Battery Metals

The price action on battery metals has reached near-ludicrous levels this year; the global expectation of a new world in which all private vehicles are electric is becoming ever-more realised, and the cost of the associated materials is climbing rapidly. But not in all cases. Lithium and cobalt may have bust through the top of the chart, but manganese has experienced somewhat of a quieter growth. A smorgasbord of factors will change this in the very near future, making manganese the only remaining battery metal with major growth potential.

Unlike steel demand, which is renowned for being steady, the supply of manganese is declining; in 2016, the USGS estimated that the world produced 8.6% less manganese than in 2015, yet the gulf between manganese production and consumption in China, for example, has been widening since 2001, and demand for imported manganese ore in China more than doubled between 2006 and 2016. There has rarely been more opportunity to enter the manganese supply chain than exists today.

Towards the end of last year, manganese prices surged in response to a rapid decline of industry stock levels. These were largely caused by producers cutting output in response to the previous year’s low prices combined with logistical problems in South Africa as well as renewed demand from China. In 2017, however, prices have taken the market by surprise by continuing to rise.

This could be due, in part, to manganese’s critical role in the production of batteries. Many people are aware of the requirements for lithium and cobalt in modern portable technologies, but manganese has flown a little under the hype-radar over the last few years and only seems to be catching up more recently, and at a slower pace. The need for battery metals is reaching fever pitch, and new patents involving these crucial ingredients are emerging every month.

Already, 3M has patented its own NMC battery which is to be used by LG Chem in the Chevy Volt and Nissan Leaf, as well as by BMW, while General Electric has gone for a lithium-manganese battery. Tesla meanwhile has signed a five year exclusive agreement with prominent NMC battery researcher, Dr. Jeff Dahn, to help reduce the costs of producing its batteries, but all of these formulations require a quantity of manganese.

Additionally, the importance of manganese in agriculture cannot be underestimated, since the micronutrient market is poised to grow at 8% CAGR to $7.7bn by 2020. Not only is manganese a requisite ingredient for photosynthesis, experiments conducted in Brazil have shown that the addition of a small amount of manganese to soils can increase crop yield by around 30%, and because of this, high purity, high grade manganese

Imaging compound developed by Mass. General team produces comparable image enhancement to the standard of care with rapid clearance, less likelihood of toxicity.

A team of Massachusetts General Hospital (MGH) researchers has developed a potential alternative to gadolinium-based contrast agents (GBCAs) for magnetic resonance imaging (MRI). In their report that has been published online in Radiology, the team describes experiments showing in a primate model that the manganese-based agent Mn-PyC3A produced contrast enhancement of blood vessels equivalent to that of gadolinium-based agents, which carry significant health risks for some patients.

Manganese dioxide could make the preparation of micromotors increasingly cost-effective, opening up new avenues for their use, according to a new study from the University of Eastern Finland.

A new report released today by the World Bank highlights the potential impacts that the expected continuing boom in low-carbon energy technologies will have on demand for many minerals and metals.

Using wind, solar, and energy storage batteries as key examples of low-carbon or “green” energy technologies, the report, “The Growing Role of Minerals and Metals for a Low-Carbon Future” examines the types of minerals and metals that will likely increase in demand as the world works towards commitments to keep the global average temperature rise at or below 2°C.

According to the report, minerals and metals expected to see heightened demand include: aluminum, copper, lead, lithium, manganese, nickel, silver, steel, and zinc and rare earth minerals such as indium, molybdenum, and neodymium. The most significant example is electric storage batteries, where the rise in relevant metals: aluminum, cobalt, iron, lead, lithium, manganese, and nickel—grow in demand from a relatively modest level under 4°C to more than 1000 percent under 2°C.

The report shows that a shift to a low-carbon future could result in opportunities for mineral-rich countries but also points to the need for these countries to ensure they have long-term strategies in place that enable them to make smart investment decisions. In readiness for growth in demand, countries will need to have appropriate policy mechanisms in place to safeguard local communities and the environment.

