Bloomberg South 32 Ltd. aims to accelerate development of the first new US manganese mine for decades as carmakers rush to secure the metal needed in electric vehicle batteries.
Chief Executive Officer Graham Kerr said that automakers are very keen to secure supply from the company's Clark Deposit in Arizona, which would become the only local source of metal. The bigger challenge is to get it to them quickly? Demand for manganese from the battery sector is expected to grow ninefold by 2030, the fastest growth rate of any of the industry's key metals, according to BloombergNEF. The effort to reduce the supply chain reliance on China under President Joe Biden's Inflation Reduction Act, or IRA, has bolstered the prospects for production in the US.
Ford Motor Co. and General Motors Co. are among automakers that are actively adding new raw materials supply deals and trying to speed up development of local sources, stoking competition for commodities with rivals such as Tesla Inc.
South 32 s Arizona-mined manganese would be attractive to US carmakers because it would help them claim tax credits under Biden's IRA, Kerr said at the company's headquarters in Perth. The law, enacted in August, will grant credits for products with a percentage of materials extracted and processed in the US or in countries that have a free trade agreement with Washington.
According to Kerr, discussions with prospective customers included the possibility of adding refining in the US to deliver electrolytic manganese metal products, which would avoid the need to send raw materials to China or elsewhere for processing into specialist battery inputs.
He said last week that it wouldn't be a high-end refinery from our side. It would be a relatively simple process. South 32 increased by as much as 6.2% in Sydney trading Tuesday, outpacing gains in Australia's benchmark index.
South Africa, Gabon and Australia account for more than two-thirds of the production of manganese, mainly used in the steel sector, and domestic output in the US - which once had mines in states including Virginia ended in the 1970 s. China currently dominates refining of the metal into materials used in the battery sector, accounting for 95% of manganese sulfate production capacity last year, according to BloombergNEF.
The development of the Clark Deposit at South 32 s Hermosa Mine project could be accelerated under US legislation aimed at promoting the development of clean energy and other infrastructure projects, Kerr said.
South 32 has allocated $290 million of capital expenditure to work on Hermosa for the current fiscal year, including a pre-feasibility study of the Clark Deposit. The work will look at potential plans for development and is expected to be completed this year, according to the company. The deposit contains 55 million tons of ore with a 9% manganese content.
Kerr said the project could be eligible for US government funding. In July, US Energy Secretary Jennifer Granholm urged miners, including Australia-based companies to explore potential support from agencies such as the Department of Energy's loan programs office.