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Successful A$35 Million Placement To Fund Company Growth
Element 25 Limited (E25 or the Company) (ASX:E25) is pleased to announce it has received firm commitments for a A$35 million placement at A$1.12 per share (Placement). The placement was heavily oversubscribed with E25 management and the Joint Lead Managers (JLM’s) agreeing to increase the raise to $35million (minimum $30M).
Funds raised from the Placement will fund the Company’s battery grade High Purity Manganese Sulphate (HPMSM) project feasibility works, operating cost reduction capital costs, engineering optimisation works and working capital.
Petra Capital and Blackwood Capital acted as Joint Lead Managers and Joint Bookrunners to the Placement.
Managing Director, Mr Justin Brown said:
“We are delighted with the support for the placement and welcome a number of highly credentialled new investors to the register. On behalf of the Board of Directors, I would also like to thank our existing security holders for their ongoing support.
Placement funds will assist in the continued optimisation of our Butcherbird Manganese Project, as we progress our staged development plan. We are also successfully continuing our negotiations with potential offtake partners, including offtake financing strategies, which remain on schedule to be finalised in line with feasibility study completion in December 2022.
This capital injection will allow the Company to continue its rapid growth strategy centred around the world class Butcherbird Project to supply both the traditional and new energy battery markets.”
Placement Overview
E25 has received firm commitments for A$35 million in gross proceeds via a Placement at an issue price of A$1.12 per shares (Placement Price). The Placement Price of A$1.12 per share represents a 22.0% discount to the last traded price and a 13.1% discount to the 10 traded day VWAP of the Company’s shares to 15 November 2022.
E25 will issue a total of 31,250,000 new shares (15,948,964 under ASX Listing Rule 7.1 and 15,301,036 under ASX Listing Rule 7.1A).
The Placement is expected to settle on or around 22 November 2022 with new shares to be issued on 23 November 2022.
Element 25 Team Strategy
E25’s Operations team continues to focus on delivering sustained nameplate production as well as on the Stage 2 expansion of the concentrate business. This work is being undertaken in parallel with the Battery Materials division to deliver the Stage 3 development of a conversion facility to convert the concentrate material into HPMSM for EV batteries to power the global transition away from fossil fuel powered mobility.
Manganese is emerging as an increasingly important ingredient for EV batteries, with potential supply constraints for nickel and cobalt forcing battery manufacturers to look to high manganese cathodes to produce the vast amount of cathode material required by the EV industry in coming years1.
Click here for the full ASX Release
This article includes content from Element 25, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
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Element 25 Limited
Overview
Element 25 (ASX:E25, OTCQX:ELMTF) is a manganese-focused company with 100 percent ownership of the largest onshore manganese deposit in Australia, which is currently producing high-quality manganese concentrate. The company’s Butcherbird Mine in Western Australia is currently producing around 365,000 tons per annum. The company is advancing towards 1 million tons (Mt) per annum by optimizing its engineering processes. Element 25 (E25) has set the pace by getting up and running quickly.
Element 25 has also moved quickly to progress its ambitions to be a globally significant producer of ethical high-purity manganese sulphate monohydrate (HPMSM) for supply to the fast growing EV battery raw material supply chains. The company has signed a binding agreement with Stellantis NV (NYSE:STLA) to supply battery-grade HPMSM from E25’s proposed USA-based HPMSM processing facility. Stellantis has further completed its first US$15-million equity investment in E25 in July 2023 towards the development of a battery-grade HPMSM facility in the USA.
Element 25 has also entered an off-take deal with General Motors (GM) to supply the car manufacturer up to 32,500 metric tons of manganese sulfate to support GMs annual production of more than 1 million electric vehicles in North America. Under this agreement, GM will provide an US$85-million loan to E25 to partially fund the construction of the new facility in Louisiana, USA, which will produce battery-grade manganese sulfate. Expected to be the first of its kind in the US, the facility will process manganese concentrate from E25’s mining operations in Western Australia to produce HPMSM.Manganese is Building Momentum
Sales of EVs have exceeded 10 million in 2022 with market analysts expecting the momentum to continue in 2023 and beyond. It’s clear that consumers and automakers are embracing EVs worldwide, with gigafactories springing up across the globe to support the EV transition. Yet, EVs require significant materials to support the increasing demand.
