an investment of $ 35.5 million to fund this second stage which, like the first stanza, is launched in the steel market.
From PFS to commissioning, the first phase only lasted ten months. Likewise, investors won’t have to wait too long with the commissioning of phase two scheduled for February next year.
Demand from steelmakers remains strong, but E25’s ultimate ambitions are to refine the plant to produce HPM for the battery market.
The relative price of base and high purity manganese shows why the latter is so attractive: As the material for making steel, manganese sulfate changes hands for US $ 140-150 per tonne ($ 180-195 / t), HPM sells for around US1300 / t.
Basically, E25 claims the advantage of a simple processing method that requires simple leaching at room temperature, with no need for heating or nasty chemicals.
E25 claims a number of other cost and logistical advantages with Butcherbird. For starters, it’s on the highway leading to the nearest port from Utah Point to Port Hedland.
The deposit is shallow and above the water table, with minimal pre-stripping and no need for explosives.
Other Australian miners have a deep footprint in the exclusive manganese scene, though the industry’s heyday dates back around ten years.
One in “Czech” is the CDI Euro Manganese Inc ((EMN)) listed on ASX and TSX (Canadian), which has just completed a $ 30 million round in two tranches to finance its Chvaletice project. in the Czech Republic.
The “mine” itself relies on a low-cost tailings recovery operation. But the funds will also support the construction of a demonstration HPM plant, which aims to supply the burgeoning market for electric vehicles and batteries in Western Europe.
With mines in Australia and South Africa, BHP spin-off South32 ((S32)) is the world’s largest producer of manganese ore. Together with Anglo American, South32 operates the Grooyte Eylandt surface mine in the Northern Territory.
The aforementioned OM Holdings company is considering a restart of its Bootu Creek mine, just a few clicks north of Tennant Creek in the Northwest Territories.
With Woodie Woodie, these projects are nearing the end of their mining life. Jupiter Mines ((JMS)) has a long history of producing manganese at its Tshipi mine in South Africa and is planning a $ 100 million expansion.
Meanwhile, keep an eye out for Wesfarmers ((WES)), who turned to the home improvement market with the purchase on the left lot of Beaumont Tiles.
But the conglomerate has a continued interest in battery materials, having tried to buy rare earth miner Lynas Corp ((LYC)) and then acquired lithium producer Kidman Resources.
Wesfarmers is building a lithium processing plant at Kwinana in Perth, which could be useful for any larger battery ambitions.
Disclaimer: In no case has the company mentioned to the IIR or to the author been the subject of incentives or otherwise. The views here are independent and unrelated to the IIR’s core research offering. The opinions here are not recommendations and should not be taken as general advice in terms of stock recommendations in the ordinary sense.
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