Larry M Reaugh presents his fundamental view on metal markets:
Larry M Reaugh presents his fundamental view on metal markets:
Earlier I talked about the increasing demand for iron for steel fabrication. As steel production increases it will create a demand for specialty metals thereby positively affecting the prices of all strategic metals including the three “M’s”, Manganese, Magnesium and Molybdenum as well as cobalt, niobium, tungsten, vanadium and titanium.
Curious about how to invest in manganese? Here’s a brief overview of the manganese industry, from supply and demand to how to invest.
Manganese is an important industrial metal. More than 90 percent of global consumption is closely tied to the steel and construction sectors, and China is a major consumer of the metal.
Despite its solid demand base, the manganese price has been a victim of volatility in the past few years.
According to a Roskill market report on the metal, significant growth in manganese production in Ghana, Gabon and South Africa, as well as an increase in Chinese port stocks, led to oversupply in the manganese market, placing “downward pressure” on the manganese price in 2019 and into early 2020.
More recently, the manganese price spiked briefly in early 2020 as COVID-19-related lockdowns at manganese operations slowed production.
Since then, China has seen a strong infrastructure-focused economic rebound, although that’s not the case in the rest of the world. As a result, Chinese demand is central to the outlook for manganese.
Read on for a closer look at manganese supply and demand dynamics, and for an overview of why the metal could be a compelling investment choice in the coming years.
As mentioned, the steel sector accounts for most manganese demand, using it as a deoxidizing and desulfurizing additive and as an alloy constituent. Among other things, manganese can improve the strength, toughness and stiffness of steel. In turn, the steel sector is a key driver of the manganese price.
The global manganese alloy market was worth US$12.26 billion in 2019, according to a report from Research and Markets. All told, this market is projected to grow at a compound annual growth rate of 7.1 percent to reach US$21.23 billion by 2027; its growth will be driven largely by “rising demand from the automotive industry and growing usage of steel,” but could be limited by factors like market volatility.
The electric vehicle battery industry represents the second largest consumer of manganese today, and many market watchers believe that demand from this sector could be set to increase in the future.
Manganese dioxide has long been used as a depolarizer in alkaline batteries, but this is not the manganese battery market that is currently the most interesting. Instead, attention is being drawn to lithium-ion battery chemistries that require manganese — these include lithium-manganese oxide batteries and lithium-nickel-manganese-cobalt oxide batteries.
In these batteries, electrolytic manganese dioxide is used as a cathode material. Many investors who believe that battery sector demand for manganese will increase are optimistic that lithium-ion batteries that require manganese will become more common in the future.
“Manganese sulphate demand from lithium-ion batteries is expected to double over the next decade as EV market penetration ramps up and will have significant impacts on the manganese metal supply chain,” the Roskill report notes. The firm also states that over the next decade the use of manganese in batteries should “grow rapidly,” although steel will still dominate demand.
While the steel and EV battery industries are the top consumers of manganese, other uses of manganese exist as well, with the metal turning up in chemicals and more.
Looking at supply, major producers have manganese-mining operations in Australia, Gabon and China, as well as South Africa, which holds 80 percent of the world’s reserves. Global manganese production reached 19 million metric tons in 2019, a slight increase from 2018, as per the US Geological Survey.
Investors looking to jump into the manganese market may find it challenging to gain exposure to the metal. While a number of large companies are involved in manganese production, it is difficult to find major manganese producers that are not listed privately.
Major mining companies that have some exposure to manganese include: South32 (ASX:S32,OTC Pink:SHTLF), Eramet (EPA:ERA), Anglo American (LSE:AAL,OTCQX:AAUKF) and Vale (NYSE:VALE).
Investors interested in smaller manganese-focused companies may want to look at juniors. A few are listed below — all trade on Canadian, American or Australian exchanges, and all had market caps between $5 million and $250 million as of January 11, 2021:
This is an updated version of an article originally published by the Investing News Network in 2017.
Don’t forget to follow us @INN_Resource for real-time news updates!
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: A.I.S. Resources, American Manganese and Giyani Metals are clients of the Investing News Network. This article is not paid-for content.