Manganese is essential in manufacturing the nickel-manganese-cobalt cathodes EVs require and is the cheapest and most abundant material available. Additionally, nickel and cobalt have significant supply constraints, while manganese does not. The relative abundance and high value in the use of manganese as a cathode material has prompted automakers such as Tesla, Volkswagen and Stellantis to turn to high-manganese cathodes to satisfy their supply chain requirements.
Manganese also has strong existing demand for usage in steel, aluminum products and specialty alloys. There is no substitute for the element in steel. Mining companies focusing on this vital element are uniquely positioned to serve both established and emerging industries.
The Future has Always Been Electric
Element 25 is committed to delivering on its strategy of producing battery grade HPMSM for EV batteries to power the global transition away from fossil-fuel-powered mobility.
The advancement of EV batteries requires a vast amount of cathode materials. Put simply, nickel and cobalt supplies simply cannot meet projected demand for New Energy Vehicle (NEV) growth.
By 2040 it is estimated that 58 percent of new vehicles will be EV or hybrid.
As demand continues to rise, EV battery makers globally are choosing to adopt manganese-rich cathode designs for safer, more cost-effective battery solutions and E25’s high-purity manganese strategy is ideally placed to feed these surging markets.
Advanced flowsheet development work undertaken in 2019 and 2020 has confirmed a simple, proprietary leach process for E25 ores which, when combined with offsets, will target the world’s first zero-carbon manganese for EV cathode manufacture. Flowsheet optimization for inclusion in upcoming feasibility studies is ongoing.
Strong ESG Credentials
Element 25 understands the importance of an excellent environmental, social and governance (ESG) rating for serving the EV market, as this rating directly reflects on the companies it supplies. The company is working towards producing zero-carbon, high-purity manganese by leveraging sustainable technologies at every step in its process through its Zero Carbon Manganese campaign. This campaign includes sustainable extraction, using renewable energy, low-carbon processing and carbon offsets. Element 25 has partnered with Circulor to provide real-time insights into its ESG status.
Element 25’s Butcherbird Mine has a Joint Ore Reserves Committee (JORC) compliant resource estimate indicating over 260 megatonnes of manganese ore. This significant deposit is Australia's largest onshore manganese deposit, with an estimated mine life of 42 years. The mine does not require blasting or dewatering, instead leveraging a simple mining and processing wash plant.
Importantly, Element 25’s board and management team has decades of experience across a range of key sectors including mining, legal expertise, mineral project development, corporate administration and operational excellence. The management team’s track record of success provides the company with a great platform to deliver on its planned milestones as E25 positions itself as a leading manganese player on the global stage.
Company Highlights
- 100-percent ownership of Australia's largest onshore manganese mine – the Butcherbird Manganese Deposit – comprising more than 260 million tons (Mt) of manganese ore in JORC resources.
- Long mine life of 42 years using only 20 percent of the global resource, significant potential to expand with further drilling.
- Currently producing high-quality manganese lump concentrate for the steel industry.
- Multi-staged expansion strategy to increase concentrate production and move into downstream processing to produce high-purity manganese sulphate monohydrate (HPMSM) as electric vehicle (EV) fuel for lithium-ion batteries.
- Expansion plans to increase ore production to 1 Mt per annum well advanced.
- Off-take and funding agreement with General Motors (GM) to supply the EV manufacturer up to 32,500 metric tons of HPMSM annually to support GM’s annual production of more than 1 million EVs in North America.
- GM to provide US$85 million in project finance for the HPMSM facility in Louisiana, USA.
- Offtake and funding agreement with global automaker Stellantis NV (NYSE/MTA/Euronext Paris:STLA) includes recently completed US$15-million equity investment to fund HPMSM short and medium term project execution costs.
- STLA is now Element 25’s largest shareholder with a 10.2-percent shareholding.
- STLA has committed to offtake for 15 percent of HPMSM production from the Louisiana facility.
- Element 25 is led by a management team with decades of experience in mineral project management, corporate administration and international law.
Key Projects
Butcherbird Manganese Project
Located in Western Australia, the Butcherbird Manganese Project is presently producing manganese concentrate for the steel industry. The mine has already reached production and is now optimizing its process to improve output. E25 is working towards producing high-quality HPMSM for use in new energy markets.
Project Highlights:
- Australia’s Largest Onshore Manganese Deposit: The Butcherbird Project has a JORC-compliant total resource estimate of 263 megatonnes of ore at 10 percent manganese. The deposit has an estimated mine life of 42 years and the potential to increase drilling in the future.
