Riding the battery material boat with manganese
The price action on battery metals has reached near-ludicrous levels this year; the global expectation of a new world in which all private vehicles are electric is becoming ever-more realised, and the cost of the associated materials is climbing rapidly. But not in all cases. Lithium and cobalt may have bust through the top of the chart, but manganese has experienced somewhat of a quieter growth. A smorgasbord of factors will change this in the very near future, making manganese the only remaining battery metal with major growth potential.
Maxtech Ventures Inc. (CSE: MVT) (“Maxtech”) is one of only a very small handful of juniors gunning for this particular material. The company is making excellent progress on its asset in Brazil, a large land package which has assayed high grade manganese of 51.4% to 55.9% on 4 mineral claims of over 40,000 hectares in the State of Mato Grosso. The company’s continued successful acquisition of strategic partners combined with positive exploration results has driven share prices up by 160% over the last eight weeks.
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Unlike steel demand, which is renowned for being steady, the supply of manganese is declining; in 2016, the USGS estimated that the world produced 8.6% less manganese than in 2015, yet the gulf between manganese production and consumption in China, for example, has been widening since 2001, and demand for imported manganese ore in China more than doubled between 2006 and 2016. There has rarely been more opportunity to enter the manganese supply chain than exists today.
Towards the end of last year, manganese prices surged in response to a rapid decline of industry stock levels. These were largely caused by producers cutting output in response to the previous year’s low prices combined with logistical problems in South Africa as well as renewed demand from China. In 2017, however, prices have taken the market by surprise by continuing to rise.
This could be due, in part, to manganese’s critical role in the production of batteries. Many people are aware of the requirements for lithium and cobalt in modern portable technologies, but manganese has flown a little under the hype-radar over the last few years and only seems to be catching up more recently, and at a slower pace. The need for battery metals is reaching fever pitch, and new patents involving these crucial ingredients are emerging every month.
Already, 3M has patented its own NMC battery which is to be used by LG Chem in the Chevy Volt and Nissan Leaf, as well as by BMW, while General Electric has gone for a lithium-manganese battery. Tesla meanwhile has signed a five year exclusive agreement with prominent NMC battery researcher, Dr. Jeff Dahn, to help reduce the costs of producing its batteries, but all of these formulations require a quantity of manganese.
Additionally, the importance of manganese in agriculture cannot be underestimated, since the micronutrient market is poised to grow at 8% CAGR to $7.7bn by 2020. Not only is manganese a requisite ingredient for photosynthesis, experiments conducted in Brazil have shown that the addition of a small amount of manganese to soils can increase crop yield by around 30%, and because of this, high purity, high grade manganese such as what Maxtech intends to offer could fetch as much as 25-30% premium in these markets.
Maxtech is advancing work on several high-grade manganese projects in Brazil, but is focused on becoming a true global supplier, with customers in Europe, North America, and Asia. The company also intends to explore Moroccan manganese opportunities since Morocco’s proximity to European and Asian markets could drastically cut transportation and logistics costs. Considering that very little competition exists in the junior manganese market, these guys have a great shot at success, and investors who missed the battery-boat have a second chance with Maxtech.