South32 Ltd. is looking to build on its record manganese production in fiscal 2023 with expansion opportunities amid hopes of wider use of manganese-rich batteries.

Manganese is an alloying agent used to improve the quality and strength of steel or aluminum, but research is also being done into its potential to displace cobalt in lithium-ion batteries with manganese-rich cathode chemistries.

South32 owns 44.4% of Hotazel Manganese Mines (Pty.) Ltd., which runs two mines and a manganese alloy smelter in South Africa's Kalahari Basin. The miner will increase its improvement and life extension spending in the country to $10 million in fiscal 2024 in an effort to access new mining areas at its high-grade underground Wessels mine.

"There is the ability for us to substantially shift the production coming out of Wessels," South32 CEO Graham Kerr told an Aug. 24 analyst call. "The bigger challenge at the moment is probably the performance of [Transnet Freight Rail (Pty.) Ltd.] and what the next contract might look like in terms of transportation of manganese by rail and obviously to the port handling. So that probably is a key to unlocking growth potential in the Kalahari."

South32's share of saleable manganese production from South Africa rose 2% to a record 2.1 million wet metrics tons in fiscal 2023.

Meanwhile, its share of saleable production from its 60%-owned GEMCO mine in Australia's Northern Territory — one of the world's largest manganese-producing assets — rose 5% to a record 3.54 million wet metric tons in fiscal 2023.

GEMCO's Eastern Lease is expected to start producing by fiscal 2025 and run until at least fiscal 2028. South32 hopes to prolong the asset's life into the next decade with extensions to the north and south, and expects to spend $35 million to improve and extend its Australian manganese assets in fiscal 2024.

New hope for manganese

Muted Chinese crude steel production coupled with weaker ex-China demand in both manganese ore and downstream markets have hit manganese alloy prices and margins, Jupiter Mines Ltd. said in its latest quarterly.

Despite the tight market, Kerr told analysts that "the South African business certainly has the opportunity to actually expand, and I do think that the manganese battery market, whilst a bit uncertain, does open up potentially a whole other opportunity."

"The uncertainty is around how many people adopt manganese-rich chemistries," the CEO said.

Aside from building out its South African and Australian manganese assets, South32 is also developing the Clark deposit at the Hermosa project in Arizona to supply battery-grade manganese to the North American market.

By 2030, "depending on how the uptake goes, we'd probably have a midpoint of about 600,000 [metric tons] of demand, but the range could be as high as 1.8 million [metric tons], of which we'd probably see North American demand somewhere between 144,000 [metric tons] and 270,000 [metric tons]," Kerr told analysts.

"Manganese features on most of the leading chemistries and we believe there will continue to be a solid demand profile for the metal, given the overall upside in the market," Shannon O'Rourke, the CEO of Future Battery Industries CRC, said in an email interview.

Pros and cons of manganese-rich battery chemistries

A deficit in battery-grade manganese is due by 2027, and South32 expects manganese-rich battery chemistries to capture about 30% of the market by 2030.

Lithium-manganese-iron-phosphate (LMFP) batteries contain 65% manganese, while innovative nickel-manganese battery cells (NMx) contain 69% manganese, according to South32.

LMFP batteries raise the cell voltage by adding manganese to the composition and could increase energy density of up to 20%, Benchmark Mineral Intelligence senior analyst Robert Burrell said in an email interview. However, battery production costs could increase by a small margin of between 5% to 15% with LMFP batteries, which also face a key challenge of manufacturing to a high standard that retains the safety, cycle life and other benefits of lithium iron phosphate batteries, the analyst said.

NMx battery chemistries meanwhile do not require cobalt, "eliminating dependence on a supply chain that has had some ESG difficulty in the past," Burrell said. NMx cells also "have high energy density figures and can achieve high power figures."

NMx's challenges are largely around "the stability of the material during cycling, as they exhibit faster degradation than traditional NCM cells," Burrell said. "If and when these are overcome then NMx will be a promising candidate to streamline supply chains and reduce dependence on costly materials."

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