HomeBase MetalsOp-ed: Manganese market outlook remains positive

Op-ed: Manganese market outlook remains positive

South Africa remains a dominant player in the high-grade manganese sector (Figure 1) with circa 30% of global reserves and annual exports of 36% global production (Figure 2).

AUTHOR: Dean Cunningham, Director at Micofin

South Africa is a major stakeholder albeit with little downstream production and mostly ore exports. The key underpin for our current situation lies in intermittent power disruptions which render the SA industry relatively uncompetitive.

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To date, this has eroded our advantage, but change we must; major mining houses are looking to renewables as a substitution for Eskom – at half the price – on a five-to-ten-year PPA.

It is my expectation that Eskom will remain the main base load provider for some time to come, but that renewables will steadily erode Eskom’s dominance as an energy provider, supported by reduced costs over the coming decade.

Taking a step back from the South African landscape, it is key to contextualize core facets surrounding manganese:

  • It is critical and irreplaceable element used in steel production;
  • The steel industry is poised to continue growing at ~2% per annum, thereby supporting demand;
  • It has significant additional upside which would come from clean energy applications (Figure 3); and
  • Vertically integrated companies will be primary drivers of the forward momentum in the manganese industry, at this juncture, which at this point is concentrated and in need of disruption.

New manganese mines are coming on stream, in parallel with iron ore expansion, across the globe. Prevailing theory is that global infrastructure is in need of maintenance and replacement, particularly since the 2008 global financial crisis, and it is expected that governments will continue to use infrastructure to stimulate economic recovery as we emerge into a post Covid-19 world.

However, outside of its steel applications, manganese is quietly becoming a major contributor to the electric vehicle market (EV) as shown in Figure 3 with growing demand anticipated.

“Outside of its steel applications, manganese is quietly becoming a major contributor to the electric vehicle market.”

The question one must ask is: how do we as Sub Saharan Africa capitalise on this, given our endowment with key EV ingredients: cobalt, lithium, nickel, and manganese?

Why are we not enticing manufacturers with tax incentives, for example, to manufacture key EV components on our soil?

It should be our priority to use our mineral wealth to create jobs and become a major player in the global EV industry, which continues to gain prominence in the eyes of investors.

About the author:

Over the past years Dean Cunningham has been the orchestrator of a number local and international transaction in the mining, downstream and energy and utilities sectors – coupled with Micofin and its strategic partners’ (Wood, Practara, NEXUS Intertrade and Africa House) objectives to take skills, technology, and capital to Africa, with a firm understanding of doing the work and creating jobs here at home.

Sources:

  • USGS
  • Manganese.org.
  • Palisade Research March 24, 2017 Base Metals Battery Metals Africa Canada Cobalt Lithium
  • Most steels contain 0.15 to 0.8% manganese. High strength alloys often contain 1 to 1.8% manganese. At about 1.5% manganese content, this steel becomes brittle, and this trait increases until about 4 to 5% manganese content is reached.
  • The International Manganese Institute projects that the global steel industry will continue growing at a clip of about ~2% annually with major consumption coming from India (just over 6okg per capita moving to 400) and Africa around 1 kg per capita moving to over 100 in the coming years).

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