A brief overview of the manganese industry, from supply and demand to how to invest.
Manganese is a brittle, hard, gray-white metal that looks similar to iron and is widely distributed in the Earth’s crust. Most manganese is consumed by the steel industry, though it is also used in batteries, chemicals and more.
The manganese space has struggled in recent years, but in 2016 the critical metal surprised market watchers to the upside. While the manganese price began the year in the doldrums, it “never returned to those lows,” according to Metal Bulletin, and despite some ups and downs was able to stabilize late in the year.
Since then, manganese market participants have remained cautiously optimistic about the metal in 2017 and beyond. 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 industry: Supply and demand
As mentioned, the steel sector accounts for most manganese demand. In all, the industry consumes 85 to 90 percent of manganese, using it as a deoxidizing and desulfurizing additive and as an alloying constituent. Among other things, manganese can improve the strength, toughness and stiffness of steel.
Steel sector strength was a key driver of the manganese price last year, and Paul Robinson of CRU Group has said that he sees that continuing this year.
“I think in the case of manganese, there is still general strength in the steel sector,” he said in a recent interview. “It’s still a commodity that is relatively underinvested, and therefore it’s just a simple question of supply, demand and looking like we’ve got much tighter markets than we’ve had in recent years.”
Of course, manganese has other applications as well. The battery space is 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.
As mentioned, manganese is also used in chemicals, such as fertilizers and animal feed. Click here to learn more about manganese applications.
Looking at supply, major producers of manganese include China and Australia, as well as South Africa, which holds 80 percent of the world’s reserves. Global manganese production reached 14,000 MT in 2016, a slight decrease from 2015, according to the US Geological Survey.
All told, the market for manganese is projected to reach 28.2 million MT by 2022, driven by rising investments in infrastructure development projects, growing automobile production and rapid urbanization in emerging markets.
Manganese industry: How to invest
Investors looking to jump into the manganese market may find it challenging to get exposure to the metal. While a number of large companies do produce some manganese, it is difficult to find major producers of manganese that are not listed privately. Big companies that have some exposure to manganese include: South32 (ASX:S32), Eramet (EPA:ERA), Anglo American (LSE:AAL) and Vale (NYSE:VALE).
Investors interested in smaller companies may want to look at manganese juniors. A few are listed below — all trade on Canadian, American or Australian exchanges, and all had market caps of above $5 million as of April 10, 2017:
- American Manganese (TSXV:AMY)
- Giyani (TSXV:WDG)
- Manganese X (TSXV:MN)
- MaxTech Ventures (CNSX:MVT)
- Montezuma Mining Company (ASX:MZM)
- Shaw River Manganese (ASX:SRR)
Don’t forget to follow us @INN_Resource for real-time news updates!
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: American Manganese, Manganese X and MaxTech Ventures are clients of the Investing News Network. This article is not paid-for content.