The issue of green energy has loomed large in the minds of Americans over the last several years. A loud public debate over the future of American energy concerns has raged in the political arena for some time. However, it does appear that the general trend of energy policy at home and abroad is towards a reduced dependence on fossil fuels.
One potential economic consequence for this push towards green energy could lie in the rising price of manganese. Electrolytic manganese, particularly, could see a major increase in demand on account of its use in making the cathodes for lithium ion batteries that are used in electric cars. Electrolytic manganese, which until now had primarily derived demand from the steel industry that uses the metal as an alloying agent in steel and aluminum, cannot be replaced and represents a key component in the creation of these batteries.
An increase in electric vehicles on the road should spark a significant jump in demand for electrolytic manganese. Hyundai recently announced an offer to guarantee a lifetime hybrid battery replacement guarantee for its 2012 Sonata Hybrids. However, the lithium ion batteries could have even more green energy applications. The batteries are also being explored as a method for storing energy at solar plants, something that could help solar plants shift energy to the evenings during peak demand.
“Global demand for manganese in batteries has been relatively stable at about 300,000 tons per year… in Japan, Europe and North America, future demand for EMD in primary batteries is likely to be relatively flat, whereas use of manganese for lithium-ion (Li-ion batteries) secondary batteries will rise strongly,” stated London-based Roskill Information Service.
American Manganese Poised to Capitalize on Trend
The increased demand for manganese, particularly in America, could create a major opportunity. At the moment, 98 percent of global supply is produced in China, offering the Chinese the ability to manipulate pricing. This, though, means that North American-based manganese producers like American Manganese (AMYZF), (AMY.TSXV) have a real opportunity to take advantage of an imbalanced market. Manganese produced at locations like American Manganese's Artillery Peak Deposit in Arizona can avoid the 20 percent export duty charged by China as well as the 14-percent import charge here in the United States.
Taken all together, American Manganese could be well-positioned to take advantage of the growing global demand for electrolytic manganese, driven by green energy concerns, by becoming the first producer of the metal outside of either China or South Africa.