Manganese Outlook 2019: Price Growth Ahead

After almost 24 months of volatility, the manganese sector experienced relative stability in 2018; even so, prices were depressed and had decreased slightly by the end of the year.

The price of manganese ore remained moderately stable with a minor decline in the last weeks of 2018. That is uncharacteristic of the metal, which has rallied in Q4 in previous years.

The Chinese market has largely remained the primary driver behind manganese demand, but silicomanganese (used in steel) futures contracts with the Asian nation, which weighed heavily on the sector in 2017, creating widespread volatility, had less of an impact in the market in 2018.

Despite not being widely known, manganese is extensively used in metallurgy. In fact, it is the fourth-most-common metal by tonnage, just after iron, aluminum and copper.

Although the price of the versatile metal stagnated and dropped in 2018, demand is expected to grow. Over the last decade, the annual amount of steel needed and used has steadily increased, and that is expected to stay true into the next year.

Here the Investing News Network takes a look at what catalysts occurred in the manganese industry during 2018, and what market watchers can expect to see in the space in 2019.

Manganese trends 2018: Prices down, supply up

Following a rally at the end of 2017, manganese prices sat at approximately US$7.52 per pound in March and steadily decreased over the year.

In September, the steel alloy and energy metal dropped to US$6.90. Then, in December, the price of manganese decreased by an additional US$0.90 to sit at US$6.

These depressed prices may be the result of increased production and output in Africa, and increased silicomanganese capacity in China.

Shipments of manganese ore out of South Africa grew considerably in November 2018, putting the country on course to ship almost 17 million tonnes for the year.

In China, the second-largest producer of manganese next to South Africa, and one of the top consumers of the versatile metal, silicomanganese capacity increased steadily over the year, reaching as much as 120,000 tonnes by November.

While supply was up in China and South Africa, the sector received a harsh blow early in the year when a US$1-billion manganese project development deal was canceled in Burkina Faso.

Manganese outlook 2018: Battery fuel

Not only is steady need in the construction sector driving manganese demand, but the abundant metal is also vital to the battery industry, which is powering the green energy revolution.

While most investors instantly think of well-known battery metals lithium, cobalt and even vanadium, manganese plays an equally important role.

One of the biggest stories in the manganese sector in 2018 came from BASF (ETR:BAS). The German chemistry company announced in late November that it was adjusting its electric vehicle battery formula to include as much as 70 percent manganese.

Upping the manganese used in EV batteries is especially exciting for American Manganese (TSXV:AMY). The Canada-based company has developed a hydrometallurgical process to recycle lithium-ion battery cathode materials such as cobalt, lithium, manganese, aluminum and nickel.

American Manganese was able to secure patents for its unique technology in both Canada and the US.

“Well 2018, to be very honest with you, has been pretty much a down market. And we’ve had some great milestones like when we announced the publishing of the patent, and that had a small effect on the market,” said Larry Reaugh president, CEO and director.

American Manganese wasn’t the only company in the sector that was able to advance projects despite depressed prices.

In late November, Australia-based manganese explorer Element 25 (ASX:E25) successfully produced the first batch of high-purity electrolytic manganese metal from ore mined at its Butcherbird project.

“The success of the test work carried out to date further confirms the process flowsheet which is a key enabling technology for the company’s strategy of producing high value, high purity manganese products from the Butcherbird project,” Justin Brown, E25’s executive director, noted in a press release.

“The Butcherbird project hosts Australia’s largest onshore manganese deposit and is the focus of a prefeasibility study due for completion in 2019.”

Manganese outlook 2019: What’s ahead?

Modest analysts are predicting that the price of manganese ore will hover around the US$5.13 to US$5.50 mark in 2019, while others see it moving past US$7.

A producer that spoke with Metal Bulletin pegged it somewhere in the middle.

“I anticipate December and the start of January will be soft but I don’t expect it [low grade] will fall much below US$6.20 per lb,” he said.

American Manganese’s Reaugh is also optimistic about the future of the sector into the new year and beyond.

“I expect 2019 to be a banner year,” said Reaugh. “We were talking to several battery companies about our technology, and I’m sure that once the patents and the results are to come off the pilot plant, that interest could turn into joint ventures.”

The manganese recycler sees the possibilities for the sector to rapidly advance through the growth of the electric and hybrid vehicle market.

“This business is going to be multibillion-dollar business — we’re talking about $21 billion in recycling and battery recycling in 2025,” said Reaugh. “We want to take a big part of that.”

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: American Manganese is a client of the Investing News Network. This article is not paid-for content.

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.