The agricultural (and investment) micronutrient advantage of Cancana manganese
Cancana Resources Corp (TSXV: CNY) is establishing itself through a joint venture, as a producer, high-grade manganese for agriculture, a niche market that we believe to grow in line with expansion of the world’s agricultural needs to feed a growing population. In practice this offers excellent prospects for Cancana but I found that there is a fundamental problem to this industry: the agricultural manganese sector is subjected to the cyclical natures of the macronutrient industry and the steel industry, two sectors with which have little in common.
Agricultural manganese amendments are necessary to feed the world’s growing population.
On November 10, 2015 Cancana reported third quarter sales at Brazil Manganese Corporation (BMC) which it owns 26% interest totalled 469 tonnes and sales prices continued to average more than a 30% premium on current Cost, Insurance and Freight prices (CIF). CIF Tianjin pricing for 44% manganese, a lesser product quality product as compared the to 50.8% grade of BMC’s product was $2.79 per dry metric tonne as of October 1, 2015.
Cancana reported that third quarter production at BMC totalled 6,976 tonnes of manganese mineral product bringing the current stockpile to 13,563 tonnes (net of sales). Cancana achieved a new monthly production record in August with 2,489 tonnes. Assays for the second quarter production showed an average grade of 50.8% manganese.
We’ve known for some time that manganese is critical in plant growth (click here) but investors generally overlook its significance.
We know from our biology classes the importance of the primary macronutrients, nitrogen (N), phosphorus (P), and potassium (K) in agriculture. But to thrive plants also need three secondary macronutrients: calcium (Ca), sulfur (S), magnesium (Mg) and finally plants need the micronutrients/trace minerals: boron (B), chlorine (Cl), manganese (Mn), iron (Fe), zinc (Zn), copper (Cu), molybdenum (Mo), nickel (Ni).
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Manganese deficiency is common in calcareous soils, which are soils with high pH (mainly in arid and semiarid areas of the world), and especially in soils with poor aeration. In other words, we should expect increases in needs for manganese for agricultural purpose in semi arid environments where marginal agriculture is critical to feed growing numbers of people. If we compound this with desertification (regardless of whether or not climate change has geological or anthropomorphic causes), then we will need more and more manganese fertiliser.
The attention given to the macronutrients (NPK) overshadows the importance of agricultural manganese. For example the figure below is from a publication of the FAO (Food and Agriculture Organization of the United Nations) from a substantive outlook document for future needs of fertilizers (click here). While the document emphasizes NPK as in this figure it ignores manganese, probably because the usage of micronutrients is 25 to 50 times smaller than that of the macronutrients.
But agricultural manganese is also overshadowed by other industrial demand for manganese as for example the use of manganese ore in the steel industry — approximately 90% of all manganese consumed annually goes into steel as an alloying element.
A search on the www for the outlook on manganese ore shows data that pertains to the steel industry, which is a product of lesser grade and quality. See for example, click here
Clearly investors are not being informed about the relevant market details of agricultural manganese. In practice Cancana’s stock is subjected to two commodity cycles (macronutrients and steel) that are not pertinent to the agricultural manganese business.
Dr. Luc C. Duchesne is a Speaker and Author with a PhD in Biochemistry. With three decades of scientific and business experience, he has published ... <Read more about Dr. Luc Duchesne>