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BASF's 'groundbreaking' cathode move excites manganese hopefuls

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BASF's 'groundbreaking' cathode move excites manganese hopefuls

Australian and Canadian-based manganese hopefuls say reports that German chemical giant BASF SE will significantly increase the manganese content in its cathodes which would push costs for battery production to no more than US$40 per kilowatt hour will change their commodity's demand story longer-term.

Euro Manganese Inc.'s TSX Venture Exchange shares have risen by 25% and ASX shares by 19% since Reuters reported Nov. 23 that BASF would ratchet up the manganese content in its cathode materials to 70% and more than halve the nickel content to 20% by 2021.

Reuters said this would lower costs to just over US$40 per kWh of energy stored from what Vancouver-based Euro Manganese CEO Marco Romero said was known to be "well over US$100 and closer to US$200."

Thus, he said, US$40 is "far beyond what has been long stated as the industry target," as US$100 is considered the point at which electric vehicles start achieving parity costs with the internal combustion engine, which is "a groundbreaking event if it is true."

"The significance of virtually eliminating the cobalt from the equation and replacing the relatively high-cost nickel with low-cost manganese is dramatic, and if US$40/kWh is real, then this is a quantum step down in cost, and is a serious event in the evolution of the electric vehicle industry as a whole," Romero said.

Euro Manganese is developing a high-purity manganese production facility at Chvaletice based on the recycling of a tailings deposit in the Czech Republic.

BASF is one of the licensed suppliers of the U.S. Department of Energy's Argonne National Laboratory for patented NCM, or nickel-cobalt-manganese, cathode active materials, which include lithium and manganese-rich mixed metal oxides.

Romero said that since the original chemistry of NCM batteries of one-third each nickel, manganese and cobalt, it has since progressed to a 5-3-2 ratio, and further moves are being made to reduce the cobalt content due to supply chain vulnerability concerns given 65% of it comes from the Democratic Republic of the Congo.

Though cobalt is still needed for battery stability, Reuters said BASF and its competitors like Umicore SA were looking to boost the nickel content from about 60% to 80% in 2019 product launches.

The move was no surprise to Perth, Australia-based Bryah Resources Ltd. Managing Director Neil Marston, who has already seen increasing interest in the product from its Bryah Basin project in Western Australia from Chinese chemical companies.

One of those Chinese companies, which could not be named, is ramping up its manganese sulfate production tenfold over the next two years due to increased demand from batteries, though not all of its product goes into batteries.

Marston said BASF's move confirmed what he had been hearing, and "makes sense as the biggest single cost in an electric vehicle is the battery."

Reports also emerged earlier in 2018 that researchers at Canada's University of Waterloo found that using a nanosheet of manganese dioxide significantly boosts the performance of lithium-sulfur batteries, which would triple the range of electric vehicles for the same weight of lithium-ion batteries.

Yet Marston said that, based on studies thus far, the battery story from a manganese market point of view is still more a long-term thematic, as the more traditional demand source, the steel industry, will support manganese prices in the short-term.

"In the longer-term if you have a high-grade manganese product which is part of the broader materials supply chain feeding into electric vehicles, then a premium will be paid and you'll be able to move it very quickly in the market," he said.

This would favor Australian producers, he said, given the country's manganese tends to contain above 40% manganese metal as opposed to South Africa's lower-grade product.

Romero, meanwhile, believes Euro Manganese is ideally placed by the moves of BASF and others who could follow its lead, given his company's Czech project is surrounded by several battery plants under construction in Poland, Germany, Hungary and Austria.