Will battery demand trends reshape manganese supply chain?

Will battery demand trends reshape manganese supply chain?

Project Blue's Manganese Market Service explores how long-term steel and battery trends will impact the supply chain.

Blue View

The manganese market has always been driven by steel demand and over 90% of all manganese produced is processed into ferroalloys for consumption in steel. 

In the future, steel trends will continue to be the most important driver of manganese consumption patterns although battery trends are set to play an increasingly important role.

Manganese demand in steel is forecast to increase moderately over the period to 2050.  This is because crude steel itself is set to see only modest growth over the forecast horizon.

Most of this growth will come from emerging economies such as India, Indonesia, Vietnam, Iran, Mexico, and Turkey, which are expected to see output increase considerably.  However, output in most developed economies – and most critically China – is now thought to have peaked and is forecast to plateau before gradually falling back. 

If the outlook for manganese in steel is perhaps a little uninspiring, the demand potential from the battery sector is quite the opposite. 

Manganese is a key ingredient in several lithium-ion battery cathode formulations and thus a vital ingredient in key technologies that will meet the safety, durability, and performance requirements of the EV industry. 

Sizable volumes of battery-grade manganese are already consumed in LMO, NCM, and NCMA cathodes and Project Blue expects 2022 consumption of manganese in lithium-ion to be in the region of 91kt. 

But importantly, over the past two years, interest in manganese as a cathode technology has intensified, with CATL, Tesla and Volkswagen all confirming that high-manganese, high-nickel cathodes are central to their future plans.  The commercialisation of cathode technologies such as LMFP, LNMO, and NMx could mean huge additional demand for battery-grade manganese.   In Project Blue’s base case, demand is set to reach nearly 500kt by the end of the decade. 

This begs the question: where will new supply come from?  Project Blue does not foresee any shortage of manganese feedstock, given that mine producers in South Africa (and elsewhere) have abundant resources.  However, there are question marks as to where battery-grade capacity will be developed. 

While existing and planned battery-grade capacity should be sufficient to meet demand over the medium term, the vast majority of that capacity is in China.  While there are several projects waiting in the wings, there are – at present – only two major producers of battery-grade manganese outside of China – one in Belgium and one in Japan. 

With downstream lithium-ion players and automotive OEMs looking to build more sustainable, local supply chains, there are considerable opportunities for ex-China projects to supply the market, subject to robust economics and strong ESG credentials.

  • 06 Dec 2022
  • China
  • South Africa
  • Manganese
  • Batteries
  • Steel & Alloys

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