Maxtech Ventures on a ‘red hot’ manganese market ride
A small-scale manganese company is a mining oxymoron.
Conventional wisdom would class manganese mining as a high volume, quarry pit-like mining operation like iron ore that lends itself to massive capital requirements as an entry barrier. Every major mining company produces some, but doesn’t talk about it much and mentions the stainless steel ingredient at the bottom of investor presentations.
Peter Wilson, CEO of Vancouver-based Maxtech Ventures Inc. (CSE: MVT), looked where others didn’t. There are three reasons why the conventional wisdom about manganese is wrong, he told InvestorIntel. First, the market is red hot right now and smelters are snapping up manganese ore supplies. Second, niche markets such as modern agriculture and batteries require high-purity manganese. Third, modern technology allows smaller players to sift through quarry like ore at a reasonable cost.
Wilson, who led a major copper discovery in Botswana with Hana Mining Ltd., started to focus on high-grade manganese deposits he discovered in Brazil’s Mato Grosso province with ore grades of 51.4% to 55.9% manganese in four claims extending over 40,000 hectares (98,842 acres). Unlike other metal markets, where off-take contracts are hard to come by, Maxtech has agreed a strategic partnership to sell ore via Grupo Maringa, a larger player in that market. Manganese holds high importance in Brazil as a crop micronutrient.
More recently, Wilson returned to his African professional roots and discovered an even richer ore discovery in Zambia, with 70% manganese content. Maxtech Ventures quickly formed a partnership with geological firm GeoQuest to delineate the resource. There are Indian smelters operating in Zambia and several Chinese firms that are willing to pay up front for high-quality manganese ore, Wilson said.
“It’s in such high demand that they will pay up front for it,” he said. “I get requests every week from China and India.”
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Manganese is mostly used as a ferroalloy to strengthen steel and is mostly produced by large scale mining companies such as Glencore Plc and Brazil’s Vale SA. The presence of a manganese pure-play at a junior exploration level is so unusual that Maxtech Ventures finds itself rubbing shoulders with the world’s largest mining companies as part of the Paris-based International Manganese Institute, and has even received a nomination to join its board.
The market dynamics have changed as usage is growing in agriculture. In micronutrient form, manganese is fundamental for major crops such as soybeans, and even marijuana. Manganese sulfate is also found in the cathode of electrical vehicles. High grade material, such as that found in Maxtech’s Brazilian and Zambian projects, is pre-destined for these markets at a 30% premium, rather than lower grade material which goes to the bulk ferroalloy market, Wilson said.
Maxtech Ventures will prioritize further exploration work in Zambia and apply in Brazil for a small-scale mining license that would allow the company to sell up to 6,000 tons a year of manganese ore. That would allow Maxtech to get its product into the marketplace, providing a source of income to increase production. The ore in both countries in a loose, dirt-like ore that lends itself to innovative new machinery such as the FlipScreen, which can sift through and collect 800 tons of ore a day. This means that both sites can be mined without multi-million dollar investments, Wilson said.
For the reason, the company is focusing on these two ventures more than a third project that the company has in Morocco, which would require hard rock mining, he said.
Matt Craze works with New York-based management consultancy 10EQS and is the founder of Spheric Research, a firm dedicated to global seafood industry research. Matt ... <Read more about Matt Craze>