The latest mine production statistics available for May 2022 from the South African Department of Mineral Resources & Energy (DMRE) suggest that manganese production in the country was down 5.9% year-on-year for the January to May period.

Manganese in lithium-ion batteries is getting most of the news headlines for the metal (if any), but the market and ore supply is and will remain fundamentally driven by the steel and ferroalloy industry.

South Africa is the largest source of manganese ores globally, accounting for 40% of total contained manganese production in 2021 and while that is on course to drop this year, it is forecast to be the main source of growth. The growth in South African manganese ore production has come from burgeoning demand from China’s steel and ferroalloys industry, which sources close to 50% of its imported manganese from South Africa.

Project Blue forecasts the manganese market to remain tight over the short-term, but currently facing weak demand sentiments that have outweighed the typical cost driver of industry prices. The actual market tightness is more severe at present compared to production statistics, as logistic constraints in and out of South Africa are making it difficult to get certain materials to market, including manganese.

Outside of ores, the predominant narrative for manganese over the 2010s has been overhanging excess alloy capacity in China, however, some changes in China are setting in. Demand growth from steel is expected to slow to a CAGR of below 0.5% compared to the 3.3% rate of the 2010s, underpinned by China’s call to slow steel output as part of its 14th five-year plan. On top of this, consolidation of energy-intensive and strategic industries in China coupled with an environmental drive to curb inefficient energy consumption puts a significant volume of Chinese manganese alloy capacity at risk of closure. In such a scenario, the manganese industry would have a requirement for investment in new alloy capacity to meet long-term demand trends.