“With better planning, resource-rich countries can take advantage of the increased demand to foster growth and development,” said Riccardo Puliti, Senior Director and Head of the Energy and Extractive Industries Global Practice at the World Bank. “Countries with capacity and infrastructure to supply the minerals and metals required for cleaner technologies have a unique opportunity to grow their economies if they develop their mining sectors in a sustainable way.”

The future demand for specific metals is not only a function of the degree to which countries commit to a low-carbon future, it is also driven by intra-technology choices. The low-carbon technologies that emerge as most applicable and beneficial, will play an important role in defining the commodity marketplace of the next 50 years. For example, the three leading forms of alternative vehicles — electric, hybrid, and hydrogen — each have different implications for metal demand: electric vehicles require lithium; hybrid vehicles use lead; and hydrogen-powered vehicles use platinum.

Demand for individual metals and minerals will reflect the component mix of low-carbon technologies, corresponding with economic changes and technical developments. To position themselves well, countries will need reliable sources of economic data and market intelligence, as well as the capacity to turn that information into plans, investments, and sustainable operations.

Based on current trends, it is expected that Chile, Peru, and (potentially) Bolivia, will play a key role in supplying copper and lithium; Brazil is a key bauxite and iron ore supplier; while southern Africa and Guinea will be vital in the effort to meet growing demand for platinum, manganese, bauxite, and chromium. China will continue to play a leading role in production and reserve levels in practically every key metal required under low-carbon scenarios. India is dominant in iron, steel, and titanium, while Indonesia, Malaysia, and Philippines have opportunities with bauxite and nickel.

A “green” technology future has the potential to be materially intensive, the report states. Increased extraction and production activities could also have significant impacts on local water systems, ecosystems, and communities. As countries develop their natural resource endowments, it will be critical that sustainability, environmental protection, and options to recycle materials be integrated into new operations, policies and investments.

“The Growing Role of Minerals and Metals for a Low-Carbon Future” report is intended to contribute to a richer dialogue around the opportunities and challenges for resource-rich countries that a low-carbon future presents. The analysis is designed to support policy-makers and other stakeholders in the areas of extractives, clean energy and climate change to better understand the issues involved and identify areas of common interest.

Researchers take another early step toward batteries that can hold more power without exploding.

Why we need an increase in production of manganese and vanadium for critical markets.

While demand for high-capacity batteries and electric vehicles are soaring, and agricultural need for fertilizer minerals grows, pressure is mounting on the mining industry to provide all the necessary materials—including both manganese and vanadium.

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All while during a meteoric rise in demand for electric vehicles and high-capacity batteries, manufacturers of these goods are running head-on into competition for materials, including from a booming agriculture sector.

Two of the most overlooked critical metals in these booming markets are manganese and vanadium.

Feature: Maxtech Ventures Inc. (TSXV: MVT) (OTC: MTEHF) is rapidly progressing towards their near-term production in both metals, which we believe has left them drastically undervalued.

Maxtech’s targeting of manganese and vanadium represents a strategic operation to provide immense value in the critical metals sector—through the increasing needs of the battery, electric vehicle (EV), and even fertilizer sectors.

BEYOND LITHIUM—MANGANESE AND VANADIUM IN THE BATTERY BOOM

As manufacturers such as Tesla Motors become household names, in this the electric vehicle renaissance, their demand for critical metals increase.

At present, the most popular being used are lithium-manganese-oxide batteries. As well, there are also lithium-nickel-manganese-cobalt-oxide (NMC) batteries, which are using 19% manganese.

Manganese isn’t a new material, but demand for it is growing rapidly thanks to the battery needs of multiple markets. For generations, the metal has been used in steel production, which still consumes 90% of all manganese supplies annually at the moment. Traditionally, the balance of the supplies have been used in fertilizer and nutrition markets.

