Manganese

Manganese (Mn) is a brittle metal essential to steelmaking and increasingly critical to lithium-ion battery chemistry, particularly in cathode materials for electric vehicles. Its dual role—as a legacy industrial material and an emerging energy-transition commodity—is restructuring its supply chains, with battery-grade demand now competing with traditional steelmaking for the most refined ore.

Manganese in steel: the old economy

For over a century, manganese has been the workhorse additive in steelmaking. When mixed with iron in quantities of 0.7% to 2%, it hardens steel, increases its tensile strength, and improves wear resistance. It also desulphurises the steel, removing a brittle impurity. Virtually every structural steel—beams, rails, machinery components—contains manganese. The metal is so integral that modern steel production without it is impossible.

Ferromanganese (an iron-manganese alloy) is the form in which manganese reaches the steelmaker. It is produced by smelting manganese ore with coke in a blast furnace, a simple and mature process. Global ferromanganese capacity is concentrated in China (which processes nearly 50% of the world’s supply), South Africa, Australia, and several other countries with access to ore and cheap power.

For most of the 20th century, manganese was a commodity of predictable demand, tied straightforwardly to steel cycles. A construction boom lifted manganese prices; a recession pushed them down. Supply was stable, and prices were modest—manganese was cheap relative to its utility.

The battery revolution: manganese at an inflection

The emergence of large-scale battery production for electric vehicles has rewritten manganese’s market narrative. Modern lithium-ion batteries, particularly nickel-manganese-cobalt (NMC) and lithium-manganese oxide (LMO) chemistries, require manganese metal or manganese sulphate in the cathode. Battery-grade manganese has much stricter purity and specification requirements than steelmaking-grade, and it is far more valuable.

A typical EV battery contains 4–12 kg of manganese compounds, depending on chemistry. With global EV production expanding from roughly 10 million vehicles in 2022 to a projected 30–50 million by 2030 (or higher, depending on policy), the demand for battery-grade manganese is growing at 15–20% annually. This growth rate dwarfs the 1–2% annual growth in traditional steel demand for manganese.

The consequence is a supply shock. Battery-grade manganese requires high-purity ore and sophisticated processing; not all manganese sources can supply it. South Africa, which holds the world’s largest manganese reserves and produces high-grade ore, has emerged as the choke point. South African ore is ideal for battery-grade refinement, and as EV makers and battery manufacturers scramble to secure supply contracts, spot prices for refined battery-grade manganese have spiked and remain volatile.

Supply concentration and geopolitical risk

South Africa controls roughly 78% of the world’s manganese reserves and produces about 28% of global output. The country’s dominance is even starker in high-grade ore; nearly all battery-grade manganese ultimately originates from South African sources.

This concentration creates vulnerability. South Africa has experienced electricity crises (rolling blackouts from coal-fired power constraints) that have disrupted manganese smelting and processing. Labour disputes in South African mines have triggered supply disruptions. Geopolitical tensions or trade disputes could tighten supply further.

Australia is the second-largest producer, but Australian ore is typically lower-grade and better suited to steelmaking than battery applications. Gabon, Brazil, and Ghana contribute smaller volumes. China is a major processor of manganese ore (converting raw ore into ferromanganese and refined metal), but China imports 90% of its manganese ore, making it a refiner, not a primary supplier.

For EV and battery manufacturers, South African supply security has become a critical risk. Automakers are pushing battery suppliers to diversify sources, but the geology and economics of manganese make alternatives slow to develop.

The two-tier pricing structure

As battery demand has grown, manganese markets have bifurcated. Steelmaking-grade ferromanganese (typically containing 75–78% Mn) is traded on commodity exchanges and published daily; prices have fluctuated between $1.50 and $2.50 per pound of contained manganese in recent years.

Battery-grade manganese (electrolytic manganese metal, or EMM, at 99.9%+ purity, or manganese sulphate solutions) commands a premium. Prices for battery-grade material are often 2–4 times higher than commodity-grade, and they are less transparent, set through bilateral negotiations with battery makers and OEMs. This opacity creates opportunities for volatility and supply-chain friction.

Steelmakers, who are price-takers on manganese, have seen margins compressed as ore costs rise. Battery makers, with longer cash flows and more resilience to cost pressure, can absorb higher input prices, creating a pricing dynamic where battery demand is capturing the marginal supply.

Ore grades and processing bottlenecks

Manganese ore exists in two primary forms: manganite and oxide ore. The richest, high-grade ore (containing over 45% manganese) is scarce. Most ore is lower-grade (20–35% Mn) and requires concentration or beneficiation before smelting. This processing step is capital-intensive and often done near the mine (in South Africa, Gabon, or Australia) rather than in the destination country.

China dominates manganese refining precisely because it has massive smelting capacity and access to cheap electricity (until recently). But as environmental regulations tighten and electricity costs rise, Chinese processors face margin pressures. Some capacity is shifting to other countries with cleaner power or lower costs, but the transition is slow.

For battery makers, processing bottlenecks mean that battery-grade supply cannot be rapidly expanded; there are limits to how much ore can be upgraded to battery specifications in any given year. This inelasticity makes battery-grade manganese a constraint, not merely a cost input.

Price volatility and hedging challenges

Manganese prices are more volatile than commodity indices suggest. Steelmaking-grade prices follow broad cyclical patterns, but battery-grade prices are driven by discrete supply shocks, new plant startups, and technology shifts (e.g., a shift from NMC to LFP batteries, which use less or no manganese, would crater battery-grade prices).

Hedging is difficult. NYMEX trades a ferromanganese futures contract, but it is thinly traded and does not reliably reflect battery-grade premiums. Most parties rely on long-term supply agreements or spot trades, accepting significant price risk.

The energy-transition wild card

The future of manganese depends partly on which battery chemistries dominate. Lithium iron phosphate (LFP) batteries, which are growing market share in China and are cheaper than NMC, contain no manganese. If LFP takes 50%+ of the EV battery market (as some forecasters predict), battery-grade manganese demand will be far lower than currently modelled.

Conversely, if solid-state batteries or other next-generation chemistries require manganese, demand could spike further.

This uncertainty is already reflected in manganese prices: battery makers are hedging their chemistry bets, and ore suppliers are building flexible processing plants that can pivot between steelmaking and battery feeds. The industry is in a state of rapid transition, and prices will likely remain volatile until battery chemistry settles.

Long-term outlook

For investors and corporations, manganese is a commodity trapped between two narratives: a declining (but still large) steelmaking market, and an explosive battery market with unclear terminal demand. Prices for steelmaking-grade manganese will likely drift lower as batteries capture premium ore, but battery-grade prices will remain elevated and volatile.

Supply constraints from South Africa and processing bottlenecks are real near-term constraints (2025–2028). Longer term (2030+), new refining capacity and possible shifts in battery chemistry will ease pressure. The next five years will determine whether manganese remains a supply-constrained critical material or whether it normalises to commodity pricing.

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