Manganese Catching the Tail Wind of Big Battery Metals
USA News Group News Commentary
06 Dec, 2017, 14:00 GMT
LOS ANGELES, December 6, 2017 /PRNewswire/ --
USA News Group - Manganese is not thought of by many people in the same breath as say iron and gold as an interesting or useful substance, but that bland rep looks set to change as new uses particularly in battery manufacturing skyrocket.
Public companies in the manganese business have already seen the interest rise including Ferroglobe PLC (NASDAQ: GSM), Glencore PLC (LSE: GLEN), BHP Billiton Ltd (NYSE: BHP), and Maxtech Ventures (TSX: MVT) (OTC: MTEHF).
Traditionally, lithium and cobalt have dominated the battery industry, but manganese promises to be a show stealer in coming years. As the clamor for environmental friendly electric vehicles takes hold, a looming shortage of battery metals has seen the prices of nickel and cobalt shatter through the roof. The value of manganese has however been less pronounced and this presents an opportunity for investors to cash in once the expected price surge hits full gear.
This could be a bright spot for investors, since international miners that produce manganese are gearing up to increase production including Ferroglobe PLC (NASDAQ: GSM), a leading producer of manganese, Glencore PLC (LSE: GLEN), a diversified major producer of manganese; and BHP Billiton Ltd (NYSE: BHP), one of the largest diversified mining companies mining manganese worldwide.
The outlier in the group worth looking into is getting attention for its entry into manganese; Maxtech Ventures (TSX: MVT) (OTC: MTEHF). This newcomer could be the one of the next near-term producers of manganese with immediate designs on Brazil.
NEW BATTERIES RELIANT ON MN
New battery technologies increasingly reliant on manganese as a critical component have continued to emerge, with NMC (Lithium Nickel Manganese Cobalt Oxide) and lithium-manganese configurations helping to bring costs of batteries down.
Demand is also being driven by its use in mobile devices and in agricultural activities as a soil enrichment nutrient for crops. The micronutrient market is expected to grow to $7.7 billion by 2020.
Manganese, an important ingredient for plant photosynthesis is one of the most important of these micronutrients, having been to be capable of increasing crop yield by up to 30%.
GLOBAL TREND
Between 2006 and 2016, the demand for manganese in China more than doubled, reflecting a worldwide growth trend. The increasing demand is accompanied by a decrease in manganese ore supply which makes for some interesting price action dynamics.
In 2016, according to the USGS, world manganese production dropped by 8.6% from 2015 levels, even as demand continued to rise. What this means is that the metal is poised for some big price surges that investors would be keen to exploit.
The price of pure manganese has risen to roughly US$2,800 a tonne, nearly double what it was in 2015. The demand for electrolytic flake manganese - the kind used in batteries - is now outpacing supply by about 25,000 MT.
There has rarely been more opportunity to enter the manganese supply chain and smaller companies are certainly jumping in.
In a taste of what could still come, the price of manganese surged in 2016 due to a sudden drop in supply levels. This was precipitated by reactionary production cuts by producers, as well as production hurdles in South Africa.
With demand in China continuing to rise, the upward trend in price has continued into 2017, and all indications point to a sustained upsurge. Glaring gaps in the supply chain promise the opportunity for some decent profits.
"UNDER THE RADAR" PLAYERS EMERGE
With this growth in value having largely flown under the radar of big multinational mining companies, it is smaller companies that have been laying the groundwork, getting ready to capitalize.
Maxtech Ventures Inc. is one such company, with its core exploration operations based in Brazil. Maxtech is a Canadian-based junior mining company with a pure play in the manganese market.
The company has future outlook for markets in Asia, Europe and North America. Morocco also offers attractive exploration opportunities due to its proximity to leading manganese markets like Europe and Asia.
Maxtech is already reaping the rewards for its exploration efforts through strategic partnerships, seeing its share price rise a tremendous 160% in just eight weeks.
