Long road ahead for ‘green’ manganese metal

Progress is being made toward fostering more environmentally friendly manganese metal production, with market participants increasingly considering the carbon emissions and environmental impact of electrolytic manganese metal (EMM) production

Despite the progress, which includes plans by a number of producers to adopt an environmental, social and governance (ESG)-centric philosophy and a willingness by some consumers to pay a premium for low-carbon selenium-free material, there remains a long road ahead for ‘green’ manganese metal.

Manganese flake, a form of EMM, has predominantly been used as an alloy in the production of stainless steel and aluminium.

This past week, Fastmarkets launched a new suite of green steel prices to cover the blossoming market for low-carbon or sustainable steel, aiming to bring transparency to the industry’s drive toward decarbonization.

Manganese is also used extensively to produce high-purity, battery-grade manganese sulfate, used in many lithium-ion batteries for electric vehicles (EVs), including nickel-cobalt-manganese (NCM) batteries.

What industry leaders are already doing

Unlike the steel and aluminium sectors, where significant progress has been made in the mainstream commercial market to push for reduced-carbon production, there appears to have been less of an impetus for low-carbon manganese flake – though some newer producers have made ESG and carbon emissions standards central to their offerings.

Morne Ruiters is marketing executive of South Africa-based Manganese Metal Company (MMC), which produces high-grade, selenium-free manganese.

In an interview with Fastmarkets, he delved into his company’s particular focus on ESG standards and the overall outlook for “green” manganese metal.

Ruiters said he believes the comparatively slow progress toward low-carbon EMM production could be credited to the relatively small global market, compared with markets like steel, as well as the lower cost of manganese when compared with other alloying materials like nickel and chrome.

This was corroborated by a major manganese flake consumer.

“We are not yet ready to report [the carbon emissions of our consumed manganese flake], and it is one of the smallest products on our team, so we have other priorities at the moment,” the consumer said.

But the consumer acknowledged that attention would eventually turn to the material. “Of course, it’ll have to happen,” they said.

Ruiters added that a further obstacle toward the creation of “green” manganese is Chinese producers’ dominance of EMM supply and demand dynamics — China produces over 90% of global EMM and more than 60% of manganese.

The low-priority attitude toward EMM also exists for battery end-users, Ruiters said.

“Most of your steelmakers and other manganese consumers would target nickel and chrome first, and raw materials like manganese will probably be looked at later, which is the same in the battery industry,” he said. “There is a lot of focus on lithium, nickel and cobalt because they are so expensive, and you know commodity like manganese always gets overlooked initially.”

This phenomenon is bound to change, he argued, since “the spirit of ESG” in green steel and aluminium is to procure sustainable products regardless of the relative price of the commodity.

However, passing higher ESG costs through to the end customers remains a huge challenge, Ruiters said.

Responsible, sustainable purchasing comes at a price, he said, while observing that most market segments are not ready to pay more for ESG-conscious producers’ higher-priced products. Quantifying such ESG costs in product pricing is also very difficult, since the scope of ESG is very broad and “ESG compliance” depends on the scope suppliers set for themselves.

In comments to Fastmarkets, Matt James, president and chief executive officer of Euro Manganese, a battery materials company aiming to become a leading producer of high-purity manganese for the electric vehicle industry, discussed his company’s focus on ESG-friendly production.

Euro Manganese is advancing the development of its Chvaletice Manganese Project in the Czech Republic and is exploring an early-stage opportunity to produce battery-grade manganese products in Bécancour, Quebec, James said.

The company has completed a Life Cycle Assessment (LCA) for its Chvaletice project – not yet in operation – to understand the environmental impact, including carbon footprint, from the production of two high-purity manganese products: High Purity Manganese Sulphate Monohydrate (HPMSM) and High Purity Electrolytic Manganese Metal (HPEMM).

The LCA indicated that by using 100% renewable energy in place of standard Czech grid power, the company can reduce its carbon emissions by over 50%, James said.

“We have [a memorandum of understanding] in place with [European renewable power generator] Statkraft to provide 100% green power for the project and intend to recycle a portion our CO2 and hydrogen process emissions,” he said.

“Opportunities exist to further reduce our carbon footprint by sourcing reagents from manufacturers with lower environmental impact than those assumed in the LCA [and] we are committed to identifying and selecting suppliers with commitments to decarbonization,” James said.

The company has noticed an increased focus from its potential customers — battery makers and automotive original equipment manufacturers (OEMs) — on procuring low-carbon, responsibly-produced raw materials.

“That’s likely being driven by a few factors. One: their own commitments to net zero, and two: regulation,” James said.

Ruiters believes that companies like MMC, with a pre-existing focus on sustainable practices, are bound to reap rewards in the future when high purity manganese products procurement shifts toward considering carbon emission reporting, transparency and wider sustainability practices.

Other Western-based companies, such as mining giant Eramet Group, are also looking toward reducing carbon emissions in their production.

The group mines manganese ore and is a world-leading producer of refined manganese alloys.

“Eramet Group achieved a world first by producing the first grams of totally carbon-free manganese metal,” a spokesperson told Fastmarkets, adding, “this was a great victory for our innovation teams.”