- Four-stage Growth Strategy: Element 25 has established a four-stage strategy as outlined below:
- Stage 1 (delivered): 365 ktpa
- Stage 2 (2023): 1 Mt per annum by optimizing engineering processes
- Stage 3: Produce sustainable high-purity manganese.
- Stage 4: High-purity manganese sulphate with zero carbon footprint
- Positive Feasibility Study: A feasibility study released in 2023 confirmed the technical and financial feasibility of producing HPMSM at a Louisiana location for sale to local and international offtake partners. Aside from indicating a net present value of US$1.66 million, the feasibility study also showed an environmental impact that is significantly lower than incumbent producers.
- Focusing on an excellent ESG Rating: Achieving and maintaining a great ESG rating is vital to serving the EV market. Element 25 has partnered with Circulor to provide real-time tracking and insights into its ESG rating throughout the entire operation.
Management Team
John Ribbons - Chairperson
John Ribbons is an accountant who has worked within the resources industry for over fifteen years in the capacity of company accountant, group financial controller or company secretary. Ribbons has extensive knowledge and experience with ASX-listed production and exploration companies. He has considerable site-based experience with operating mines and has also been involved with the listing of several exploration companies on the ASX. Ribbons has experience in capital raising, ASX and TSX compliance and regulatory requirements.
Justin Brown - Managing Director
Justin Brown is a geologist with over 20 years of experience in global mineral exploration and mining. He has been involved in the full spectrum of mineral exploration through to mining in a range of commodities. Brown has also held a number of board positions, including an executive role with Element 25 Limited since 2006. He has a strong track record of closing successful commercial transactions and brings a well-rounded set of skills to the management of the Company’s activities.
Sam Lancuba - Non-executive Director
Sam Lancuba is a chemical engineer with more than 40 years’ experience in the global fertilizer industry. Lancuba has worked in research and development, process engineering, manufacturing and management. Following 27 years at Incitec Pivot Limited, an ASX top 50 company, He has been providing expert consulting services for industry clients in Australia, New Zealand, USA, South America, Europe, India and China.
Fanie van Jaarsveld - Non-executive Director
Fanie van Jaarsveld is an experienced company director and has held numerous senior management and executive positions over a career spanning more than 40 years. With a demonstrated history of working in the mining and metals industry, van Jaarsveld is the managing director for OM Manganese which operates the Bootu Creek manganese mine in the Northern Territory and is highly skilled in mining, mineral processing and operational management. He has strong business development expertise and will be a key asset in achieving the company’s production targets at the current manganese operation as well as helping to guide the planning and implementation of the company's expanded production plans and the downstream production of HPMSM. van Jaarsveld has an ND in analytical chemistry from the Cape Peninsula University of Technology - Cape Town.
Sias Jordaan - VP Battery Minerals & Marketing Manager
Sias Jordaan has been involved in the stainless steel production and raw material supply markets as well as rare metals markets for over 25 years. Jordaan held various roles within BHP Billiton in South Africa, The Netherlands and Western Australia in the stainless steel, ferrochrome and nickel divisions. As a result, he has gained extensive experience in the procurement, marketing and logistics of various steel-making metals. Jordaan was also involved in the management team that commissioned the Ravensthorpe Nickel Plant. More recently he performed study work for Arafura Resources Ltd (2011-2015), specifically the Nolans Rare Earths Project located in the Northern Territory, including the study into a suitable offshore separation facility and the establishment of a Letter of Intent with a Korean-based partner. Jordaan has an accounting degree and is qualified as a chartered accountant in South Africa. He also holds a diploma in international logistics from the University of Navarra and is a licensed real estate and business agent in Western Australia.
Neil Graham - VP Battery Minerals & Development Manager
Neil Graham is a chartered chemical engineer with more than 30 years of international experience in the chemical and resources industries. His experience in greenfield and brownfield project development, driving operational change and delivering performance turnarounds has been gained in various managing director/general manager roles, across a breadth of organizations and locations. These roles have been European, Asian and Australian based with multi-nationals, such as Huntsman and Orica, and West Australian resources businesses.
Clint Moxham – General Manager Operations
Clint Moxham has joined the team as general manager operations. Moxham’s key responsibilities include statutory and operational oversight of the safe operation of the Butcherbird Manganese Mine, implementation and oversight of improved operational processes and continued improvement in plant preventative maintenance targeting improved run times to increase production. He is a vision-driven miner with a track record of delivering greenfield and start-up operations. Moxham has a reputation of safe operations with a career-long record of team management and mining operations success.
