The adoption of manganese-rich battery chemistries will increase demand for manganese and raise supply concerns for battery-grade product, industry participants told S&P Global Commodity Insights.

The manganese industry is closely watching the developments in battery innovation as attempts to increase energy density and affordability are intensifying the use of manganese chemicals. And while analysts are divided on just how much the demand will rise, bottlenecks for battery-grade material, particularly outside of China, could create challenges for battery-makers and original equipment manufacturers (OEMs).

"Manganese is a bit like graphite in the sense that there's no shortage of it globally," Gavin Montgomery, principal analyst for metals and mining at Commodity Insights, said in an interview. "The midstream processing or refining of those materials is very skewed toward China. With the [US] Inflation Reduction Act and the EU [Critical Raw Materials] Act, not relying on China is going to be important for OEMs going forward."

Changing cathodes

Lithium-iron-phosphate (LFP) chemistries held about 38% of the global battery market in 2022, and nickel-manganese-cobalt (NMC) chemistries held a little less than 51%, according to Commodity Insights. LFP is generally more affordable, whereas NMC provides more energy density.

EV demand is creating a race to find the chemistry that best balances cost and performance. Lithium-manganese-iron-phosphate provides higher energy density than LFP. Lithium-nickel-manganese-oxide and manganese-rich versions of NMC lower costs when compared to nickel-rich chemistries.

"Most emerging cathodes have a much higher manganese content than the average cathode today, which is good news for manganese miners," Ben Campbell, manager of battery research at the firm E Source, told Commodity Insights.

Campbell expects manganese-rich chemistries to take 30% of the market by 2033, increasing demand for manganese and manganese sulfate by 13 times. The International Energy Agency takes a more conservative approach and expects manganese demand to rise between three to five times by 2030.

A major challenge will be resistance from OEMs to make the investment and take on the risk of a new chemistry, said Danny Keating, president and CEO of Giyani Metals Corp. which is developing the K.Hill manganese project in Botswana.

"Hopefully, they can eventually get to the point where we look more credible in their supply chain, and they can then be prepared to make those decisions that lend themselves to using the product," Keating told Commodity Insights.

Wanted: Battery-grade manganese

Increased use of manganese in battery chemistries is not expected to affect overall availability of the mineral, since the battery sector accounts for such a small fraction of total demand, analysts said.

"It will have very little visible effect in increasing the amount of manganese mined and used in total, since the vast majority of manganese is and will continue to be used in ferroalloys," said Jeff Christian, managing partner at CPM Group, a commodities research and consulting firm.

The share of manganese demand from clean energy technologies is 1%, according to the IEA, which estimates that the share could rise to as much as 17% by 2050. Global production of manganese totaled 20 million metric tons in 2023, according to the US Geological Survey.

"The difference is manganese is a bulk [industry]," Montgomery said. "The battery sector just doesn't move the needle the way those other industries do."

The biggest challenge for OEMs might be getting their hands on high-purity manganese sulfate — the battery-grade product — and other manganese chemicals that might increase in use with EV battery innovation. US and EU carmakers have received incentives in recent legislation to break free of Chinese product, but that means building new supply chains domestically or in allied countries. China produced 97% of total battery-grade supply in 2023, according to the IEA.

"This creates a large supply deficit for western automakers if there is any supply disruption from Chinese sources," Justin Brown, managing director at Element 25 Ltd., said in an email. The company is expanding its Butcherbird manganese mine in Australia and is planning to build a refinery in the US state of Louisiana.

Industry participants are expecting a deficit in battery-grade manganese by the end of the decade.

Diversifying the supply chain

A host of projects are in the pipeline outside China, including Firebird Metals Ltd.'s Oakover in Australia and Southern Hemisphere Mining Ltd.'s Los Pumas in Chile.

"In the short term, the Western supply-demand balance for manganese sulfate depends more on the number of projects that are successful and their full capacity rather than chemistry adoption," said Zoe Ollagnon, strategy and product manager for rechargeable batteries and manganese at Vibrantz Technologies Inc., a US-based specialty materials company.

"In the long term, the supply-demand balance is entirely dependent upon cathode chemistry. There is significant potential for increased demand and different forms of manganese chemicals. If cathode chemistry changes before the supply chain scales up, a shortage of manganese could be an issue," Ollagnon added.

US EV-makers have added incentive to sign offtakes with suppliers outside China. Doing so helps to ensure their customers are eligible for a $7,500 buyer tax credit under the Inflation Reduction Act. But investments may be stalled by the current manganese price, which is heavily based on production costs in China, analysts and producers said.

The Platts-assessed China manganese sulfate daily price on a delivered-duty-paid basis was $869 per metric ton on July 30. Platts is part of S&P Global Commodity Insights. That was a 50.9% rebound from a low of $576/t in January but down 13.8% from the high of $1,008/t in July 2022.

"Our task is to make sure that we are as competitive as we can be cost-wise with China material," Keating said.

"The OEMs that we've chatted with, I think they recognize [that] there will be an incentive price. ... I know they don't want it to be a very high incentive price, and we wanted it to be higher," the executive added.