But, while many of the newer consumers of manganese are manufacturers in the west, there is currently no manganese production in North America.

Now while manganese is quietly rising in demand within the metals markets, so is vanadium.

Sharing many similarities with manganese, including being used in steel production, vanadium’s market value is solidly on the rise. Like manganese, approximately 90% of the world’s vanadium is used in steel production.

The Economist recently highlighted that Vanadium is the latest beneficiary of the battery craze.

According to the article, the price of vanadium is rising faster than cobalt, copper and nickel, all of which are also used in lithium-ion batteries. Vanadium demand is growing through the need of the compound vanadium pentoxide, which is used as an electrolyte in vanadium redox flow batteries (VRBs).

Unlike manganese batteries, vanadium batteries are much larger, and are not used in EVs. Instead, VRBs are as big as shipping containers and are seen as better at storing large amounts of wind and solar energy, than large stacks of lithium-ion batteries.

For large-scale needs, it appears that VRBs are more economical and scalable than their lithium-ion counterparts.

Both manganese and vanadium are quietly rising in value, despite a supply gap that’s on the rise.

While the current battery boom is a major driver for both, manganese is also receiving heavy demands from another booming sector—Brazilian agriculture.

 

BRAZIL’S MANGANESE NEEDS GROWING FASTER THAN EV MARKET

Brazil is one of the world’s largest producers and exporters of sugar cane, maize, and soybeans. The agricultural sector employs 15.7% of the workforce, and is estimated at 5.9% of the country’s GDP.

The Brazilian agricultural sector has become one of the most competitive on the planet within just one generation. Output from the sector is expected to continue to rise, thus so too will Brazil’s demands on fertilizers—both in production and distribution.

Thanks to favourable weather, and being the primary beneficiary of a global soybean triangle  with the US and China, Brazil’s soybean harvest is expected to be 2-3% larger in 2018-19.

Part of the drawbacks of having a heavy agricultural output, is the strain that’s created upon the soils of the crops.

By looking at soybean crops, which Brazil is the #1 exporter of in the world, one deficiency stands out among the rest—Brazil’s micronutrient levels show that manganese is the most common deficiency noted in soybean production.

Demand for high-purity manganese in Brazil is expected to increase by 4.8% CAGR, which would equate to an additional demand of 227,000 tonnes—just for use in fertilizers!

While global demand for manganese is on the rise, and production is on the decline, the result has been a significant price increase from 2016.

But while prices rose significantly for the metal, manganese production fell in 2016 due to the quiet closures and cuts implemented in Australia, China, Gabon, and South Africa.

Which puts Brazilian farmers at a disadvantage, because for them the fight for high-purity manganese is for their livelihood, whereas there’s no sign of counter demands from the EV and battery markets waning.

The result has been a 25-30% pricing premium on high-purity manganese used in fertilizers.

So, for the few manganese providers out there in the global market, there’s a built-in incentive to sell to Brazil’s fertilizer market first, and let the EV makers move to second in line.

Hence, the location of Maxtech Ventures’ Brazilian assets being near major agricultural centers, is a key advantage for a burgeoning future manganese producer.

The use of high-quality flake manganese in the battery industry has caused the price of pure, (99.7 percent flake) manganese to surge to roughly US$2,800 a tonne, nearly double what it was in 2015. The demand for electrolytic flake manganese used in batteries is now outpacing supply by about 25,000 MT.

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WHY MAXTECH’S BRAZILIAN MANGANESE COULD BE WORTH MORE

Maxtech’s Brasnorte Project is located in Juina, Mato Grosso, and mean levels obtained on the claim were 50%+ manganese metal, with analyses performed by SGS Geosol Laboratorios LTDA., Belo Horizonte, Brazil.

The location of Maxtech’s Brazilian assets is key to the company’s strategy. Not only do the assets contain high grades of manganese, but their geographic location provides strategic advantage that other manganese operations likely cannot capitalize on.

