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Manganese: Why This Critical Steel, Battery and EV Metal Should Be on Your Radar

Manganese is in high demand because of its applications in steel, batteries and electric vehicle production.
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Strategic metals are no less important today than they were after World War II, when the US government famously started building its reserves of metals it called “strategic.” At the time, that decision marked a shift in policy to ensure the US would have access to critical metals should it be called to war to defend its allies.

American leadership saw how Germany practically starved Britain with submarine attacks on British and Allied shipping vessels. On the other hand, the US managed to break the back of the Japanese economy by sinking over 90 percent of the Japanese merchant fleet. Both of these events show how cutting a country’s supply lines (including critical metals) in times of war can devastate a war-time economy.

During the Cold War, that same fear saw the US maintain its “strategic stockpile” of metals. Those metals included indium, chromium, cobalt and molybdenum as well as diamonds. In 1987, the US added manganese to the stockpile. The reason? Manganese is essential to the production of steel as it increases the strength and flexibility of steel. Steel cannot be made without manganese. For every tonne of iron, 10 to 20 pounds of electrolytic manganese metal must be consumed, resulting in it the fourth-most-traded metal in the world. Only aluminum, iron ore and copper are more widely used.

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Giyani Metals (TSXV:EMM) is focused on the development of its three manganese projects in the Kanye Basin of Botswana, Africa. The company’s flagship K.Hill project is a near-surface deposit currently going through a feasibility study to produce, on-site, both high-purity electrolytic manganese metal and manganese sulfate, key cathode ingredients for batteries in the expanding electric vehicle (EV) market.Send me an Investor Kit

Since the end of the Cold War in the early 1990s, the US government has sold off its strategic stockpile. This has made the country vulnerable to foreign metal producers such as China, which produces 90 percent of the rare earths used in smartphones, green energy applications and missile-guidance systems. In addition to its importance to steel, manganese has also become an essential part of green technology, particularly in batteries for electric vehicles.

According to the Mineral Resources Program conducted by the US Geological Survey, the US is entirely reliant on manganese imports as it has no production capacity of its own. The US’ situation is echoed in most industrialized countries, including those in Europe. According to the US Geological Survey, manganese ore containing 20 percent or more manganese has not been produced in the US or Canada since 1970.

Rising steel demand will keep the focus on manganese

The steel industry is responsible for as much as 90 percent of manganese consumption. According to a report by Market Research Future, the global steel market is expected to reach US$9.63 billion by 2027 with a compound annual growth rate (CAGR) of 2.5 percent over the forecast period. Rising steel demand is expected to be driven by a number of factors, including technological innovations and the growing need for sustainable, low-cost and durable building materials.

Growth in steelmaking shines a spotlight on manganese as a critical metal, which is defined as a metal that is essential to the economy and has a significant risk of supply interruptions. If one of the few nations that supply manganese to the US falter unexpectedly, the implications for steelmaking could be dire.

EV metal: Emerging battery technologies are leading the charge

Manganese is an electric vehicle or EV metal, used to produce batteries for electric vehicles and other renewable energy applications such as electricity grid storage for Tesla’s (NASDAQ:TSLA) Powerwall batteries. Its status as a battery metal is expected to propel its demand in the wake of what experts predict will be a widespread transition to EVs driven by lofty climate policy goals and zero-emission targets.

This metal represents a critical link in the lithium-ion battery supply chain. Electrolytic manganese dioxide (EMD) is an upgraded form of manganese that serves as a key ingredient of lithium-ion, alkaline and zinc-manganese batteries. However, despite the US being the largest consumer of EMD, China has long dominated the space. Globally, experts note the supply chain’s high barrier to entry. While mining the metal may be simple, processing it is technically challenging and quite expensive — especially for battery-grade manganese.

Companies like Giyani Metals (TSXV:EMM) have positioned themselves to capitalize on a rapidly expanding EV market by producing high-grade electrolytic manganese metal and manganese sulfate, both key cathode ingredients in EVs. The company’s unique near-surface deposit benefits from significant infrastructure owing to its location in Southern Botswana, Africa, in a well-established mining district with direct access to multiple shipping ports.

Manganese offers a number of benefits when compared to its fellow battery metals. While Tesla used to rely on nickel-cobalt-aluminum (NCA) batteries for the EVs in production at its Gigafactory in Nevada, new batteries made from nickel, manganese and cobalt (NMC) offer lower raw materials costs, a reduced charging time and a longer lifespan. Manganese sells for a little over $1 a pound versus around US$20 per pound for cobalt, allowing for a much cheaper battery, which accounts for half the price of a vehicle made by Tesla. Cobalt also has an unstable supply chain, with few mines producing pure cobalt.