The spokesperson said the group intends to achieve carbon neutrality by 2050 and “must aim to develop carbon-neutral production channels for manganese and be very proactive in [its] carbon-reduction programs.”

More expensive, more environmentally friendly production

Low-carbon, more environmentally friendly production of manganese flake inherently comes with an accompanied premium price tag, Fastmarkets understands.

Ruiters explained that there is a premium on MMC material versus its China-origin alternative.

In the case of MMC, customers are willing to pay this price, Ruiters said, in significant part due to the absence of selenium – which is typically used as an additive for Chinese manganese flake production. Selenium reduces the cost of production significantly but is a very toxic element, both for employee health and the environment.

“Most of our customers want selenium-free material, some of them have technical reasons, others are making a primarily sustainable decision,” he said. “So, a major section of our customers wants to use our non-selenium product for good ESG credentials.”

The premium on MMC material is applied to production costs, as opposed to margin, Ruiters clarified, because of the higher cost of production associated with the selenium-free process and sustainable production in general.

Euro Manganese also reported that premiums are beginning to be ascribed to lower-carbon raw materials.

“For example, the pricing mechanism outlined in our offtake term sheet with French battery market Verkor is linked to the carbon footprint of our products,” James said.

“If we lower our carbon emissions from what is outlined in our LCA, we receive a price premium [and] conversely, if we don’t meet our emissions targets, we give a price discount,” he said.

The company also specifies it does not use selenium in its process and intends to further reduce its environmental impact by using wastewater from a neighboring power plant.

China-concentrated production

The vast majority of manganese flake production is currently concentrated in China, and market participants speaking to Fastmarkets reported difficulty in acquiring information related to carbon emissions from manganese flake producers in the country.

One trader reported difficulty in finding specific information and was uncertain as to whether it was because the information was not available or because the producers were unwilling to provide it.

“It could be either way – they could not have the figure, or they could be worried the figure’s release would have some negative impact on their [commercial appeal],” the trader said.

Another trader reported that most producers had been unwilling to provide specific data on carbon emissions, but that one, with which their trading house had a long relationship, was able to oblige.

The second trader acknowledged that there was a premium on more environmentally friendly material but observed that some countries – in Northern and Central Europe especially – are particularly keen to only acquire material from trusted countries.

“They’re very strict about who they buy from and want to use producers in countries that are solid [in terms of ESG credentials],” they said.

There are signs that the Chinese production sector is undergoing a change in perspective regarding ESG standards, although it is uncertain how concrete this shift is.

Qingdao Manganese Investment Cooperative Enterprise, a partnership between leading Chinese manganese flake producers, was established in March 2021 with the self-professed goal of ensuring the green, healthy and stable development of the “entire manganese industry.”

Despite a notable growth in alternative energy sources in China, most energy generation in the country currently comes from high carbon-emitting coal, according to International Energy Agency (IEA) statistics.

Fastmarkets’ assessed price for manganese 99.7% electrolytic manganese flake, in-whs Rotterdam was $2,050-2,195 per tonne on Friday June 9, whereas the price for manganese 99.7% electrolytic manganese flake, fob China was assessed at $2,050-2,100 per tonne on the same day.

Both prices have been on a general downward trend in recent weeks, while weak demand has undercut the impact of production cuts in China.

Advances needed in reporting standards

Along with the need for clarity on what, exactly, constitutes “ESG-friendly” manganese flake, there is a need for more unified reporting and certification standards for mining and metal ESG, with producers looking to disparate certification and reporting companies to assist.

This was corroborated by Trevor Jones, CEO of Lynx Global Intelligence, which provides ESG data-gathering software for the mining and mining finance industry.

While he declined to disclose individual clients, he said the company does interact with the manganese sector.

“A challenge to Western markets will include increasing pressure to source sustainable and ESG-verifiable jurisdictions for manganese,” Jones said, adding that this challenge is already reflected in consumer marketing and information.

Indeed, both MMC and Eramet participate in a variety of initiatives intended to verify their ESG credentials.

Both are certified by the International Organization for Standardization (ISO) and reported collaborating with other organizations.

In the case of MMC, a current state assessment was recently performed by leading global auditing and consultancy firm PwC, which Ruiters said lends weight to his company’s ESG transparency claim.

“If you have a credible external body, who came to your site and verified your governance standards and environmental impact, it helps a lot,” he explained.

Eramet’s spokesperson reported that the group answers the Carbon Disclosure Project climate change questionnaire, which assesses the progress made by companies in terms of transparency and environmental leadership.

“In 2022, Eramet joined the leading companies in its “metal smelting, refining and forming” business sector by receiving an A- rating, compared with a B in 2021 and a D in 2019,” the spokesperson told Fastmarkets.

The perception around what good ESG standards constitutes has shifted in recent years, but uncertainty persists.

Customers are beginning to focus more and more on carbon emissions, Ruiters told Fastmarkets.

“If you speak about ESG now, some customers almost throw out the rest of the metrics from the conversation and just focus on carbon emissions,” he said.

Holly Chant in London contributed to this report.

Keep up to date with global market manganese insights and predictions for 2023 and beyond.

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