Euro Manganese announced a key positive environmental ruling for its Czech Republic-based Chvaletice manganese project.
Euro Manganese (TSXV:EMN,ASX:EMN) announced a key positive environmental ruling for its Czech Republic-based Chvaletice manganese project.
As quoted in the press release:
The Company received a ruling under the European Union’s Natura 2000 system of reserves and protected areas that determined the Project is not expected to cause adverse impacts on valuable and threatened species habitat.
The determination was issued by the Pardubice Region Authority, which is responsible for the management of the Project’s Environmental Impact Assessment and the administration of numerous Czech and European environmental laws, regulation and standards that govern the Project’s permitting and implementation, including those that relate to Natura 2000 and Czech lawsthat govern the protection of endangered species and habitats. The Company’s application for a ruling was made under the provisions of the Czech Republic’s Nature and Landscape Protection Act.
This ruling follows the approval of investment incentives for the Project by the Czech Republic’s Ministry of Industry and Trade, in the form of tax credits amounting to CZK 470.3 million (approx. CAD$27 million) (see announcement dated March 30, 2020).
Click here to read the full Euro Manganese (TSXV:EMN,ASX:EMN) press release.
A.I.S. Resources Chairman Martyn Element joined INN at to discuss his company’s progress in the manganese market, the future of electric vehicles and the dominant trends that are most likely to shape the resource industry moving forward.
A.I.S. Resources (TSXV:AIS,OTCQB:AISSF) Chairman Martyn Element joined the Investing News Network at the Vancouver Resource Investment Conference to discuss his company’s progress in the manganese market, the future of the electric vehicle market and the dominant trends that are most likely to shape the resource industry moving forward.
A.I.S. Resources recently completed sourcing and shipping an order of manganese to send to a client in China. The 292 dry metric tons of manganese were assayed at 53.66 percent by the purchaser following shipment.
According to Element, the move towards electric vehicles has created significant demand for manganese, lithium, copper and other metals commonly used in rechargeable batteries and the vehicles themselves. Despite the potential in similar industries, Element maintains that A.I.S. Resources is focused on the manganese industry. However, there is potential for a new company to be created by A.I.S. as an investment issuer moving forward.
Below is a transcript of our interview with A.I.S. Resources Chairman Martyn Element. It has been edited for clarity and brevity.
Investing News Network: What is the name of your company, what is its symbol, where would we find you and which market?
A.I.S. Resources Chairman Martyn Element: We are on the TSXV and have been around since 1968. We’ve never been consolidated and never been rolled back. The company is an investment issuer, A.I.S. Resources, and our symbol is AIS.
INN: And you’ve been around for a little while.
ME: I’ve personally been around for a little while; I was a broker in the early 1980s in corporate finance. I finished up with a local firm here as Director of Corporate Finance for Pacific International. I had a client that was beginning to take a lot of my time so I went full-time with the client and that was called Clearly Canadian. I found them their first money and I found all the money for Clearly Canadian, which, of course, went from 50 cents to C$31 a share. So I left Pacific International and went on my own in corporate advisory and corporate finance.
INN: For those who don’t know what manganese is, why is this an important element as we move into the green sector?
ME: It’s not a well-followed metal, but it’s beginning to be now as it’s starting to come into vogue. There’s quite an accomplished fellow who is a director over at Canaccord — he has a deal called Euro Manganese that he’s going to be producing from a tailing situation just outside Prague, and he’s going to be producing manganese in 2024. He’s capped at about C$30 million I think, so it’s significant money he’s got. He’s single-handedly putting manganese a little bit more on the map. Manganese is used as a strengthener in steel traditionally, but it’s now beginning to be used more in futuristic car batteries. Manganese and cobalt are two of the metals that are being integrated into these longer extended batteries.
Manganese is starting to get the spotlight and cobalt is beginning to get the spotlight as well. We looked at the lithium market and lithium had quite a significant correction. With all these new cars coming out, I’m sure we’ll be seeing a lot more lithium in the future. However, we looked at manganese and we decided that we didn’t want to mine it, we didn’t want to get involved in that, but we saw an opportunity to start getting involved in the trading of manganese. So we shipped our first manganese as a company about two months ago now, and we are expecting to have news of that shipment soon. There’s a learning curve, but it was a small amount relatively speaking. We shipped 400 tonnes of product which is still 21 or 22 containers, so it was a lot of work but we got it done and we hope to be in a position to announce that shortly. We’ve now discovered that in this marketplace to be a meaningful player will require a minimum of 5,000 tonnes.