Other large purchasers of new battery technology are shifting to NMC batteries, including 3M (NYSE:MMM), BMW (ETR:BMW), General Electric Company (NYSE:GE) and Duracell.

Manganese is also used in the nickel-metal hydride (NiMH) batteries seen in hybrid vehicles, including the Toyota Prius, and in up-and-coming lithiated manganese dioxide (LMD) batteries. LMD batteries, which consist of 61 percent manganese and 4 percent lithium, are said to have higher power output and better thermal stability and are safer than regular lithium-ion batteries.

Solar and EV growth is just getting started

Manganese is also used to make solar panels. In solar power, the use of manganese atoms increases the electric current produced by a solar cell by 300 percent, according to the US Department of Energy. In 2019, the global market for solar photovoltaic panels was valued at US$115.2 billion. Growing demand for renewable energy and government-implemented incentives are expected to accelerate the market in the coming years with a CAGR of 4.3 percent between 2020 and 2027.

The EV market is expected to see a similar rise in interest. More than two million battery-electric and plug-in hybrid electric cars were sold in 2019, a 40 percent increase from the previous year. In the past year, the EV market has made great strides, with original equipment manufacturers investing billions of dollars into the development of new electrified models. Ford (NYSE:F) released an all-electric version of its iconic Mustang, while General Motors (NYSE:GM) is planning to deliver the first-ever electric Hummer in Q3 2022. While manganese is a key building material for EV batteries, the critical mineral also plays a role in the form of advanced high-strength steels, which offer greater reinforcement in the event of a crash.

The takeaway

Manganese is in high demand because of its applications in steel, battery and electric vehicle production. Add to that shifting government policies when it comes to climate change, renewable energy and the shift away from fossil fuels and it’s clear just how important this strategic metal is today. Companies with the potential to supply growing manganese demand will be well-positioned to capitalize on this potential growth story.


This INNSpired article is sponsored by Giyani Metals (TSXV:EMM).This INNSpired article provides information which was sourced by the Investing News Network (INN) and approved by Giyani Metals in order to help investors learn more about the company. Giyani Metals is a client of INN. The company’s campaign fees pay for INN to create and update this INNSpired article.

INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.

The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Giyani Metals and seek advice from a qualified investment advisor.

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Energy & Critical Metals

Trident Royalties should benefit from the Thacker Pass resource upgrade

 
Trident Royalties (TRR.L) still seems to be flying a bit under the radar but over the course of the past fifteen months, the company has acquired some…

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Trident Royalties (TRR.L) still seems to be flying a bit under the radar but over the course of the past fifteen months, the company has acquired some interesting royalties on non-precious metals deposits. One of the key assets in the portfolio is the 60% ownership in an 8% gross revenue royalty (4.8% attributable to Trident).

Thacker Pass is operated by Lithium Americas which wants to bring the project into production in the next few years. Ahead of the development of the mine, Lithium Americas has released an updated resource estimate on Thacker Pass, which now contains 13.7 million tonnes of LCE in the measured and indicated resource categories and an additional 4.4 million tonnes of contained LCE in the inferred resource category (at a respective grade of 2,231 ppm and 2,112 ppm lithium). The results of this resource update allow Lithium Americas to investigate a production scenario of 40,000 tonnes of LCE per year followed by a Phase 2 expansion to 80,000 tonnes per year (up from 30,000 tonnes and 60,000 tonnes respectively).

As mentioned, Trident owns 60% of an 8% GRR but it’s very likely Lithium Americas will repurchase the GRR to the bare minimum, especially in the expanded production scenario as an 8% GRR would result in an annual royalty payment of over $64M at the current lithium prices. The image below shows the different clauses and conditions related to the royalty:

We should indeed assume Trident will end up with an attributable gross revenue royalty of 1.05% as it would make zero economic sense for Lithium Americas to forego the repurchase of the royalty. As it would only cost Lithium Americas US$22M to save about $38M per year in royalty payments at 40,000 tonnes per year and a LCE price of $15,000/t. This means Trident will likely receive US$13.2M in cash when Lithium Americas repurchases the royalty while the remaining 1.05% will bring in over $6M per year (again at 40,000 tonnes per year and a $15,000/t lithium price).

