Manganese, an essential steel-making ingredient, has outperformed copper, gold, and other commodities this year. A cyclone that hit northern Australia in March halted exports from the world’s second-largest manganese mine, causing prices to soar.
Prices of 44% grade manganese ore have nearly doubled since January, outpacing gains of 15% in copper, 12% in gold, and almost 30% in tin.
The cyclone struck the Groote Eylandt Mining Co. (Gemco) operation, damaging key port and haulage infrastructure and halting high-grade exports. Shipments are expected to remain suspended until 2025. South32 owns 60% of Gemco, while Anglo American holds the remaining 40%.
While manganese is less known than other metals, it is crucial in steelmaking for strengthening and reducing brittleness. It is also used in batteries and aluminum alloys.
The price surge was initially delayed due to existing stockpiles, according to Benchmark Mineral Intelligence analyst Zach Parsons. The supply shock impacted ore prices in April and gradually affected other manganese products.
Supply constraints and elevated prices will persist until Gemco resumes operations, Parsons noted. The high prices have prompted pure-play manganese miners to sell lower-grade material. ASX-listed Element 25 informed shareholders that current prices present an opportunity for short-term cash flow. The producer may sell stockpiles of lower-grade manganese from its Butcherbird project, which is profitable in the current market.
Other companies may fast-track projects in development. “Miners planning to commence operations might move their timetable up to take advantage of higher prices this year,” Parsons said. However, he added that the small number of producers would be insufficient to bridge the supply gap.
Manganese plays a crucial role in steel production, as it enhances the strength and reduces the brittleness of the material. Its versatility extends to the manufacturing of batteries and aluminum alloys, contributing to its high demand.
The supply constraints caused by the cyclone have highlighted the volatility in the manganese market. As Gemco’s shipments remain suspended, the market faces continued pressure. Miners are responding by adjusting their production strategies to capitalize on high prices.
ASX-listed Element 25 has already taken steps to benefit from the current market conditions. The company announced plans to sell lower-grade manganese from its Butcherbird project. This move is expected to generate significant short-term cash flow.
The high prices may also encourage other companies to accelerate their projects. However, the limited number of producers means that the supply gap will likely persist until Gemco is fully operational again.
The global market’s response to the supply constraints demonstrates manganese’s crucial role. As industries rely on this metal for various applications, its availability directly impacts production processes.
Manganese has become a notable commodity in 2024 due to supply constraints caused by a cyclone’s impact on Gemco, leading to a significant price surge. This highlights the metal’s importance in steelmaking and other industries. As the market adapts to these challenges, high prices are expected to persist, benefiting producers who can take advantage of the current conditions.
Source: Mining Weekly
