Less than 1% of the 20 million-tonne manganese produced each year is used in batteries, but the battery industry is disrupting the manganese market as increases to demand from the ferrous sector slows. Increased battery uptake in NMC categories is driving this change in demand though innovations in the L(M)FP battery market could create more change at an even faster rate.
High Purity Manganese Sulphate Monohydrate, or HPMSM, is used in the making of precursor material for cathode active material, or pCAM, and has emerged as the main input for manganese in batteries. An increase in the demand for batteries is a key driver for growth in manganese demand as battery raw materials offer HPMSM producers a new, rapidly growing and valuable line of business.
The extra source of customers has attracted attention from both emerging junior mining companies and established traditional miners, such as Tshipi, which produces an average of 3.5 million tonnes of manganese ore annually from South Africa. Large-scale increases to expected HPMSM demand will pose a significant challenge for the supply-side of the manganese industry before 2030. Benchmark’s base case demand expectation is for HPMSM demand in 2030 to be 3.5 ties that estimated for 2023.
Passenger vehicle demand is expected to demand approximately 80% of that increase though other battery use-cases are still evolving, and consumer uptake is increasing.
China is the main source of demand for these extra units of HPMSM but that large share of demand is expected to be diluted by demand from western regions as they increase their involvement in these global markets. In 2023, 93% of all HPMSM producers were Chinese, and those Chinese producers accounted for 96% of non-recycled supply.
Production facilities are located throughout the country but are particularly located in the southern provinces of Guangxi and Guizhou. Even despite this significant capacity, new pro-jects in Ningxia and Hunan provinces are expected to come online over the short-to-medium term, and only two facilities exist outside China (Belgium and Japan).
Many projects outside of China are planning to build green-field manganese mines with HPMSM production facilities on site, while others are building plants in other markets. For example, two companies with HPMSM production facilities in China and in Louisiana, USA, are each opening mines in West-ern Australia to supply their facilities overseas. Should more western projects successfully bring their supply to market, they will provide downstream purchasers a more varied set of options based on ESG and geographic preferences.
Economics will continue to be the main driver of the HPMSM market but policy from countries concerned about the durability of supply chains is increasingly important. New updates to the Inflation Reduction Act, or IRA, are clarifying rules around traceability and crafting restrictions on the involvement that Foreign Entity of Concerns, or FEoC, firms can have within USA supply chains. Domestic projects are some-times fast tracked by governments, and indeed South 32’s Hermosa received backing under the USA’s FAST 41 act.
But these classifications do not solve all issues and traditional governmental barriers like permitting continue to lengthen project timelines. Policies from IRA subsidy requirements to European traceability stipulations, the evolving policy land-scape will continue to shape the battery-grade manganese market over the coming decade. Western governments have proven willing partners in notable cases, but traditional bu-reaucratic barriers can still create bottlenecks.
Base-case expectations are for the HPMSM market to remain in some surplus by the end of the decade – and this already relies on some extra supply coming to market. But the mass-market emergence and uptake of LMFP chemistry could yet add further HPMSM demand to the market although uncertainty around its adoption remains.
HPMSM demand levels could increase 5.9x by 2030 (on 2023 levels) should cell-manufacturers adopt chemistries with increased manganese intensities, including LMFP.
Benchmark’s analysis suggests that the HPMSM market would be undersupplied by more than 750,000 tonnes should LMFP batteries increase their penetration rates. But this technology is still relatively new, and there are still signif-icant barriers to higher LMFP penetration.
Benchmark sees relatively robust demand for manganese-bearing batteries over the short-term with upside risk should LMFP production exceed our base case estimates. But in-creased demand needs to be matched with supply-side in-vestment and development, if additional HPMSM tonnes are to be brought to market. It is particularly important to follow developments as projects outside of China build their pro-jects in jurisdictions that have not traditionally produced HPMSM – governance barriers could be particularly complicated for such new entrants. There are many degrees of freedom in the forecast for manganese, and our base case provides a nuanced outlook for the sector as it seeks to balance the need for new supply given a new source of demand from electrification.
By Maximilian Court
Product Director – Battery Chemicals, Benchmark Mineral Intelligence mcourt@benchmarkminerals.com
Read more about this market in the Benchmark Minerals’ Manganese Sulphate Market Outlook
https://www.benchmarkminerals.com/forecasts/manganese/reports
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