Manganese consumption aligned with steel and lithium-ion battery demand

By David Duval

Although it’s not a widely known or understood industrial commodity, manganese is the fourth most common metal by tonnage after iron, aluminum and copper. Most of the world’s manganese is used to improve the strength and toughness of steel or remove unwanted elements such as sulphur and oxygen. A silvery-white to grey, hard, brittle chemical transition metal, manganese does not occur as a free element in nature and in fact is often found in minerals in combination with iron.

South Africa was ranked as the world’s largest producer and exporter of manganese ore in 2019, accounting for 30% of global production and almost 50% of global exports. Australia is the world’s second-largest manganese producer, with annual production of about three million tonnes. The country, which is believed to have the fourth-largest manganese reserves, produces 15% of the globe’s manganese ore and has 11% of the world’s economically demonstrated manganese resources.

Based on its annual production of 2.9 million tonnes, China is third on the list of top manganese producing countries. A huge manganese ore reserve discovered in the Guizhou province in early 2017 is believed to contain an estimated 203 million tonnes of manganese ore, with a total value estimated at more than $10 billion.

Growth rates for the manganese market will depend on the prospects for the steel industry which saw output fall marginally in 2020. However, last month The World Steel Association released its Short Range Outlook (SRO) for 2021 and 2022 and it suggests significant growth prospects for the metal.

The study forecasts that steel demand will grow by 5.8% in 2021, reaching 1.87 billion tonnes after declining 0.2% in 2020. In 2022 steel demand is expected to see further growth of 2.7%, reaching 1.92 billion tonnes according to SRO projections. (The current forecast assumes that ongoing Covid19 infections will stabilize and that steady progress on vaccinations will be made allowing for a gradual return to normality in major steel-using countries).

During the pandemic construction activities in most industrialized nations were stopped in order to curb the spread of new COVID-19 cases. This sharply decreased demand for steel from the construction industry. Today, the construction industry is on a much sounder footing and recovering, with steady increases in steel demand projected by most market analysts.

Overall market growth, however, will be driven by rising demand for manganese in lithium-ion batteries owing to the rising demand for electric vehicles. Not surprisingly the Asia-Pacific region is expected to dominate the market and yield the highest growth rates.

The manganese market is segmented by application, end-use sector, and geography. By application, the market is segmented into Alloys, Electrolytic Manganese Dioxide, Electrolytic Manganese Metals, and Other Applications. By end-use sector, the market is segmented into Industrial, Construction, Power Storage and Electricity, and Other End-use Sectors.

Over 40% of the world’s steel production is used in the construction sector, mostly in buildings for structural sections, reinforcing bars, sheet products, non-structural steel in addition to infrastructure and transportation needs. Various steel grades are also used in offshore oil rigs, bridges, civil engineering and construction machines, pressure vessels, power plants, and hydroelectric plants. Rapid urbanization has augmented the need for new residential construction, buildings, and railways.

The global construction industry is expected to reach US$8 trillion by 2030, primarily driven by countries such as India, China and the United States. ​ China is in the midst of a construction mega-boom and it has the largest building market in the world, making up 20% of all construction investment globally.

China alone is expected to spend nearly US$13 trillion on buildings by 2030. ​In 2019, the total value of new construction was about US$1,365 billion in the United States and reached about US$1,430 billion in 2020, representing a growth rate of about 4.5%. In 2019, Canada’s total residential and non-residential construction was valued at about US$178 billion and reached about US$174.5 billion in 2020.

According to commodity research firm, Roskill, steel will continue to dominate manganese demand; however, consumption of manganese in batteries is expected to grow exponentially over the next decade. Manganese sulphate demand from lithium-ion batteries is projected to double over the next decade as Electric Vehicle (EV) market penetration ramps up and will have significant impact on the manganese supply chain.

The manganese market is fairly consolidated with major players including Anglo American plc, Assore Limited (Assmang Proprietary Limited), Ningxia Tianyuan Manganese Industry Group Co., Ltd., Mesa Minerals Limited, and Sibelco, among others. The manganese market is estimated to grow at a Compound Annual Growth Rate of >4% over the next five years.

CRU Group, which does commodity market analysis, is forecasting a small but persistent oversupply in the manganese market as a whole through the medium term but a recovery in demand combined with restocking in the short term. What could really impact the market to the upside is stronger demand from China and/or persistent strength in Chinese steel demand.