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Commodities / Metals & Mining May 03, 2012 - 12:55 AM GMT

By: Anthony_David


Best Financial Markets Analysis ArticleManganese may be the fourth most used metal in the world but last year ended on a relatively weak note for manganese products. While Chinese ports had large stockpiles of manganese ore, the weak demand for steel long products was reflected in a weak demand for manganese. The economic uncertainty and low business confidence in Europe and the USA were key reasons for the lack of interest in manganese. The recovery of the construction industry in these regions would certainly be a big boost to the manganese market and prices would firm up by 2013.

China’s infrastructure market appears to be on the rise again and if the trend continues along with similar trends in India and other Asian nations, the manganese market could secure itself in the long-term. The growth of the Asian automobile market would also drive manganese prices upward. In fact, the growth of the infrastructure market in China and India, and thereby the demand for steel, is expected to trigger an average annual growth rate of 6% in the manganese market over the next five years. Prices, on the other hand, are expected to increase by about 20% over the same period in comparison to 2011 levels.

After the steel industry, the battery manufacturing industry is the largest user of manganese and is also expected to stimulate the manganese market. China and other south Asian countries are expected to show a high demand for manganese for primary batteries, especially lithium and alkaline batteries, while Europe, Japan and North America are expected to show a high demand for manganese for lithium-ion secondary batteries.

The growing demand for manganese will naturally require new supplies to enter the market. The main producers of manganese are China, Australia, South Africa, Gabon, India, Brazil and Ukraine. Although existing and projected supply of manganese ferroalloy from these countries are expected to meet the medium-term demands, China’s industry restructuring and power restrictions could cause supply problems in the short-term.

Africa is gearing up to begin development of about 10 million tonnes per year of new manganese mining capacity. About 6.3 million tonnes per year of that is planned for South Africa. Perth based Segue Resources has announced a maiden manganese resource of 13.9 million tons at its South African Emang project. Steven Michael, MD, said, “The inferred resource of 14 million tons is at the top end of our expectations and covers only 20% of the prospecting right area. More importantly, the high-grade resource could produce direct shipping ore at 500,000 tons/year for over seven years.”

Diversified mining giant BHP Billiton and the government of Gabon are working out the details of an agreement whereby BHP would develop a 300,000-tons-per-year manganese mine at a site that has enough resources to run for at least half a century. Gabon’s Mines Minister Regis Immongault told the Australia Africa Business Council (AABC) that Gabon was resource-rich enough to overtake South Africa as the world’s largest manganese producer by 2015.

In South America, Guyana is making plans to produce and export manganese ore after 50 years. The ore was last mined about 40 years ago but falling prices forced the closure of the industry. The current rising prices have encouraged the revival of the industry. Canada based Reunion Manganese, a subsidiary of Reunion Gold Corporation, was granted four prospecting licenses to explore and develop a manganese rich area in northwest Guyana. The company has announced that it expects to produce and export the metal from the Matthews Ridge site by Q4 2014. The pilot plant is scheduled to be up by April next year.

President Donald Ramotar said, “Guyana used to be an exporter of manganese in the ’60s, but at that time the technology wasn’t very well developed. It has become viable again. Next year the company will start commercial operations and will begin exporting around the same time.” Guyana hopes to boost its economy by investing in mining operations, not just manganese but gold and oil as well.

China’s electrolytic manganese metal (EMM) industry is undergoing restructuring and that would mean fewer large operations. From 2011 to 2015, about 30 EMM units with capacities of over 30 kilo tonnes per year are being set up and planned. In an effort to modernize the industry, several small scale units have been shut down. However, in spite of any dip in numbers, China will most likely remain at the top of the EMM market for some more time since it produces almost 98% of the global EMM. Either way, China’s EMM production costs are rising, due to lower grades and depleting resources of carbonate manganese.

Meanwhile, American Manganese Inc. is focusing on completing and publishing it’s NI 43-101 prefeasibility study. The company aims to institute a patent-pending process whereby EMM, EMD (Electrolytic Manganese Dioxide) and CMD (Chemical Manganese Dioxide) will potentially be produced on site at it’s Artillery Peak Deposit in Northwest Arizona, USA. The company hopes to achieve this by reducing water and electricity consumption. Arizona’s lower electricity costs are an added bonus.

Speaking about the project, Larry W. Reaugh, President and Chief Executive Officer of American Manganese Inc. is excited by the potential opportunities of high purity EMD and CMD for use in the emerging battery industry. “Our process can produce a high purity EMD and CMD to service the growing demand coming on stream due to the electrification of the automotive industry and we are well positioned to potentially be the first producers of Electric Metals utilizing domestic resources.”

By Anthony David

The mission of the Critical Strategic Metals Web Site

is to serve as a monthly compass for those who take a fundamental view of investment regarding the Molybdenum, Manganese and Magnesium metals markets, are concerned with the emerging critical under-supply of these strategic metals to Western nations and wish to profitability chart their course. Each month we will research and provide, in as short and concise a manner as possible, the most applicable information available on resources that will have the biggest impact on our day to day lives. Click here to sign-up for our FREE monthly report.

© 2012 Copyright  Anthony David- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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