Ian Huitson - Study Manager
Ian Huitson is a mining executive with 33 years’ experience in executive, operational and technical roles in the manganese, chromite, gold, silver and nickel industries in Australia, Africa and Asia. Huitson has extensive manganese experience through roles as study manager at Shaw River Manganese (2012-2014), chief operating officer at Auvex Resources (2009-2011), group mining engineer at Consolidated Minerals Ltd (2005-2007) and resident manager at Consolidated Minerals’ Woodie Woodie mine site (1999-2005). In addition to the above, Huitson has executive management experience including roles as operations director and managing director at Monarch Gold Mining Company (2007-2009). Prior to this, he had 15 years’ experience as a mining engineer with WMC Resources, Dominion Mining/Plutonic Resources and the Walhalla Mining Company. He has a degree in mining engineering and is a fellow of the AusIMM. Huitson has completed multiple scoping and pre-feasibility studies throughout his career.
E25 Progresses USA HPMSM Refinery Plans
Element 25 Limited (E25 or Company) (ASX: E25; OTCQX: ELMTF) is pleased to provide an update in relation to it’s planned construction of a high-purity manganese sulphate (HPMSM) refinery in Louisiana USA to supply domestic HPMSM to the US electric vehicle battery industry.
Element 25 Managing Director Justin Brown said: “E25 aims to be a leading source of high quality, vertically integrated, traceable and ESG and IRA-compliant battery material to the global electric vehicle industry. Construction of our HPMSM facility in the USA – the first of its kind there – is a key pillar to the strategic plan which aims to position E25 as the industry leading provider of high quality ethically sourced battery-grade manganese to support global electrification efforts.
Engineering Development
Basic engineering packages for specific sections of the plant are being generated by equipment vendors. Design development of the balance of the processing facility is progressing. The project engineers have developed an initial project execution plan, procurement plan and other foundational elements, which are being reviewed. Project controls are being developed to manage cost and schedule.
Figure 1. 3D engineering model development for Louisiana HPMSM refinery.
Schedule
The project schedule has been developed, incorporating all facets of the project, including engineering, permitting, project financing and construction. Commencement of construction and commissioning are under review pending the execution of binding terms on the project site, in addition to the conclusion of project financing activities and a Final Investment Decision by E25’s Board of Directors to commence construction (FID).
The current schedule development provides for approximately 80 weeks of project build time based on the current critical path, however is being reviewed with the aim of compressing construction timelines.
The current timeline assumes no material interruptions to project development once construction commences due to procurement, procurement delays or weather-related disruptions.
Project Site Selection
Discussions continue with the owners of the preferred project site with the intention of combining land, sulphuric acid and ancillary services into the commercial terms. The principal reagent required by the Element 25 HPMSM process is sulphuric acid, and securing reliable supply at competitive commercial terms is an important aspect of the site selection process. Other considerations include inbound and outbound logistics and site permitting requirements. Site-specific engineering activities are currently paused pending finalisation of these commercial agreements.
Permitting
Air Permit
The air permit is a key requirement to commence facility construction. Any source, including a temporary source, which emits or has the potential to emit any air contaminant (defined as particulate matter, dust, fumes, gas, mist, smoke, or vapour, or any combination thereof produced by the process(es) other than natural) requires an air permit. As part of the permitting process, Element 25 has completed a detailed assessment of expected emissions from the HPMSM refinery and provided this information along with supporting documentation to the Louisiana Department of Environmental Quality (LDEQ).
A draft permit has been issued, and comments have been provided to the regulator. The final stage of the permitting process is a public meeting, currently scheduled to be held on 18 April 2024 to be held in the local community centre close to the proposed project site.
The LDEQ Office of Environmental Services will conduct a public hearing in order to receive comments on the proposed Initial Part 70 Air Operating Permit and the associated Environmental Assessment Statement (EAS) for Element 25 (Louisiana) LLC, being the operator of the site. It is anticipated that the final permit will be issued during May 2024 at the conclusion of this process.
Click here for the full ASX Release
This article includes content from Element 25 Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
December 2023 Quarterly Report
Element 25 Limited (E25 or Company) (ASX: E25; OTCQX: ELMTF) is pleased to present its Quarterly Activities and Cash Flow Report.
QUARTERLY HIGHLIGHTS
Butcherbird Manganese Operations, Western Australia
- Butcherbird Expansion Feasibility Study targets 1.1 million tonnes per annum (Mtpa) manganese production.
