[SMM Analysis] Future Outlook on Manganese Ore Capacity and Supply-Demand Changes

Most manganese mines globally are facing the issue of gradually depleting resources. This year, a hurricane caused the GEMCO mine to halt production, further exposing its crisis of insufficient lifespan. Although many Australian mines are facing resource depletion, mines in South Africa and Gabon have a longer remaining lifespan. However, from the perspective of production and transportation of South African mines, the global manganese ore cost curve may become steeper in the future. South Africa is the world's largest manganese ore producer, most of manganese ore there is semi-carbonate rock mined underground. In contrast, Australia and Gabon have rich and shallow high-grade deposits, mainly mined through open-pit methods, which poses greater challenges for South Africa in terms of cost and price fluctuations. South African manganese ore is transported by a combination of rail and road, with cost control capabilities inferior to those of Australia and Gabon.

In the next 10-20 years, the growth in manganese ore demand will mainly come from lithium-ion battery cathode active materials, while the demand from steelmaking will gradually decline. According to relevant institutions, by 2040, the proportion of manganese ore demand from steelmaking will decrease from 94% to 87%, while the demand from lithium-ion batteries will increase from 2% to 10%. Although the global demand for manganese is expected to continue growing, the shift in demand structure will become more significant against the backdrop of peak global crude steel production.

Looking ahead, both supply and demand for global manganese are facing significant changes. The growth potential on the supply side is mainly concentrated on the development of battery-grade manganese ore, while the increase in capital expenditure for major manganese mines is limited. Some Australian mines are nearing depletion, and life extension plans are urgently needed. Meanwhile, the capacity expansion rate in major producing countries like South Africa and Gabon has significantly slowed, consistent with the growth rate of steelmaking demand. Although there is considerable growth potential for manganese demand from lithium-ion batteries, it is difficult to reverse the significant impact of steelmaking demand on manganese. In the long term, manganese ore will be in a dual reduction pattern of supply and demand, which will exacerbate price fluctuations and increase the sensitivity of supply to prices.