Investing in the Manganese Market

- September 5th, 2019

Curious about investing 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. Most manganese is consumed by the steel industry, though it is also used in batteries, chemicals and more.

More than 90 percent of global manganese consumption is closely tied to the steel and construction sector, with China being a major consumer of the metal.

The manganese price has suffered much volatility in the past few years. According to a recent Roskill market outlook report, significant growth in manganese production in Ghana, Gabon and South Africa as well as an increase in Chinese port stocks led to an oversupply in the manganese market, placing “downward pressure” on the manganese price in 2019 and into early 2020. Manganese prices spiked briefly in the spring of 2020 on COVID lockdowns at manganese operations slowed production.

 

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A strong infrastructure-focused economic rebound in China is translating into record steel production, while the rest of the world is likely to post a double-digit year-on-year decline, Erik Sardain, a principal consultant at Roskill, told the Investing News Network (INN). China’s continued focus on infrastructure development bodes well for manganese demand.

The electric vehicle battery sector also represents a growth market for manganese. “Though steel will continue to dominate manganese demand, consumption of manganese in batteries is expected to grow rapidly over the next decade,” stated the Roskill report.

Read on for a brief overview of manganese supply and demand dynamics, and for a look at why the metal could be a compelling investment choice in the coming years.

Manganese market: Supply and demand

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, a strong steel sector is notably a key driver of the manganese price. Manganese consumption directly related to the steel industry has increased slightly year-on-year, thanks in part to countries like the US, Japan and China.

Of course, manganese has other applications as well. According to the US Geological Survey, automobile manufacturers are increasingly using magnesium in auto parts as a lighter-weight substitute for aluminum, iron, and steel in an effort to “decrease vehicle weight in response to consumer desires for increased fuel efficiency.”

The global manganese alloy market accounted for U$12.26 billion in 2019, according to a market research report from Research and Markets. All told, the market for manganese alloys is projected to grow at a CAGR of 7.1 percent to reach US$21.23 billion by 2027, driven by “rising demand from the automotive industry and growing usage of steel are the major factors propelling market growth.”

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.

 

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“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 noted.

Regardless, manganese’s role in facilitating green energy applications is proven and will likely be a driving force behind market demand.

As mentioned, there are many uses for this versatile metal. Manganese sulfate is also used in chemicals, such as fertilizers and animal feed. Click here to learn more about manganese applications.

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, according to the US Geological Survey.

Manganese market: How to invest

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 (OTC Pink:ERMAY,EPA:ERA), Anglo American (LSE:AAL,OTC Pink:AAUKF) and Vale (NYSE:VALE).

Investors interested in smaller manganese mining 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 $225 million as of January11, 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, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: American Manganese, Manganese X Energy and A.I.S Resources are clients of the Investing News Network. This article is not paid-for content.

 

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