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Manganese in Australia (Updated 2023)
Interested in learning about manganese in Australia? Here's a breakdown of the country's manganese market and what to consider before diving in.
Manganese is a hard, silvery metal with many uses in the world today.
Despite being brittle, it adds strength and wear-resistance to metals like iron. It can be used to make glass and ceramics, and manganese sulphate is even used as a fungicide. Manganese is also an essential mineral in our diets, and is found in bones as well as organs like the kidneys, liver and brain.
But most substantially, manganese is used in the Australian and global industrial metals sector. Right now, about 85 to 90 percent of manganese demand comes from the steelmaking sector, including ironmaking.
Manganese in Australia: Battery market applications
While manganese is most commonly used in the steel and construction industries, the rechargeable battery sector is the second biggest demand sector of manganese. Nickel-manganese-cobalt (NMC) batteries are the most commonly used type of lithium-ion battery in hybrids and electric vehicles (EVs) today, as they have a have a high cycling rate, high capacity and high power, as well as a low self heating rate — although its not the only formulation on the market.
Much of the world is slated to move toward EVs and hybrid cars, which may lead to a significant rise in demand (and prices) for Australia-mined manganese.
For example, car company Tesla (NASDAQ:TSLA) already has six gigafactories and is expected to open more across the globe in the next few years. For its part, General Motors (NYSE:GM) is going to spend over US$35 billion to fast-track EV production until 2025. More specifically, the company expecting annual investments of US$11 billion to US$13 billion in order to complete infrastructure that will allow it to produce 1 million EVs per year. Not to mention China, which is currently one of the biggest suppliers and buyers of manganese, promises to phase out gas-burning cars entirely by 2035.
In 2019 and early 2020, manganese prices decreased due to overproduction of the metal in countries like South Africa, Gabon and Ghana.
However, prices for the metal also shot up a bit later in 2020 for a short time, when the COVID-19 pandemic caused production to slow down. Manganese performed relatively flatly in 2022, seeing a small dip at the end of the year. It has since climbed back up in early 2023.
Manganese in Australia: Outlook for 2023
Manganese prices may be heavily driven by the steel sector, but it is the EV battery industry that has investors excited about manganese’s future.
In fact, demand for manganese sulphate is expected to double in the next 10 years thanks to the lithium-ion battery market. Though the steel sector will still be the biggest consumer of manganese, the battery industry is expected to impact the manganese supply chain.
While this industry is likely the fastest-growing player in the manganese production market, there are other industries to consider. For instance, the micronutrient market, which includes high-purity manganese, is expected to reach a market size of US$6.87 billion by 2028.
As mentioned, the alloy demand in the steel sector is huge. The manganese alloy industry was valued at US$12.26 billion in 2019, and it is expected to grow by 7.1 percent per year to reach US$21.23 billion in 2027, according to Research and Markets. This growth will be driven by increasing demand from the steel industry and EV market.
Still, despite this increasing demand, manganese prices have been volatile over the last few years. Looking at the overall market for manganese in 2023, supply and demand should be broadly in balance, although there may be pinch points during the year, according to CRU.
Manganese in Australia: The sector down under
South Africa, Gabon and Australia are the world’s largest producers of manganese, and combined they hold about 67 percent of global reserves.
Australia is the third largest producer, putting out about 3 million tonnes per year. These manganese exports bring about AU$1 billion to the country every year. Although Australia has a large role in the global manganese market, production of the metal in Australia is fairly recent; it wasn’t mined there until 1966.
Today, Australia has three manganese ore mines: Woodie Woodie, Groote Eylandt and Bootu Creek.
Woodie Woodie is operated by privately owned Consolidated Minerals and Bootu Creek is owned by OM Holdings (ASX:OMH,OTCQX:OMHI). Groote Eylandt is 60 percent owned by South32 (ASX:S32,LSE:S32,OTC Pink:SHTLF) and operated via its joint venture subsidiary Groote Eylandt Mining Company (GEMCO).
Although the Australian manganese market has faced a few ups and downs over the years, with the Woodie Woodie mine and Bootu Creek mine entering care and maintenance around 2016, both have since bounced back as a result of steadily increasing manganese prices. In 2022, Bootu Creek ceased its mining operations after 15 years.
Another Australian manganese miner worth mentioning is Anglo American (LSE:AAL,OTCQX:AAUKF), which holds the remaining 40 percent stake in GEMCO. Anglo American also has manganese productions in South Africa and South America and metal operations all over the world.
Manganese in Australia: Ways to invest
Investors in Australia don’t have a wide array of options for investing in this metal market, since many manganese companies are privately owned.
However, there are major producers in Australia that are publicly traded and contributing heavily to the country's output of manganese. Here's a look at the three largest by market cap.
1. Anglo American
Market cap: US$45.45 billion
Anglo American, as mentioned before, owns 40 percent of GEMCO and the Groote Eylandt mine. It also owns a 40 percent stake in the Tasmanian Electro Metallurgical Company.
Market cap: US$13.51 billion
South32 owns the other 60 percent stake in GEMCO. Its mine in Australia's Northern Territory is one of the world’s biggest producers of low-cost manganese ore.
3. OM Holdings
Market cap: AU$393.64 million
OM Holdings' operations include a Singapore-based metals marketing business supported by a manganese mine in Australia and a ferroalloy processing facility in China. The company owns 100 percent of the Bootu Creek manganese project in the Northern Territory. The mine has been on care and maintenance since January 2022.
Don’t forget to follow us @INN_Australia for real-time updates!
This is an updated version of an article first published by the Investing News Network in 2022.
Securities Disclosure: I, Matthew Flood, hold no direct investment interest in any company mentioned in this article.
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