China's Manganese Stockpiles Create Market Opportunity

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The mining industry in China is both vast and critical, providing a huge portion of the global supply of many important resources. Unfortunately, China has often used this position of power to leverage market shift and make attempts to manipulate global prices by controlling supply. One such resource market that may be susceptible to this is manganese, a necessary component in making steel due to its sulfur-fixing, deoxidizing, and alloying properties of which there is no substitution. The metal is also crucial to creating a corrosion resistant aluminum alloy.

For over 30 years, manganese has been listed as the most strategic metal by the U.S. Department of Defense. However, the United States still fails to produce large quantities within its own borders, depending on exports from countries like China, South Africa, and Mexico for the bulk of its manganese supply.

EMM Critically Under-produced in North America

The issue is even clearer when one considers electrolytic manganese (EMM), an important alloying element. Electrolytic manganese is used in stainless steels, specialty metals and aluminum alloys and, at present, over 98 percent of global supply can be sourced to China. China's hammerlock on the global supply could easily become a concern if the Central Government decides to engage in price fixing and market manipulation efforts like those employed in the rare earth sector, making it all the more essential that a viable source of the metal is created on this side of the Pacific. Canada's American Manganese (AMY.TSXV) is making the effort to do just that, acquiring Arizona's Artillery Peak Manganese Properties in June of 2007 and British Columbia's Black Prince, Junction Creek and Olson Manganese Properties that July. Reports show that the Arizona properties have 13.83 billion pounds of indicated reserves and over 3.531 billion pounds of inferred reserves.

Increasing Demand Means a Prime Opportunity

As American Manganese prepares to ramp up to production, it is entering into an increasingly receptive global market. As China ramps up its production of steel, which requires 10 kg of manganese ore per tonne of crude steel, global demand continues to increase. Since the start of 2007, the price for one ton of electrolytic manganese has gone from $1,225 to over $3,500. In this climate, American Manganese has the properties in their control to help alleviate the lack of supply in the United States and ensure that international markets can't create a critical shortfall in the element at home.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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