- Study demonstrates strong fundamentals, with robust economic returns and rapid capital payback:
- Expansion envisages expanded open-cut mining methods, modified primary comminution circuit and dense media separation (DMS) back-end solution to optimise grade and recoveries.
- Expanded operation will establish Butcherbird as a low-cost Mn operation with a US$2.76/dmtu C1 FOB cost – which will ensure sustainable profitability at lower manganese prices compared to the current pilot operation.
- Low capital cost of A$49.8M with annual operation cashflow of A$57.3M at full production – payback period of 14 months from start of operations.
- Study used all available Measured and Indicated Resources within the mine plan to support a 7.2-year mine life – which represents 36% of the total mineral resource inventory within granted mining lease M52/1074.
- E25 plans to undertake infill drilling in areas containing Inferred Resources, outside the current mine plan, within the next 12 months targeting an additional 20-25 years of mine reserves at the proposed production levels.
- E25 approved for US$57 million of tax incentives under Louisiana State’s Industrial Tax Exempt Program (ITEP).
- Two key international patents lodged under the Patent Co-Operation Treaty, expected to be processed in 2024.
Corporate
- Non-Executive Director John Ribbons was appointed Chairman following Seamus Cornelius’ decision to step down from E25 Board.
Click here for the full ASX Release
This article includes content from Element 25 Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
E25 Commences Butcherbird Stage 2 Expansion
Element 25 Limited (E25 or Company) (ASX: E25; OTCQX: ELMTF) announces it will immediately commence detailed design, planning and procurement for expansion of manganese ore production at its 100%-owned Butcherbird Mine in WA in line with the expansion Feasibility Study (FS) released earlier in January 20241.
Expansion of the processing facility at Butcherbird aligns with E25’s commissioning target date for its planned battery grade high purity manganese sulphate monohydrate (HPMSM) project to be built in Louisiana, USA in partnership with General Motors LLC and Stellantis NV2.
Activities over the next three months will focus on detailed engineering and design, project financing and finalising the required permitting to support the commencement of construction in line with the project schedule.
In parallel with expansion activities, the Company will suspend Butcherbird’s current production operations, aiming to reduce operational cash outflows and re-focus resources and available cash on implementing the expansion plan outlined in the FS. Recent weak manganese prices support this decision.
E25 Managing Director Justin Brown said: “Expanding the scale of operations at Butcherbird beyond our Stage 1 pilot plant has always been a part of our growth plans and given the outstanding metrics reported in the updated Feasibility Study released earlier this month, this is the ideal time to implement those plans to ensure we can increase production ahead of our Louisiana HPMSM facility commencing operation.
Given the current manganese price environment coupled with high interest rates and inflation, we will suspend current operations at Butcherbird to conserve resources and use available cash to achieve this goal. We understand this is a difficult decision for our employees, contractors and suppliers and not one we have made lightly, but it is intended to help E25 better position itself to reach its longer term goals.”
The current schedule anticipates operations to recommence in approximately 11 months, following project financing being secured, when E25 will increase annual production to 1.1 million tonnes per annum of manganese oxide concentrate. Further detail and an updated schedule will be provided at conclusion of front-end engineering and design (FEED) which has now commenced.
Click here for the full ASX Release
This article includes content from Element 25 Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
Feasibility Study Confirms Strong Case for Expansion
Element 25 Limited (E25 or Company) (ASX: E25; OTCQX: ELMTF) is pleased to announce that it has completed a Feasibility Study (Study or FS) to investigate the potential to expand the production of manganese concentrate at the Company’s 100% owned Butcherbird Project (Project), located in the southern Pilbara region of Western Australia.
Butcherbird Expansion Feasibility Study Targets 1.1 Mtpa Manganese Production to Capture Economies of Scale.
A strong result supporting progress toward a Decision to Mine.
The Study demonstrates strong economics with robust economic returns and rapid capital payback. The financial summary of the Study outcomes are shown below.
HIGHLIGHTS
- The FS examines the expansion to 1.1Mtpa manganese concentrate production using expanded open-cut mining methods, a modified primary comminution circuit and a dense media separation (DMS) back-end solution to optimise grade and recoveries.
- The expansion establishes Butcherbird as a low-cost Mn operator (USD 2.76/dmtu C1 cost) able to produce at a cost lower than the low manganese sale price points seen within the Mn market.