This advantage is namely, agriculture. Beyond the demand caused by high-end batteries, manganese has another use that commands a premium—as a fertilizer.

With a 40,000-hectare flagship project located in in the Brazilian state of Mato Grosso, Maxtech is positioning itself to become one of the highest-grade, lowest-cost manganese producers on the planet.

The company’s target production is already projected at 11,500 tonnes of manganese, with an expectation of ramping up to full annual production of 80,000 tonnes per annum by 2020.

With just the growth in Brazil’s demand for high-purity manganese expected to rise by an additional demand of 227,000 tonnes, it’s possible for Maxtech and its partners to sell the majority of its manganese product domestically in Brazil for the coveted 25-30% price premium.

WHAT ABOUT THE VANADIUM?

Along with the targeting of manganese in Brazil, Maxtech is moving forward on its vanadium pursuits in Brazil, through the formation of a vanadium exploration-research team to work on identifying further potential vanadium mineralization deposits in other Brazilian areas of interest, near the company’s established high-grade manganese assets.

Maxtech has filed to acquire two vanadium mineral claims in the State of Bahia, Brazil. The total areas of interest are 3500 hectares, located in the eastern Bahia State of Brazil, which is roughly 813 km northeast of the capital of Brazil in Brasilia near the city of Maracás.

The new claims are adjacent to the producing Maracás Menchen Vanadium Mine, and the Campbell pit deposit developed by Largo Resources (OTC: LGORF) (TSX: LGO), which is a Toronto-based strategic mineral company focused on the production of vanadium flake, high-purity vanadium flake and high-purity vanadium powder.

With a new focus on vanadium, Maxtech wasted no time to form a strategic alliance with GeoXplor Corp. The new partner is a top-tier mining consulting firm with offices in British Columbia, Arizona, and Nevada and has a successful history of acquiring outstanding properties of merit. The new alliance is specifically focused on identifying new North American vanadium claims for Maxtech.

GeoXplor brings an impressive track record that involving key roles in the development of lithium brines in the Clayton Valley region, including helping discover and identify an Inferred Resource of 816,000 tonnes of Lithium Carbonate equivalent (July 2015 NI 43-101), and fulfilling the role as operators for both Lithium X Energy Corp. and Pure Energy Minerals in the Clayton Valley.

MORE HIGH-GRADE MANGANESE POTENTIAL

Maxtech’s footprint isn’t only in Brazil. The company has strategically sought out high-grade large-scale exploration licenses in Zambia, through the filing for licenses that were recently validated by Zambia’s Minister of Mines and Mineral Development.

The two specific license areas that Maxtech secured have shown the potential for high-grade manganese mineralization with grades up to 70% Mn, as well as vanadium from initial research prepared by Maxtech’s Zambian-based geology team, GeoQuest.

Moving forward, the exploration licenses submitted to the Minister of Mines have detailed exploration and production outlines up to 4 years covering not only manganese, but also for other critical battery materials including cobalt, vanadium, nickel and copper mining rights on the areas.

With major companies such as Ferroglobe PLC, Largo Resources Ltd., and BHP Billiton Ltd. each ramping up their own production capabilities to meet the market’s growing needs for their critical metals, it’s a valuable exercise to see where Maxtech’s upper potential can lead.

FEATURE COMPANY: FOR COMPARISON

Maxtech Ventures Inc.
(CDNX: MVT) (OTC: MTEHF) (FF: M1NA)
Market Cap: $5.75 million

Maxtech Ventures is a Canadian-based junior exploration company that has positioned itself to become a force in the Green Energy Revolution through assembling and acquiring mineral assets worldwide with a view to becoming a low-cost supplier of manganese and vanadium to agricultural, industrial and technology markets. The company has assembled multiple assets that it intends to develop with its established partners on the ground in strategic global regions.

