Will lithium-ion put a squeeze on manganese?

Opinion Pieces




Will lithium-ion put a squeeze on manganese?

From the “forgotten battery material” to “the next big thing” – how important will manganese be to the next generation of lithium-ion batteries and is there sufficient capacity waiting in the wings?

It has taken some time for manganese to shake off its “forgotten battery material” moniker. Geologically abundant and relatively cheap, manganese initially failed to compete for column inches with its battery-cathode cousins lithium, cobalt, and nickel – all of which have been in the headlines for supply risk concerns in recent years. 

Nevertheless, manganese has been part of the lithium-ion story since the early days. Sony introduced the world's first commercial lithium-ion battery in 1991 using lithium-cobalt-oxide (LCO) as a cathode material. A lithium-ion cell with lithium-manganese-oxide (LMO) as a cathode material followed shortly after, and was first commercialised in 1996. The three-dimensional spinel structure of LMO provides high thermal stability and safety, though its limited life span and energy density led to other cathode chemistries being more widely used. 

Its role in nickel-cobalt-manganese (NCM) cathodes saw manganese gain more prominence as a battery material – given NCM’s role in the high-growth electric vehicle market (whereas LMO is used mainly in less enticing power and motive applications). NCM batteries feature a high power rating and energy density. In NCM, manganese adds stability, forming a spinel structure to achieve low internal resistance but with low specific energy – making it perfect when combined with nickel, which has high specific energy but poor stability. 

By and large, it is LMO and NCM which have driven manganese demand in lithium-ion to date, with overall demand having increased at a noteworthy 25%py over the decade to 2022 (see chart). Given strong demand for NCM (and bigger battery sizes – a Jaguar IPace battery contains a whopping 131kg of manganese sulphate) most demand for manganese in lithium-ion is for manganese in the form of high-purity manganese sulphate monohydrate (HP MSM).  

As such, demand growth for the “forgotten battery material” has been significant – and this could be set to increase much more now that the metal has seemingly become front and centre of automakers' plans owing to its reasonable price and the potential for comparatively low carbon emission supply. 

Manganese’s future growth potential in batteries is underpinned by its potential use in promising future cathode technologies, including high-lithium-manganese (HLM), lithium-manganese-iron-phosphate (LMFP), and high nickel-manganese (Ni-Mx) bearing formulations. 

In February 2023, Umicore confirmed that it is starting the “industrialisation” of its leading manganese-rich HLM cathode active materials technology. Umicore already produces NMC cathode materials for high-performance, long-range EVs and is now setting its sights on commercial production of “HLM” cathode active material (CAM) for EVs by 2026. Umicore’s press release notes that HLM offers “…a better total cost of ownership than LFP with longer driving ranges, equivalent safety, much more reliable state of charge monitoring and better recyclability”. It is expected that Umicore would manufacture the HLM material at its plants in Poland, South Korea, and its plant in Canada which remains under development.  In 2021, Umicore and BASF entered into a non-exclusive patent cross-license agreement covering a broad range of cathode materials and their precursors, including HLM as well as NCM, NCA and NCMA.

Umicore isn’t the only key player signalling a bright future for manganese in lithium-ion. Both Tesla and Volkswagen have publicly highlighted the benefits of manganese as a CAM, while CATL has announced plans to mass produce its Qilin LMFP batteries, which offer improved energy density compared to typical LFP formulations, by 2023. 

Such announcements can be seen as positive news for manganese sulphate demand, which is set to see double-digit growth in Project Blue’s base case ten-year outlook. We expect LMFP to start to gain traction over the coming years, but the high manganese formulations are not likely to take off until later in the decade.

But what about supply?

As previously mentioned, manganese feedstock isn’t in short supply. Global reserves are estimated at 1.5Bnt with over 40% of those in South Africa – the world’s biggest mine producer. Even the most bullish of lithium-ion forecasts won’t prompt concerns over future manganese feedstock supply (although of course, some deposits are more suited for battery feedstocks than others owing to grade, and deleterious elements etc.) 

Project Blue expects battery-grade manganese sulphate to also remain sufficiently supplied over the coming decade.  As shown in the chart, HP MSM demand was around 86kt (contained manganese) in 2022 while global capacity is currently thought to be more than double that. What’s more, there are projects in the pipeline which could potentially add a further ~400kt to that amount, though not all projects under development are expected to be successful. 

However – nearly all of that capacity (and future capacity) is in China. As of 2022, China accounted for 98% of HP MSM production and is home to 14/16 producers of battery-grade manganese (the others are in Belgium and Japan). This could pose a problem for western OEMs hoping to create more local, sustainable supply chains for EVs and batteries. 

HP MSM isn’t the only problem in this regard.  Similar issues exist with the pre-cursor cathode active material (PCAM) stages of the supply chain – which is also concentrated in China, with limited capacity planned for construction in Europe and North America. If policymakers want to make OEMs enforce strict procurement of ex-China material the issue of HP MSM production and PCAM production outside of China needs to be overlooked or overcome. 

There is uncertainty as to whether a large ex-China market for HP MSM will develop. If it does not, it would mean that China will continue to dominate HP MSM supply. Global CAM procurement from China would also endure, thwarting the attempts of OEMs to build local supply chains, which overall could impact the commercialization of high-Mn formulations. 

Alternatively, a ROW supply chain could develop. This would require a selection of ROW producers/projects to be successful in overcoming three main challenges for HP MSM production. The first challenge is investment, as large amounts of CAPEX will be required from developers, OEMS, institutional investors and other sources of capital. The second is technology, with limited production know-how outside of China and Chinese producers able to adapt more quickly to evolving end-user requirements. The third is price – and whether consumers will tolerate a premium to Chinese HP MSM. If these challenges can be surmounted, a developing a market based on high-purity ore as feedstock and selling, ultimately, to western OEMs could be formed. There are various projects targeting this aim though overcoming the three key challenges will prove a test for even the most experienced developer.