- The FS utilises all the available measured and indicated resources within the mine plan supporting this Study. The Company plans to undertake infill drilling in areas containing Inferred Resources, outside the current mine plan, within the next 12 months targeting an additional 20-25 years of mine reserves at the proposed production levels.
- The Measured, Indicated and Inferred Mineral Resources used to support the 7.2 years mine life from 2024 to 2031 represents 36.0% of the total mineral resource inventory within the granted mining lease M52/1074.
- Low capital requirement of AUD 49.8M capital.
Average base case annual operating cashflow of AUD 57.3M at full production. - No changes to the Proven and Probable Ore Reserve of 49.2Mt at 10.2% Mn containing 5.0Mt Mn (4.1Mt Recoverable Mn).
- Forecast cashflows generate a simple payback period of 14 months from start of operations.
- Expanded mining production and process commissioning is currently scheduled to commence within 11 months, subject to final investment decision and securing project financing.
- The base case involves an annual production and sale of 1.1M tpa of lump manganese ore grading 32% Mn.
- The concentrate production strategy complements and enhances the Company’s plan to develop the proposed high purity manganese sulfate (HPMSM) plant in Louisiana to supply offtake partners General Motors LLC(GM) and Stellantis NV (Stellantis) with high purity manganese for EV battery manufacture1.
Click here for the full ASX Release
This article includes content from Element 25 Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
Manganese Market Forecast: Top Trends That Will Impact Manganese in 2024
Caught up in the same volatility that impacted many metals in 2023, manganese prices trended downward on China’s slowing economic recovery and worsening global inflationary pressures.
Despite not being widely known, manganese is an important raw material for the steel industry. In fact, it is the fourth most common metal by tonnage, just after iron, aluminum and copper. It also has growing uses as a battery metal.
With those factors in mind, what will happen to manganese in 2024? To find out, the Investing News Network (INN) reached out to analysts who cover the market to get their take on what’s next for the manganese.
How did manganese perform in 2023?
The manganese market remained oversupplied for much of 2023 amid tepid demand and high ore supply.
The metal is inextricably linked to the steel market as more than 97 percent of annual manganese production is used in steelmaking. And as Andrew Zemek of CPM Group pointed out, the steel industry is not in great shape.
“Global crude steel production has been falling for the most part of the last two years,” he told INN in an email. “After the first 10 months of 2023 (seven of which recorded a year-over-year decline in production), steel industry output is almost exactly where it was after the first 10 months of 2022 — there was no growth at all.”
This happened even though China, the largest global steel producer, recorded a 1 percent year-over-year rise in steel production in the first 10 months of 2023, alongside a 2 percent increase in the rest of Asia. This dynamic caused manganese ore prices to decline by 10 to 20 percent from the start of 2022. Meanwhile, international prices for manganese ferroalloy, which is smelted directly from ore, were 20 to 40 percent lower as of early December.
China is the largest consumer of manganese, mainly as feedstock for its steel sector. And although the Asian nation is the fourth largest producer of manganese in the world, it is also the largest importer of the metal. Perhaps unsurprisingly, China is responsible for 90 percent of global manganese refining as well.
Decreased steel production activity means less demand for manganese, which has resulted in all-time high surpluses of manganese ore at China’s ports. “Ore prices have responded to the surplus in the market, and ferroalloy prices currently sit below the cost of production, even with reduced ore input costs,” Project Blue analysts told INN via email.
A mid-2023 report from Fastmarkets states that increased manganese imports weighed heavily on manganese prices in 2023, despite the overhang in ore material supply in China.
“According to China customs data, the country imported a combined 15.38 million tonnes of manganese ore in the first six months of 2023, up by 9.03% from imports in the first half of 2022,” said the firm’s analysts.
At the same time, China’s debt-ridden property market, which is a major source of demand for steel, has been in the doldrums for most of the year. “The key single factor affecting manganese demand is the situation of the Chinese construction sector,” explained CPM Group’s Zemek. “Silicomanganese (SiMn) is the most important manganese ferroalloy, which is mostly used in the production of concrete reinforcing bars (rebars).”
He noted that rebar production in China was 6 percent lower in the first 11 months of 2023 compared to the year-ago period, resulting in 8.1 million metric tons of “lost” rebar production, or 163,000 metric tons of “lost” SiMn demand.
What is the manganese supply and demand forecast for 2024?
Heading into 2024, the forecast for manganese supply and demand is slightly better; however, much of what happens will depend on which way the wind blows for China’s economy and the global steel industry.