In the last three weeks, we’ve written up two contracts for 5,000 tonnes. One was with a very large company, a $9 billion corporation called Erdos out of China. Another was with a company that we haven’t announced yet, so we’re awaiting clarification on that. Then just in the last three or four days, we’ve written a contract up for 50,000 tonnes.
Peru is not the country for that sort of quantity. So we’ve now gone further afield and we’re now sourcing in Zambia and indirectly into Tanzania and Brazil with larger amounts because for those sorts of quantities you’ve got to be able to have the supply. My CEO is a very accomplished fellow, he’s a mineral adviser in Australia, he’s one of 12 men in Australia considered in such high esteem, so he’s very qualified in all metals. He’s doing a lot of the sourcing and we are going to be the agent on these trades. To give you an idea about the money involved, on a 5,000-tonne order, our revenue at the end of the day would be just over US$1,000,000, so there’s a lot of money at stake here.
We’re all very excited about what we’re doing. We’re getting a reputation, we’re new guys, but we’re not without a resource and we’re not without players in the world and they are looking. One of the reasons there’s been a delay with our shipment is that the price of manganese went down and now it’s coming right back to where it was six months or nine months ago, which is more than holding its price, so it’s a nice place to be.
INN: Do you foresee demand for more battery power?
ME: That’s coming. People like Tesla (NASDAQ:TSLA) and these big companies are starting to get a little nervous. They’re forward buying products like manganese and lithium of course because they don’t want to get caught. When the wave comes, it’s going to be bigger than anybody would ever estimate.
INN: You touched on lithium as one of the commodities that you’re still in. Where is your lithium project at?
ME: We went into Argentina and we drilled three properties. We hit lithium on all three, but we didn’t get the parts per million. So, we didn’t get it. Millennial Lithium (TSXV:ML,OTCQX:MLNLF) did. They drilled less than 30 kilometers from one of our wells and they hit but we didn’t; it was a mother nature situation.
Now they’ve just recently changed the government again in Argentina and things are getting out of control a little bit there with inflation, the new president and a lot of the business philosophy. So, we’ve kept some key personnel in Argentina and we’re closely monitoring the situation. We’re not walking away, we’re just keeping it close. So we’re keeping our hand in but we’re not going after anything at the moment in the lithium field, we’re focusing on manganese.
INN: What are your connections like in Asia? Who do you have as a representative that’s out helping to tell your story in those complex marketplaces?
ME: The people we met in Montreal are employed close to the Chinese government and they have been incredible. We have two ladies working for us who have been successfully sourcing supply for us. I have a very close personal relationship with a very famous racing car driver, Emerson Fittipaldi from Brazil. He has told me that he’s very keen once we have a track record of success. He’s been working in China with the two biggest car manufacturers in China and the largest car manufacturer in Korea, which is KIA (KRX:000270). He said, “Martyn, when the time comes, I will take you and we will go together to meet the guys that run these plants but we have to have the success of a few things.”
So I have a few options through him. I’m going to put an advisory board together in the coming months along with some fund manager friends of mine out of Australia. We’ll have Emerson, of course, heading up the advisory board as well and I think it’s all going to come together really nicely.
INN: How important do you see manganese being in the future development of automotive batteries?
ME: Mercedes Benz is buying forward, buying lithium and other metals as we speak and they have to because the world is waiting for the explosion of cars. They’re coming on now fast and furious, with the Volkswagen (OTC Pink:VLKAF,FWB:VOW) Golf, even Volvo is going 100 percent electric by 2025. I’ve driven an electric car now for three or four years and I absolutely love it. My last car was an exotic; I had an Aston Martin DB9 Volante and it was a beautiful car. But then it was just too fast and I didn’t need it, so I’ve got an electric vehicle, a Nissan (OTC Pink:NSANY,TSE:7201) Leaf, and I love that car. Now I’m looking at the Jag, the new SUV electric that they have.
