The manganese market in 2024 was influenced by a wide range of factors, including rising demand for battery applications, geopolitical risks, production disruptions, and strategic investments. Toward the end of the year, lower-than-expected steel demand in China led to oversupply, which curtailed price growth. However, looking ahead, the manganese market is expected to recover over the next few years.
One of the most significant events in 2024 was the suspension of operations at the Groote Eylandt mine, operated by South32 (ASX:S32, OTC Pink:SHTLF), the world’s largest manganese producer. South32 has stated that exports are expected to resume in the third quarter of 2025, and this restoration of supply may exert downward pressure on manganese ore prices.
On the demand side, however, positive trends are emerging.
The electric vehicle (EV) sector is supporting demand in the manganese market as automakers increasingly adopt manganese-rich lithium-ion chemistries like lithium manganese iron phosphate (LMFP). These materials help lower costs and reduce reliance on nickel and cobalt.
Compared to traditional lithium iron phosphate (LFP) batteries, LMFP batteries offer higher energy density, effectively overcoming a key limitation of LFP batteries. Although LMFP batteries are slightly less expensive than nickel-based ternary lithium batteries, they exhibit superior safety, thermal stability, and chemical stability, reducing risks such as thermal runaway and fire hazards. As a result, these batteries are gaining popularity in the EV market.
In addition to their use in mid-range EVs, LMFP batteries also have applications in consumer electronics like smartphones, as well as in energy storage systems.
A December report by Fastmarkets highlighted that manganese demand is projected to grow from now through the 2030s, driven by advancements in battery chemistries such as LMFP. However, while there may be a long-term need to increase capacity for high-purity manganese, China’s supply base is expected to meet global needs over the short to mid-term.
At the same time, vulnerabilities in the supply chain have become evident due to political instability in key producing regions and heightened environmental scrutiny. To address these issues, countries like the United States and Australia have accelerated investments in refining facilities to reduce dependence on China and secure EV battery supply chains.
Similar to other battery metals, the manganese supply chain is heavily dominated by China, which has raised concerns in Western nations. In response, significant investments outside of China were made in 2024, including numerous high-purity manganese sulfate (HPMSM) production projects. Some of these projects are aligned with new or existing upstream mines, aiming to reduce risks for original equipment manufacturers (OEMs) while taking advantage of incentives provided under the U.S. Inflation Reduction Act.
In May 2024, South32’s Hermosa project in the U.S. secured a $20 million grant from the U.S. Department of Defense, aimed at accelerating domestic production of battery-grade manganese.
In September 2024, Element 25 (ASX:E25, OTCQX:ELMT) received a $166 million grant from the U.S. Department of Energy (DoE) to support the construction of an HPMSM facility in Louisiana. The project also drawn $115 million in funding from offtake agreements with General Motors (NYSE:GM) and Stellantis (NYSE:STLA).
The outlook for manganese supply security is improving as Western countries invest in diversifying their production capacity and reducing their reliance on China. However, their abilities to scale these projects efficiently will remain a key factor for the market in the years to come.
