The price of manganese has been falling since October. As the price moves towards 2009 lows, the profitability of many high cost manganese producers is coming into question. If the miners reduce their output, prices may stabilize.
Manganese prices have remained weak due to oversupply and weak steel demand. However, emerging technologies demanding manganese may bolster prices going forward.
The price of manganese, an essential ingredient in steel production, has been declining, down some 40 percent year-over-year. Upwards of 12 million tonnes of new supply is coming from South Africa, weight down prices. However due to issues with Chinese manganese production, the country will have to increase imports.
The price of manganese is a good barometer for the health of an economy primarily because of its use in steel, a prime component of infrastructure projects. The price has moved lower, but remains stable. Also, improvements to South African railways are planned to meet new demand from new, massive manganese projects.
The Gold Report interviewed mining consultant Ken Reser about the potential of manganese as an investment.
Prices for March delivery of manganese in China have slipped due to fierce competition and excess inventory. The ramp up in manganese production in 2010 seems to have hit a ceiling in the short term. However, long term outlook shows increased demand for the metal going forward.
Many mining companies in the Pilbara region of Western Australia have been consolidating manganese and iron ore operations. Pallinghurst Resources describes their strategy as a ‘steel feed corporation,’ producing all the products for steel milling operations. Also, Consolidated Minerals and OM Holdings are talking merger.
A new proprietary process for the treatment of manganese ore being developed by American Manganese may decrease the competitive advantage held by Chinese steel manufactures over the steel producers in the US. The new economic and environmentally friendly process can produce high quality manganese from low grade ore.
A new Lithium-Ion battery that utilizes manganese may be the solution that is needed for renewable energy sources. The new battery, from Hitachi, is said to have double the output of regular Lithium batteries, with a life span of ten years. This may drive the future manganese market if use is widespread.
OM Holdings and Jupiter Mines have announced major manganese mining operations in South Africa. Also, American Manganese Inc. is advancing its manganese mine in Mohave County, Arizona.
Thursday, January 5, 2012