Its leading project is a land package of manganese mineral claims in the State of Mato Grosse, Brazil. At 540,000 hectares, the company's interest is expected to be one of the world's highest-grade, lowest-cost manganese operations.
That positions Maxtech Ventures perfectly to produce manganese for its other major use: fertilizer.
Manganese has unique qualities that enable providers to earn up to a 25%-30% premium on average pricing for this application and Maxtech is in an ideal location to offer its manganese to the local producers in in Brazil.
With the likes of Tesla, BMW and Nissan sealing astronomical deals in NMC battery manufacture, which is highly reliant on manganese, a new battery metal boom seems to be in the offing. Lithium and cobalt may have pushed to new highs, but manganese has experienced somewhat of a quieter path, mostly flying under the radar.
Investors who missed out on the first battery boom with lithium and cobalt will have another go with manganese.
POTENTIAL COMPARABLES
Ferroglobe PLC (NASDAQ: GSM)
Ferroglobe PLC operates in the silicon and specialty metals industry in the United States, Europe, and internationally. The company offers silicon metals that are used in personal care items, construction-related products, health care products, and electronics, as well as used in the manufacture of silicone chemicals; silicomanganese, which is used as deoxidizing agent in the steel manufacturing process; and ferromanganese that is used as a deoxidizing, desulphurizing, and degassing agent in the removal of nitrogen and other harmful elements from steel. It also provides ferrosilicon products that are used to produce stainless steel, carbon steel, and various other steel alloys, as well as to manufacture electrodes and aluminum; silico calcium, which is used in the deoxidation and desulfurization of liquid steel, and production of coatings for cast iron pipes, as well as in the welding process of powder metal; nodularizers and inoculants, which are used in the production of iron; and silica fume. The company was formerly known as VeloNewco Limited. Ferroglobe PLC was incorporated in 2015 and is headquartered in London, the United Kingdom. Ferroglobe PLC is a subsidiary of Grupo Villar Mir, S.A.
Glencore PLC (LSE: GLEN)
Glencore plc engages in the production, refinement, processing, storage, transport, and marketing of commodities worldwide. It operates in three segments: Metals and Minerals, Energy Products, and Agricultural Products. The Metals and Minerals segment is involved in smelting, refining, mining, processing, and storing zinc, copper, lead, alumina, aluminum, ferroalloys, nickel, cobalt, and iron ore. The Energy Products segment activities include coal mining and oil production operations covering crude oil, oil products, steam coal, and metallurgical coal; and investments in ports, vessels, and storage facilities. The Agricultural Products segment engages in the farming, processing, handling, storage, and port facilitating of wheat, corn, canola, barley, rice, oil seeds, meals, edible oils, biofuels, cotton, and sugar. Glencore plc markets and delivers physical commodities sourced from its own production and third party producers to industrial consumers. The company was formerly known as Glencore Xstrata plc and changed its name to Glencore plc in May 2014. Glencore plc was founded in 1974 and is headquartered in Baar, Switzerland.
BHP Billiton Ltd (NYSE: BHP)
BHP Billiton Limited is an international resources company. BHP Billiton Limited discovers, acquires, develops, and markets natural resources worldwide. It operates through four segments: Petroleum, Copper, Iron Ore, and Coal. The company explores for, develops, produces, and markets oil and gas in the United States Gulf of Mexico, Australia, and Trinidad and Tobago. It also explores for copper, silver, lead, zinc, molybdenum, uranium, gold, iron ore, and metallurgical and thermal coal. The company was formerly known as BHP Limited and changed its name to BHP Billiton Limited in July 2001. BHP Billiton Limited was founded in 1851 and is headquartered in Melbourne, Australia. BHP Billiton Limited is a subsidiary of BHP Billiton Group.
For a more in-depth look into MVT you can view the in-depth report at USA News Group: http://usanewsgroup.com/2017/11/30/manganese-critical-metal-for-battery-and-electric-vehicle-markets/
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