Gabon coup puts security of battery metals in spotlight | Insights | Bloomberg Professional Services

The recent coup in Gabon places a spotlight on the supply of one of the lesser-known metals that will help power the energy transition: manganese.

Gabon is the world’s third-largest supplier of manganese ore after South Africa and Australia. Together, these countries account for almost 70% of production. Right now, manganese is mostly used as an essential alloy to help convert iron into steel. But it will increasingly go into the cathodes of the lithium-ion batteries that power electric vehicles.

Only 2% of manganese production feeds into battery manufacturing at present, but this will likely to grow as automakers like Tesla and Volkswagen have announced plans to use manganese-rich batteries in their vehicles by 2030. BloombergNEF expects manganese demand from lithium-ion batteries to surge 13-fold across the current decade, hitting 725,000 metric tons.

French mining giant Eramet produced about 5 million tons in Gabon last year. The company has now resumed its mining operations after hitting pause in the wake of the military seizing power. As the political crisis unfolds, if there is any disruption to production or rail transport, or from sanctions on trade, this will distort the market and exert an upward pressure on prices.

Eramet has plans to add an extra 3 million tons of production capacity to its Moanda mine and the coup will have a negative impact on this expansion project. Despite Africa’s competitive advantage in quality geological grades and a lower cost of production, rising political risk will lower the region’s competitiveness.

The US and Europe could end up benefiting from this crisis as support for critical minerals, proximity to demand centers and political stability attracts investment. South32, the world’s largest manganese miner, is in the process of developing its Hermosa polymetallic mine in Arizona, while Euro Manganese is proceeding with its Chvaletice manganese project in the Czech Republic.

BloombergNEF (BNEF), Bloomberg’s primary research service, covers clean energy, advanced transport, digital industry, innovative materials and commodities. BNEF helps corporate strategy, finance and policy professionals navigate change and generate opportunities. Explore more content on the BNEF blog.