Industry Leaders: A View of the Upper End for Potential Gains

The following stocks represent some of the critical metals sector’s biggest players, which have been able to leverage their interest in the developing manganese and vanadium trends. Unlike Maxtech which has significant growth potential ahead, these majors already have the upside of the new opportunities for manganese and vanadium priced in, so they do not have the potential for 10x, 20x or 30x returns like that of our feature company. However, an example of established majors can demonstrate the size and scope of the manganese and vanadium markets and their positive momentum.

Ferroglobe PLC
(NASDAQ: GSM)
Market Cap: $2.2 billion

Ferroglobe PLC is one of the world’s leading suppliers of silicon metal, silicon-based specialty alloys, and ferroalloys serving a customer base across the globe in dynamic and fast-growing end markets, such as solar, automotive, consumer products, construction and energy.

 

Largo Resources Ltd.
(OTC: LGORF) (TSX: LGO)
Market Cap: $844.672 million

Largo Resources Ltd., is a natural resource development and exploration company, which engages in the acquisition, exploration, and development of mining and exploration properties located in Brazil and Canada. The company primarily explores for vanadium, iron, tungsten, molybdenum, chromite, palladium, and platinum group metals. Its flagship project is the Maracás Menchen Mine that consists of 18 concessions covering an area of 17,690.45 hectares located in Bahia State, Brazil.

BHP Billiton Ltd
(NYSE: BBL)
Market Cap: $33.4 billion

BHP Billiton Limited is an international resources company. The Company’s principal business lines are mineral exploration and production, including coal, iron ore, gold, titanium, ferroalloys, nickel and copper concentrate, as well as petroleum exploration, production, and refining.

 

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Manganese is a little-known element yet it is the fourth most used metal in terms of tonnage, ranked behind iron, aluminum and copper.

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Its becoming readily apparent that drivers such as the growing EV and battery markets, as well as other power demands such as for steel production and agriculture are positively affecting manganese and vanadium demand and prices. Now researchers are predicting that without a new source and development for manganese and vanadium supplies could cause prices for the metals to spike and possibly lead to some serious global challenges.

Maxtech Ventures is investing in amassing a huge footprint in both manganese and vanadium, while positioning themselves to capitalize on their respective demands.

Here are examples of the positive momentum that we currently see from Maxtech Ventures:

• Fast-tracking toward near-term production with an expanded exploration program.
• Operating in the mining-friendly jurisdiction and agricultural super power of Brazil—leading global soybean exporter and prime market for manganese-enriched fertilizers.
• Holds a large (54,000-hectare) land package of high-grade manganese mineral claims located within 100 km of the nation’s most important soybean producing region—representing a path to near-term cash flow.
• Partnered with one of Brazil’s largest manganese companies to explore further and co-develop retail markets.
• Secured two massive licenses in Zambia with grades up to 70% Mn.
• Offers near term for high-grade manganese and vanadium, which are essential for expanding battery markets; no current large-scale high-grade manganese production.

And impressively, Maxtech Ventures has accomplished all these milestones since the beginning of 2017.

Manganese is still a lesser-known element, despite being the fourth most used metal in terms of tonnage, ranked behind only iron, aluminum and copper.

Because it’s still currently not widely followed, there’s a significant potential that Maxtech’s share price is presently quite undervalued. Since manganese and vanadium haven’t received sufficient coverage, companies dealing in the metals have not experienced the same market boosts witnessed by similar companies in other battery metals, such as lithium.

The market should consider Maxtech Ventures at its current stage – prior to major production on its Brazil and Zambia projects.

As we’ve seen through the early rise in the lithium space, many investors missed out on that sector’s best opportunity window. Many incorrectly assumed that the smaller players in pre-production stages weren’t worth following, and missed out on significant gains.

At the stage it is at, and with its focus on two critical metals we believe are crucially overlooked at this time, Maxtech Ventures deserves the same level of attention for its pre-emptive efforts in manganese and vanadium, before the reality of their respective supply and demand gap becomes mainstream knowledge.

 

USA News Group
Editorial Staff

 

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