Technology with worldwide transport implications has added a new, potentially multi-billion dollar dimension to the manganese market and further underpins WA’s biggest manganese producer’s increasingly buoyant view of the commodity.
Technology with worldwide transport implications has added a new, potentially multi-billion dollar dimension to the manganese market and further underpins WA’s biggest manganese producer’s increasingly buoyant view of the commodity.
Consolidated Minerals’ Woodie Woodie manganese mine in the Pilbara, 400 kilometres south-east of Port Hedland, already produces 10 per cent of the world’s manganese, and coincidentally provides 10 per cent of China’s imports for that country’s runaway steel industry.
As ConsMins general manager, marketing, Michael Walters described Woodie Woodie to WA Business News: “It’s a great dig-and-deliver operation.”
And his confidence is well founded, with a recent $6.5 million expansion lifting production to nearly a million tonnes a year of high-grade, low-phosphorous manganese for markets in Asia and Europe, and cementing a mine life of at least 15 years.
Overall resources recently increased by 577,100t to 15.24 million tonnes, with the all-important high-grade mineable reserves at 11.07 million tonnes. And there is more at the nearby Greensnake and Canyon prospects.
About 90 per cent of manganese consumed worldwide is used in the steel industry, where it is used as a cleansing agent to prevent oxidation and as an alloying element to increase hardness. It is an essential and non-substitutable part of steel manufacture, so demand is directly linked to world industrial growth. And at the moment that means China.
However, it is also used in the production of aluminium cans, electronics, fertilisers and, importantly, battery production. It is in the latter that the new potential has arisen.
Subaru parent Fuji Heavy Industries recently announced a major breakthrough in battery technology for the hybrid (dual petrol and electric motors) and electric cars of the future – a manganese lithium ion battery that is more portable than other technology and has a very fast charging time.
The word out of Fuji is that the manganese battery lasts longer than the common nickel hydride unit used to power hybrid cars such as the Toyota Prius, and its charge times are as low as five minutes. The aim is to get that charge time down to three minutes.
A wild card, admittedly, when it comes to manganese prices, but in October this year Toyota bought 8.7 per cent of Fuji, worth about $A420 million, after General Motors bailed out of nearly 20 per cent of the company it had held since 1999. Toyota is the world leader in hybrid development.
The new manganese lithium ion battery and its possible long-term effect on the manganese market are not subjects canvassed by ConsMins. The company is pragmatic and more short term in its view of manganese and return to investors.
Mr Walters recently returned from meetings with key customers in China and reported firmer pricing levels for both manganese ore and manganese alloys.
Further, he said that, by early next year, manganese prices would return to the strong price levels enjoyed in the second half of 2004-05.
Mr Walters said the market consensus in China was that manganese alloy and ore prices had bottomed in the first half of the current financial year, with the return of buyers to the market providing evidence for a market rebound.
“Traditionally, if Chinese buyers anticipate continued price reductions they will defer buying. However, we have recently seen buyers re-enter the manganese market, which suggests that they consider pricing will not be adjusted further downwards,” he told WA Business News.
“We are now discussing pricing levels for ore for the third quarter of this financial year moving back towards the strong prices seen in the second half of the 2004-05 financial year.”
The price rebound in China in recent weeks is reflected in firming manganese alloy prices worldwide, with alloy prices increasing in recent weeks by 5 per cent to 10 per cent in the US, by 12 per cent in Japan and by 5 per cent in China.
The actual price equation for manganese is a difficult one as they are multi-grade related, not uniform and negotiated on an individual delivery/grade basis.
The only bigger manganese producer in Australia than Woodie Woodie is BHP Billiton’s Groote Eylandt mine in the Northern Territory, which together with the company’s much larger production out of South Africa, makes BHPB the world’s biggest supplier.
Also in the Pilbara is ConsMins’ Coobina chromite project, which supplies 2.5 per cent of the world market.