INN: Right. You’re connected to other markets as well aren’t you?
ME: Yes, yes. Well, all markets. We’re covering a lot of different things with gold through our endeavors in Peru. After two or three months, a group brought us a really nice gold property that is producing gold from two veins. Philip Thomas, a certified Mineral Valuer and Geo Scientist with the Australian Institute of Mineral Valuers and Appraisers, went out and had a close look at the property and he thinks there’s potential there for the swarming of veins that could reveal 12 to 18 veins, but it needs a little bit of money spent on it. We’ll earn our way up to 50 percent on a cash-flowing small gold mine.
There’s a county in the world that has changed all its mining laws and we’ve been working closely with some representatives there on very, very big projects in the gold world. But I don’t want to confuse investors. We have geared towards manganese. If we do something in a big way in gold, we won’t do it directly. Because of the way A.I.S. is structured, we can put an umbrella over a big deal coming in and we can vend it out quite successfully. Then you take the shareholders from A.I.S. and they get a piece of the action as we give birth to another company.
INN: OK, for somebody at home watching right now. What is my investment opportunity with you at the moment?
ME: You’ve got a company that’s capped at C$3.5 million, which of course is nothing these days. The major shareholders in A.I.S. are very big players because of my reputation and where I’ve been and they’re all staying in there, hanging in at five cents. So I think as we close on some of these bigger manganese transactions, the stock is just going to go up, very substantially and very quickly. It’s an opportunity to put some investment into the current situation and be ready for significant developments very, very shortly.
We’ve got the infrastructure, we’ve got the players and we’ve got the pedigree with me and my successes. I’m watching the market and I’m thinking you can’t ignore gold right now. I’ve got a lot of people who’ve said to me, “Look, if you do something, we’ll do something significant with you as well.” So, I’m very confident. As I’ve stressed, we will be managing, we won’t be mining, we’ll be creating another company within A.I.S. as an investment issuer.
INN: Wonderful, thank you very much.
ME: Thank you for a great interview. Thank you.
This interview is sponsored by A.I.S. Resources (TSXV:AIS,OTCQB:AISSF). This interview provides information which was sourced by the Investing News Network (INN) and approved by A.I.S. Resources in order to help investors learn more about the company. A.I.S. Resources is a client of INN. The company’s campaign fees pay for INN to create and update this interview.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with A.I.S. Resources and seek advice from a qualified investment advisor.
This interview may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, receipt of property titles, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The issuer relies upon litigation protection for forward-looking statements. Investing in companies comes with uncertainties as market values can fluctuate.
Catch up and get informed with this week's content highlights from Charlotte McLeod, our editorial director.
Top Stories This Week: Powell Gets Fed Nomination, Using Gold in a Market Correction youtu.be
We're back after a break last week with quite a bit to cover in the gold space.
After running up past the US$1,860 per ounce mark midway through November, the yellow metal has taken a tumble. At the time of this writing on Friday (November 26) afternoon, it was sitting just under US$1,790.
Gold's losses this week have been attributed to elements like a stronger US dollar and better Treasury yields, although Jerome Powell's US Federal Reserve chair renomination has pulled other factors into play — some market watchers believe he may move to taper and raise interest rates faster than anticipated.
If the Fed follows its previously laid out timeline for tapering, it will wrap up in mid-2022; the central bank has said it won't raise rates until after that. It has also emphasized that its roadmap may change if necessary.
Looking at the larger picture for gold, I heard recently from Nick Barisheff of BMG Group, who believes the stock market is due for a major correction.
"The market is due for a major correction. What will cause it and when it will happen is anybody's guess — it could be tomorrow, it could be six months from now" — Nick Barisheff, BMG Group
It's impossible to know when this correction will happen, but Nick emphasized the importance of acting before it's too late. He pointed out that investors are typically slow to get out of the market once a crash actually begins — they wait for a turnaround, and by the time it's clear there won't be one, they've experienced big losses.
In his opinion, the solution is to get out of the stock market early and transfer money into gold.
