Euro Manganese [TSXV:EMN / ASX:EMN], the operator of a developing project in the Czech Republic to produce high purity manganese for the electric vehicle battery market, has completed a feasibility study for the project, which is located at Chvaletice. The after-tax NPV was US$1.34 billion with pre-tax NPV of US$1.75 billion, using an 8% real discount rate and risk-adjusted base case price forecast.
The ungeared after-tax IRR was estimated at 21.9% with a 4.1-year payback period; and pre-tax IRR of 24.9% with a 3.6-year payback period.
Strategic demand for battery raw materials
The project is designed to process high purity manganese from historic mine tailings. It is uniquely positioned at the centre of Europe as the only sizable, proven and probably reserve of manganese in the EU. Strategic location of the project is highly favourable, as it is easily accessible by the range of next generation battery factories cropping up in the EU.
“The global automobile industry has been transformed in recent years with manufacturers focused on the transition to electric vehicles,” said John Webster, Chair of the Board at Euro Manganese. “This focus has not only resulted in an increased demand for battery raw materials, but specifically for those sourced from a sustainable and responsible supply chain. At the same time, manganese has emerged as a key component in the dominant formulations of lithium-ion batteries. This has created an unprecedented opportunity for us.”
The project will require initial capital of US$757.3 million, including contingencies of US$103.2 million. Sustaining capital of US$117.0 million will be required over the 25-year life of the project. LOP revenues were estimated at US$13.9 billion with gross revenues expected to average US$554 million per year over the 25-year project life.
Euro Manganese recently appointed Stifel Nicolaus Europe Limited as financial adviser to assist with the structuring and securing of financing for the project. The company and Stifel believe the project is an attractive proposition for potential financial partners, including European financial institutions such as the European Bank of Reconstruction and Development, which is one of Euro Manganese’s largest shareholders.
Why manganese is becoming so important for Europe
According to CPM Group, a leading, independent commodities market research firm with expertise in high-purity manganese, the market for high-purity manganese sulphate monohydrate and high-purity electrolytic manganese metal is forecast to be radically transformed as a result of the ‘electric vehicle revolution.
Most lithium-ion batteries that power electric vehicles are expected to use manganese in their cathodes and these manganese-containing battery chemistries are expected to dominate the battery market for the next two decades.
CPM Group expects the demand for high purity manganese to increase 13 times between 2021 and 2031 (from 90 kt to 1.1 million tonnes of Mn contained) and 50 times between 2021 and 2050 (to 4.5 million tonnes of Mn contained).
The total manganese market in 2022 is approximately 22 million tonnes, with manganese use currently dominated by the steel industry, however, high purity manganese suitable for the battery market makes up less than 0.5% of the global manganese market.
Manganese supply bottlenecks
The bottleneck in supply of HPMSM and HPEMM is the lack of high-purity refining capacity. Known expansions and new projects are unable to satisfy this demand. CPM Group forecasts the 2031 deficit to be 475kt manganese equivalent and if battery demand continues to grow as expected and no additional new projects come to the market, the deficit would increase to 1 million tonnes by 2037.
Dr Matthew James, CEO of Euro Manganese, said that several factors uniquely position Euro Manganese to transform into a leading supplier to the European EV market. “The supply security, traceability, sustainable production, and low impurity, high quality nature of Chvaletice’s battery grade manganese products, make our HPEMM and HPMSM increasingly desirable to customers,” he said.
