Market Overview

About 90 percent of all manganese consumed is used in the production of steel, primarily for its properties as a deoxidizing and an alloying element.

World crude steel production in 2017 was 1.689 billion tonnes with China being the dominant producer, producing 831.7 million tonnes. Calendar year to date (August 2018) world crude steel production was 1,194 million tonnes an increase of 5% when compared to same period in 2017 (World Steel Association statistics).

Steels usually contain from 0.2% to 2% manganese in the form of manganese alloy depending on the grade of steel being produced as manganese is the cheapest alloying element that improves the tensile strength, workability, toughness, hardness and resistance to abrasion. No satisfactory substitute for manganese in steel has been identified which combines its low cost with outstanding technical benefits.

Stainless steels which represent less than 2% of total world steel production uses chrome and nickel but also contains about 1% manganese. There are also manganese-stainless steels, where nickel is replaced partly or entirely by manganese, giving a manganese content of 4 to 16%, however these are not produced in large quantities, these are known as 200 Series stainless.

There are two families of manganese alloys called ferro-manganese and silico-manganese. Silico-manganese is approximately 60% of overall manganese alloy production and ferro-manganese the remaining 40%.

Ferro-manganese, which contains 74-82% manganese, and can be classified into three main sub groups; High Carbon (>2% carbon), Medium Carbon (1.0-2.0% carbon) and Low Carbon (<1% carbon).

Gulf strategy is to produce the highest purity, low carbon and medium carbon ferromanganese alloys to full fill international demand from high grade and specialty steel producers.

The higher manganese content and lower impurity content of Low Carbon and Medium Carbon Ferro-manganese achieves premiums pricing than standard High Carbon ferro-manganese alloys.

After steels, the second most important market for manganese (in dioxide form) is for batteries. Other uses include manganese sulphates as an agricultural fertilizer, in water purification, health vitamins, gasoline additives and colouring glass.

Whilst Indonesia is home to many high-grade manganese deposits the legislation does not allow for the export of untreated ore. As a result, following the implementation of that law in 2012, mining of the manganese ores in Indonesia largely stopped in 2013. The establishment of Gulf’s Smelting Hub in Kupang will allow many of these mines to start production again.

Gulf is also progressing with permitting to allow sale and shipment of manganese concentrates (>49% Mn) under the Indonesian provision for smelting and processing companies to sell concentrate during construction to assist with cash flow.

Indonesia manganese ore is one of the highest grade’s manganese ores available, with a unique combination of very high manganese content, above 49%, combined with low iron and phosphorous. These qualities are in high demand from manganese alloy producer worldwide particularly in China, Korea and India.

Gulf production facilities in Kupang are ideally located to supply these key markets with access to international container lines and bulk cargo trade routes on its door step.

Manganese ore alloy prices remained strong over the financial year with Metal Bulletin’s 44% Manganese ore price index staying above US$6.00 per dry metric tonne unit (dmtu) for the entire financial year, peaking at USD$8.90 per dmtu March of 2018 before stabilising at US$7.00 per dmtu in August and September. Medium and Low Carbon prices also remained stable at strong levels throughout the financial year.