MANGANESE ORE
Global ore production in 2009 was estimated to be 9.6 million tons of manganese content. Ore production is mainly from eight countries: South Africa, Australia, China, Gabon, Brazil, Ukraine, India and Ghana.
The production of high-grade ore is concentrated in Australia, Gabon, South Africa and Brazil
MANGANESE ORE PRODUCTION IN 2009 - (thousands of tons of manganese content)
China* 2,278
Australia 1,641
South Africa 1,391
Brazil 888
Gabon 881
India* 802
Kazakhstan* 391
Ukraine* 388
Ghana* 180
Mexico* 126
Georgia* 98
Other* 591
Worldwide 9,655
* Low grade ore. Source: International Manganese Institute and ERAMET
The main producers of high-grade manganese ore are BHP Billiton (Groote Eylandt / Samancor), Eramet (Comilog) Assmang (Nchwaning/Gloria) and VALE (Azul)
There is no futures market for manganese alloys. Prices are agreed directly between producers and customers. For scheduled sales, alloy prices are often agreed on a quarterly basis. Non-scheduled sales are agreed on the basis of spot prices.
The manganese market is above all global and highly competitive. However, prices can sometimes vary between geographic areas (Europe, North America and Asia) because of movements in currency rates or out-of-step economic cycles. These differences are usually only temporary.
Furthermore, the positions of the various alloy groups also vary because of their relative values in use. In particular, refined alloys have higher selling prices than standard alloys.
Outside Europe, manganese alloy prices are mostly denominated in US dollars. In Europe, they are mainly traded in Euros. Prices are determined per gross ton of alloy and not per manganese content. However, product quality, particularly manganese content, is taken into account when negotiating.
The selling price of manganese ore, as with alloys, is agreed directly between sellers and buyers. They are typically stated in US$/dmtu (dry metric ton unit).
A dmtu corresponds to 10 kg of manganese content. 100 tonnes of ore containing 45% Mn = 45 tonnes of pure Mn = 4500 dmtu. The price per dmtu of 45% Mn was $7.50 in January 2010.
1 tonnes of 45% Mn ore was therefore worth 4500 x $7.50 = $337.50
The price of a dmtu carries a premium for rich ores (>50%) and also depends on the granularity and the presence or absence of impurities.
After long years of slow growth, world steel production accelerated from 2000 to 2007, with an annual average growth rate of approximately 7%. This has resulted in considerable structural manganese demand that fed through into an initial manganese price peak in 2004 for both alloys and ore. The response on the supply side was swift and since 2005 prices have fallen back to their historical average.
Global carbon steel production increased by 9.1% in 2006 and 7.3% in 2007, resulting in an upturn in prices that accelerated in 2008, taking them to record levels. Manganese ore supply has faced certain logistical bottlenecks in the railways and ports of certain large producer countries, particularly South Africa. Also, very few large investment projects have been announced to cope with the rapid growth in demand, and they are mainly concentrated in South Africa.
As regards manganese alloy production, in addition to logistical constraints and the price of ore, the last few years have seen an increase in energy costs (electricity, coke, etc.,), which has contributed to the rise in prices. In addition, in China where most new capacity has been built in recent years, a new policy has been introduced designed to limit exports of a certain number of metallurgical products, including manganese alloys.
During 2009 worldwide Mn ore output nevertheless dropped 8% compared to 2008. In H1, the impact of the crisis on demand for manganese ore and alloys was accentuated by significant inventory run-down throughout the sector. Manganese producers responded in turn, considerably cutting back their output. Thus, in H1, worldwide output of ore was cut by about 50%.
Spot prices of manganese ore dropped until Q3, down to around US$3.5/ dmtu, before starting to recover to over US$6/dmtu by the end of the year. The price of manganese alloys also dropped sharply in H1 2009, before recovering in H2 2009. In the medium term, the capacity to supply manganese ore will continue to be strongly dependent on the logistical capacities of South Africa. Also, Chinese output is finding it difficult to meet growing demand and its quality (grade) is tending downwards, which makes it even more necessary to use imported higher grade products.