The World Steel Association is projecting 1.8 percent growth in global steel demand in 2023, and another 1.9 percent increase in 2024, with a slower recovery expected in the developed economies compared to their emerging counterparts, particularly in Asia. “We expect the situation in China’s property market will stabilise in the latter part of the year and China’s steel demand will record slight positive growth thanks to government measures,” the association states.
China’s National Development and Reform Commission announced consumption stimulus measures midway through 2023, with a focus on auto, property and consumer goods such as appliances and electronic products. All of these moves should be beneficial for ferromanganese demand, but with Chinese consumers facing economic restraints it remains to be seen if demand from these sectors will improve enough to bolster the manganese market.
Given those factors, the Project Blue team has a more positive demand outlook for manganese this coming year: “Our 2024 demand estimate is in line with an expected recovery in the Chinese economy, with China dominating 54 percent of the steel market. The property stimulus, depending on additional government incentives, will affect overall ore demand.”
CPM Group also sees better prospects for manganese in 2024, however slight. Zemek stressed that some of the demand placed on the market by 1.9 percent growth in the steel industry “will be met from existing inventories" — not to mention that “the previously forecast 1.8 percent growth in demand in 2023 is not likely to materialize this year.”
Longer term, the expert told INN some analysts are predicting that steel production may only see a compound annual growth rate of 0.7 percent between now and 2032.
Outside of China, critical manganese supply and demand factors are also taking shape. One important region is India, the world’s sixth largest producer of the metal and one of the world’s largest consumers.
The vast majority of India’s manganese goes to the production of steel. This will be a necessary component of reaching the country's 2040 Vision, which includes the buildout of massive airport hub infrastructure. The World Steel Association is predicting that steel demand in India will “show healthy growth” of 8.6 percent in 2023, and 7.7 percent in 2024 — that would be down from 9.3 percent in 2022. “India is expected to see an increase in both manganese ore production and imports as the country moves towards implementing its 2040 Vision,” said Project Blue.
On the supply side, the Project Blue team is watching supply chain challenges, including reduced rail capacity and port delays in South Africa — the world’s number one producer of the metal. The firm said state-owned Transnet has reportedly received US$2.5 billion to assist with the operational challenges for both its port and rail facilities.
As for new manganese production, CPM Group said there are about 60 development-stage manganese ferroalloy projects scheduled to start production through now and 2025 — nearly all of which are outside of China. If all of these new projects in the pipeline are brought online, the impact on the global market would be about a 6 percent increase in manganese ferroalloy production capacity. This figure outpaces that of the expected growth in steel production.
“But it is not certain if all of them will go ahead, bearing in mind the current overcapacity and general economic climate, and very modest expectations regarding steel production,” Zemek explained in his comments to INN. “With Chinese dominance in manganese ferroalloy production, these new projects outside China will not change much in the overall picture of geographical distribution of production.”
Project Blue “expect(s) ore prices to remain under pressure moving into 2024 due to the uncertainty facing the Chinese steel and construction market.” The firm sees Chinese domestic demand supporting higher ore and alloy prices in the short term, and a potential global economic recovery in 2024 returning prices to a cost-driven level in the medium term.
“Thereafter, our price forecast is more driven by fundamentals and the need for new capacity to be developed,” the analysts added. “We expect prices in China to rise in the second half of the decade.”
What factors will move the manganese market in 2024?
Outside supply and demand, what trends should manganese market watchers look for in 2024?
“A general conclusion from analyzing the 2023 manganese market is that we won’t see any fireworks in 2024,” said Zemek. However, market events could lead to moderate price growth for some manganese products, particularly electrolytic manganese metal, high-purity manganese sulfate monohydrate and certain manganese ferroalloys.
Of course, the main driver of the ferroalloy market will continue to be China’s economic health and the consequences for its construction and steelmaking sectors. “Whatever is happening in the steel sector globally (and in China in particular) translates into demand for manganese (with some delay),” said Zemek. This means investors should watch for any impacts of China’s economic stimulus measures, as well as any additional steps that may come in 2024.
Aside from that, growth in the battery sector is another area for investor attention, particularly the chemical high-purity manganese products used by electric vehicle (EV) battery manufacturers.
“Several high-manganese rechargeable battery chemistries have been developed in recent years, but many will only enter mass production in Q4 2023 and 2024,” said Zemek. “This should reduce the current surplus of high-purity manganese sulfate and lift the prices from their doldrums.”