Here's how Nick explained it:
"Instead of taking your money off the table and going into cash … you go to gold (because cash is devaluing daily). Gold will at least hold its own and probably appreciate … so by sitting it out in gold you can wait until the market finishes correcting and then buy back in" — Nick Barisheff, BMG Group
With gold's future in mind, we asked our Twitter followers this week what price they think the metal will be at the end of 2021. By the time the poll closed, most respondents had voted for the US$1,800 to US$1,900 range.
We'll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.
Finally, in the cannabis space, INN's Bryan Mc Govern spoke with Dan Ahrens of AdvisorShares to get his thoughts on 2021 trends and what's ahead in 2022.
Dan was candid, and said if he had to choose one word to describe the cannabis market in 2021, it would be "painful." Like many others, he's been disappointed in the industry's performance — while positivity initially ran high due to excitement about potential federal changes in the US, ultimately progress has been slow.
"Cannabis started with a big run-up in January and February ... and things dragged from there" — Dan Ahrens, AdvisorShares
Still, Dan has hope for 2022 and said it will be a "huge year" for cannabis. He believes US reforms will come sooner rather than later, and in his opinion those widely anticipated changes will bring a wave of M&A activity.
Specifically, he expects to see alcohol, tobacco and other consumer packaged goods companies making deals with cannabis players, not just cannabis entities doing transactions with each other.
"Those big alcohol companies, tobacco companies, other consumer packaged goods product companies — they're waiting. They're waiting on the US" — Dan Ahrens, AdvisorShares
Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there's someone you'd like to see us interview, please send an email to cmcleod@investingnews.com.
And don't forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Catch up on some of the biggest news of the week for the cannabis investment world.
Three political parties have formed a coalition in Germany, leading to a new government, and it has promised cannabis reform in the European nation.
Meanwhile, a popular cannabis retailer confirmed consumers will now find its products available for delivery on the Uber Eats mobile application in Ontario.
Keep reading to find out more cannabis highlights from the past five days.
Germany, a country with comprehensive and elaborate medicinal rules for cannabis, is in a time of transition as a new government is set to begin to take over after 16 years of Angela Merkel.
Olaf Scholz, the proposed next chancellor of Germany, leads a three party coalition that will become the country's governing body. As part of its promises, talk of adult-use cannabis regulation has now gained even more momentum. A report from MJBizDaily quotes a German policy document that shows the coalition's stance:
"We are introducing the controlled distribution of cannabis to adults for consumption purposes in licensed shops. This controls the quality, prevents the transfer of contaminated substances and guarantees the protection of minors."
However, despite the promise and excitement, it remains to be seen how these ideas will be applied since no formal regulations have been drafted or approved yet.
Tokyo Smoke, a cannabis retail operator in Canada owned by Canopy Growth (NASDAQ:CGC,TSX:WEED), announced a collaboration agreement with Uber Canada (NYSE:UBER) whereby cannabis consumers will be able to use the Uber Eats app to order products before they visit stores.
While the app won't let consumers get cannabis delivered to them, this new method opens the doors to more dynamic ways of buying cannabis.
"As a market leader in innovation and a platform used by so many Canadians, we believe this is the ideal next offering that can be done safely and conveniently on the Uber Eats app," Mark Hillard, vice president of operations with Tokyo Smoke, said in a press release.
A report from the Canadian Press indicates Ontario is considering allowing dispensaries to have delivery and pickup options made available to consumers permanently. The province allowed some of these purchasing options at the outset of the COVID-19 pandemic, but then removed them.
Lola Kassim, general manager of Uber Eats Canada, said this new end-to-end experience will provide consumers with responsible access to legal cannabis products.
Don't forget to follow us @INN_Cannabis for real-time updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
| Commodities | |||
|---|---|---|---|
| Gold | 1792.60 | +0.99 | |
| Silver | 23.13 | +0.02 | |
| Copper | 4.29 | -0.18 | |
| Palladium | 1751.49 | +10.50 | |
| Platinum | 955.50 | +2.50 | |
| Oil | 68.17 | -10.22 | |
| Heating Oil | 2.09 | -0.29 | |
| Natural Gas | 5.49 | +0.43 | |
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