This makes the Thacker Pass royalty very valuable for Trident Royalties and as the Thacker Pass project gets derisked, the value of the royalty will increase towards a value that could likely be in excess of the current market cap of Trident.


Disclosure: The author has no position in Trident Royalties. Please read our disclaimer.

Author: CR Team

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Q3 Report: King coal makes return amid Europe’s record gas prices

Record gas prices across Europe saw coal and lignite make up a greater share of Europe’s fuel mix than gas in the third quarter of 2021.
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Record gas prices across Europe saw coal and lignite make up a greater share of Europe’s fuel mix than gas in the third quarter of 2021.

That was one of the key standouts from the latest report from energy market data analyst EnAppSys, European Electricity Generation Summary Q3-2021.

European coal and lignite plants produced 110TWh during the quarter compared with 92TWh generated by gas-fired plants.

Image credit: EnAppSys

Gas-fired generation output was 21TWh (18%) down on the previous quarter and 55TWh (37%) lower than in the same quarter last year. Meanwhile, coal generation in Q3 2021 was 21TWh (24%) greater than the previous quarter and 19TWh (21%) up on the same quarter last year.

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Jean-Paul Harreman, director of EnAppSys BV, said: “The sustained trend of increasing gas prices across Europe was driven by several factors, including the need to replenish low levels of storage resulting from a long cold winter last year, high levels of global LNG demand and limited flows of Russian gas into Europe as Russia reportedly sought to replenish its own storage stocks.

“The high price levels flipped the economics of coal/lignite versus gas-fired generation, despite the high price of EU Emissions Trading Scheme (ETS) allowances resulting from the increased demand caused by such fuel-switching.”

Image credit: EnAppSys

The third quarter of 2021 saw electricity demand reach 653TWh, slightly below levels in most previous years although 2% higher than in the COVID lockdown-affected Q3 last year.

Renewable output contributed more than 40% of total generation in Q3, as increasing levels of installed wind capacity offset the impact of reduced wind speeds throughout the period. After low levels of output in Q3 last year, nuclear output of 184TWh returned to levels more typically seen in the same period in previous years. 

The EnAppSys report, GB Electricity Market Summary Q3-2021, shows that in the United Kingdom, record-breaking power prices were seen in the third quarter as margins of generation over demand were squeezed due to very low wind output. 

System prices, day-ahead prices and within-day off-peak prices all increased dramatically from the previous quarters – and hit record highs towards the end of the quarter.

EnAppSys said the record prices were due to several factors, including lower wind generation, low nuclear utilisation and unfavourable conditions for solar, higher imports and low European gas storage levels following a long winter last year, which led to extreme gas prices.

Paul Verrill, director of EnAppSys, said: “High wholesale electricity prices throughout the quarter were driven by gas prices, which were already high at the start of the quarter at £31.37/MWh and continued to rise further as the quarter progressed. The price passed £50.00/MWh on September 13 and closed the quarter at £72.01/MWh, showing no signs of easing. A major contributor to this is the global gas shortage, with total European stored gas reserves not yet replenished after a long winter and being around 25% lower than the same period last year. Indeed, these reserves were lower than in any Q3 since 2015.

“Carbon allowance prices were also at an all-time high, rising consistently from August onwards and peaking at £75.57/te on the penultimate day of the quarter. This also fed into the high level of wholesale electricity prices seen throughout the quarter.

“The break-even cost of gas generation increased to such a degree that by mid-September, at times it became cheaper to generate using the least efficient coal units than the most efficient gas units.

“The record prices were also driven by lower wind output, which was 28% down on levels seen in the same period last year, while low nuclear utilisation and unfavourable conditions for solar further reduced supply margins.

“Looking ahead to Q4, if levels of renewable generation remain low, trends of high prices are likely to continue into the winter.”

Due to the low levels of renewables and nuclear, interconnectors from the continent saw record level import volumes, although a fire at the IFA interconnector in September reduced capacity in the last two weeks of the quarter.

Gas and coal made up the majority of the generation (42.5%), while renewables accounted for 29.1%. Imports (12.4%) and nuclear 16.1%) made up the rest of Britain’s power mix during the quarter.

Paul Verrill continued: “Average APX prices reached £128.59/MWh, a 78.1% increase from Q2. System prices peaked at a record £4,037.80/MWh on September 9. This was the highest imbalance price seen since the £5,003.33/MWh in June 2001, shortly after NETA Go-Live, breaking the next highest for this year that had been set on January 8 2021 at £4,000.00/MWh at 19:00 and 19:30.