The team at Project Blue is also keeping an eye on this segment of the market. The firm expects that while prices for manganese sulfate will remain under pressure in 2024, over the long term they will gain support from rising demand from the EV battery sector, which will require a large-scale buildout of new manganese sulfate production capacity.
“Project Blue foresees sustained growth in demand for manganese in EVs over the medium term, as sales of EVs are projected to increase significantly due to governmental pressure to transition to low-emission fleets,” the team told INN.
While China is expected to remain the major producer of battery-grade manganese sulfate moving into 2024, one of the key catalysts for this submarket that should be on investors' radar is recent funding for several ex-China projects, which could move them closer to development in the new year.
“We estimate existing producers will be able to supply the market via increases in capacity utilization until about 2027, but that, thereafter, new supply will be required if supply is to meet demand,” said Project Blue. “We expect high-purity manganese sulfate prices to follow a similar trend to ore and metal for the next two years, with costs driving prices.”
CPM Group is also watching government policy and funding initiatives that may prove beneficial for ex-China manganese sulfate projects; for example, the US Inflation Reduction Act and the EU’s Critical Minerals Act.
“However, most of the non-Chinese projects in the pipeline are scheduled to start production by 2026/2027, so we’ll not see much change in 2024/2025,” said Zemek.
He added that the high-purity manganese sulfate subsector represents less than 2 percent of the overall market, and is currently oversupplied to the detriment of prices. This low-price environment will likely pose funding challenges for new battery-grade manganese projects, leading to possible production timeline delays and future supply deficits.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: 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.
E25 Approved For US$57M of Louisiana Tax Incentives
Element 25 Limited (E25 or Company) (ASX: E25; OTCQX: ELMTF) is pleased to announce it has achieved all milestones for the Louisiana State Industrial Tax Exempt Program (ITEP) incentive package to support E25’s planned lithium-ion battery grade high purity manganese sulphate (HPMSM) processing facility in Ascension Parish, Louisiana (Facility or Project). Governor Jon Bel Edwards has now approved the incentive agreement between E25, the Louisiana Department of Economic Development, and the Louisiana Board of Commerce and Industry.
This represents a significant milestone for the Project and concludes several months of active stakeholder engagement with multiple levels of state and local government and local community members to explain the benefits that will flow from the proposed Facility. The total benefits available to the Project from State Incentives have been estimated by EY at US$57M1.
Louisiana Governor John Bel Edwards said: “Louisiana’s long standing status as a national pacesetter in foreign direct investment is no accident. It is the result of sustained relationship building. Companies such as Element 25 see the strategic advantages of doing business in our state, from top notch logistics to our skilled, dynamic workforce.”2
Table 1. Summary of Louisiana State incentives available to the E25 HPMSM Project slated for Ascension Parish in Louisiana.
The incentive package that has been agreed with the State includes direct and indirect measures of financial support for the Project, which will reduce the required funding to construct the Facility.
To meet the requirements of the incentive agreement, E25 has committed to:
- Construct the Facility with a minimum expenditure of US$211,640,709 on fixed plant and equipment and buildings/fixed structures.
- Where feasible and practical, consider using local labour and manufacturing capability in the construction of the Facility.
- Operate the Facility in order to provide employment in the State of Louisiana.
- Create and maintain sixty five (65) jobs with payroll totaling US$5.85M per annum for the duration of the incentive agreement.
In all cases, the current development plan for the Facility meets or exceeds all required thresholds to secure the State’s support under the agreement.
Earlier this year, E25 engaged EY to undertake an analysis of the likely value of the Louisiana incentives, both were included in the ITEPA summary of the benefits available to the Company under the Louisiana State incentives listed in Table 1. The total forecast Project benefit is estimated at approximately US$57M.
E25’s Louisiana Project is expected to create 220 new direct jobs with average annual salaries of more than US$90,000. Louisiana Economic Development estimates the Project will result in an additional 408 new indirect jobs, for a total of 628 new jobs in the Capital Region.
Figure 1. Members of the E25 HPMSM team met with Governor Jon Bel Edwards of Louisiana (3rd from left) in September 2023.
Element 25 will import manganese concentrate from its Butcherbird Mine in Western Australia to produce EV battery materials and its proprietary production process will also produce three reusable by-product streams which can be repurposed as fertiliser feedstocks, ferro alloy feedstock and in other industrial operations. As a result, the facility will minimise solid and liquid wastes. Furthermore, the majority of the reagents will be sourced from within Louisiana.
Click here for the full ASX Release
This article includes content from Element 25 Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
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