System Summary – System Prices. Credit: EnAppSys

“The average system price was £126.14/MWh, the highest of any quarter back to the start of our dataset in Q4 2011, with the next highest being an average of £74.85/MWh in the previous quarter.

“Auctions for the UK Emissions Trading Scheme allowances launched in May 2021, with clearing prices initially higher than those for the EU scheme that it replaced, amounting to £48.01/te for GB compared with £42.37/te for EU. They had converged to within around £2.00/te from June until September, but then diverged with GB prices peaking at £75.57/te on September 29, while EU remained under £55.00/te.”

The third quarter of 2021 also saw ten energy suppliers cease trading amid the surge in wholesale gas prices, most notably Avro, Green and People’s Energy. In total, more than 1,840,000 customers were affected.

All reports are available online.

The post Q3 Report: King coal makes return amid Europe’s record gas prices appeared first on Power Engineering International.

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Even After Soaring in its Debut, President Trump’s Social Media SPAC DWAC Could be an Interesting Speculation

On October 20, former U.S. President Donald Trump, perhaps the most polarizing world figure in decades, announced an agreement whereby
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On October 20, former U.S. President Donald Trump, perhaps the most polarizing world figure in decades, announced an agreement whereby the newly formed Trump Media & Technology Group (TMTG) will merge in a SPAC transaction with a SPAC sponsor called Digital World Acquisition Corp. (NASDAQ: DWAC). TMTG intends to launch a conservative social network called TRUTH Social. Ultimately, after regulatory and shareholder approval, TMTG would become the surviving publicly traded company.

Details on the venture are scarce, but TRUTH Social plans to launch for invited users in November 2021 and hopes to be available to all users in early 2022. The company also expects to create a subscription video-on-demand service.

TMTG says the enterprise value (EV) of the company will be US$875 million. An undefined US$825 million provision was also mentioned, which could bring the initial EV to US$1.7 billion. We note these figures are presumably based on an initial US$10 share price, as is the convention with SPACs. 

Since DWAC is trading at about US$45 as of yesterdays close, the current implied EV could be around four or more times these US$875 million/US$1.7 billion figures. Reflected in these calculations is some portion of the US$293 million of cash that DWAC has in trust. This cash will initially fund the launch of TRUTH Social. It is not clear if the DWAC-TMTG venture will include private investment in public equity (PIPE) financing that is typically part of SPAC transactions.

It would be easy to scoff at this transaction. In a typical SPAC transaction, the underlying business may not yet be generating revenue, but it is at least operating (e.g., electric vehicle SPACs). TRUTH Social is not yet even operating. In addition, the Trump venture provides no forecast information. Since such forecast information is used to justify (frequently inflated) SPAC valuations, this raises the question of how the initial enterprise valuation was determined.

However, Trump supporters are very loyal and may be inclined to support his venture enthusiastically. Indeed, former President Trump raised US$170 million from donors in just a few weeks last fall to fight what he termed election fraud. 

More explicitly, many Trump supporters could very well join his platform, including as paying subscribers. To put this in a numerical context, President Trump, at his peak before he was barred from appearing on various social media outlets, had 146.5 million total followers on Twitter, Facebook and Instagram combined. If even a fairly smaller fraction of these followers were to join TRUTH Social, that platform could have many tens of millions of members.

To put this in economic perspective, consider the following: Twitter (NYSE: TWTR) currently has 396.5 million users, including 206 million active users. Its stock market value is US$52 billion. While the number of active users is far from a direct link to stock market capitalization, it does not seem impossible that TRUTH Social could achieve a daily active user base (and therefore an advertising audience) of perhaps a third of Pres. Trump’s previous total followers, or around 50 million. Based on Twitter’s valuation, the market could value such a venture at significantly more than just US$4-US$7 billion.

Clearly, DWAC is a highly speculative stock, but the outsized media attention that is lavished on its very public leader could bring many members and subscribers to the upstart social media platform. That attention could drive its equity value well above current levels. After all, “There is no such thing as bad publicity.”

Digital World Acquisition Corp. last traded at US$101.50 on the NASDAQ.


Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Even After Soaring in its Debut, President Trump’s Social Media SPAC DWAC Could be an Interesting Speculation appeared first on the deep dive.

Author: Jim McFadden

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