Element25 chief executive Justin Brown at the company's Osborne Park office. Kelsey Reid Credit: Kelsey Reid/The West Australian
The US Government will tip $US166 million ($243m) into an Osborne Park-based manganese developer wanting to build a battery grade processing operation in Louisiana.
Element 25, which has a market cap of about $47 million, has been selected for the lucrative grant by the US Department of Energy under a battery materials processing program aimed at ramping up local manufacturing efforts in the States and usurping China’s critical minerals dominance.
The grant will underpin the build costs of what would be the first high-purity manganese sulphate plant in the US, where Element 25 eventually plans to be producing 135,000 tonnes per annum of the raw material precursor to be used in electric vehicle battery cathodes.
Multinational automotive giants Stellantis and General Motors have signed up as customers for output from the operation and lent a combined $US115m ($168.9m) for the first stage of the plant.
The manganese concentrate that will be fed into the proposed facility will come all the way from Element 25’s flagship Butcherbird mine in the Pilbara, some 17,000 kilometres away.
Chief executive Justin Brown admits the process “sounds counter intuitive”, but he says it’s more cost effective than attempting to pack up and ship highly-refined manganese project from Australia, where downstream manufacturing ambitions are hampered by higher costs and supply chain disadvantages.
“When you actually do the maths on the transport logistics . . . it’s actually more cost effective to take the ore to Louisiana in a bulk carrier, produce the high purity manganese sulphate in Louisiana and deliver it locally to the car makers,” he said.
“It works out better to do that than it does to refine it in Australia and then transport the refined product, partly because the refined product has to be containerised, it’s quite delicate, it can’t get wet, it can’t get dirty, because it’s obviously very high purity.”
The CEO hopes Element 25 will able to break ground at the Louisiana facility at the start of 2025 with the build to take about two years thereafter subject to permits.
“We’d love to build a refinery here as well. The challenge is that we do have a high cost structure here in Western Australia,” he said.
“We don’t have a lot of the commonly needed reagents to do the downstream, things like sulfuric acid, caustic soda, these kinds of reagents that a lot of these industrial parks in Louisiana, or, Japan take for granted.”
The company is busily working away to lift production capacity in parallel with the US facility and ahead of an eventual restart of Butcherbird after halting production in early 2024 amid depressed prices.
Mr Brown is hoping the company can catch a recent wave in prices triggered by a cyclone wiping out the wharf that ships the entirety of South32’s Australian manganese ore from the Northern Territory.
“We will keep pushing that as hard as we can, and expect to get that into production ASAP. Well ahead of the first commissioning of Louisiana refinery.”
Mr Brown said customers were still “champing at the bit” to get hold of manganese despite recent bearish sentiment around electric vehicle uptake.
“The people that I speak within the car industry and the analyst reports that I read show that the transition is still happening in the same fashion as it was, but obviously it might be just a slightly slower pace.”
He was also upbeat about the prospect of manganese demand, as battery makers and manufacturers to pull back on using cobalt in manufacturing for environmental, social and governance reasons.
“Cobalt is a really problematic metal for them, so they’re desperately trying to eliminate cobalt because its sourcing (from) the Democratic Republic of Congo is problematic from (an) ESG perspective.”
From that, and based on recent studies by LG Chem, he’s banking that manganese intensity in batteries should increase.
“Even though at a high level, it looks like people are slowing down slightly in their EV uptake, we still think manganese as a metal is really going to have a strong demand and and there’s plenty of room for us and others to develop projects in that space.”
In a bid to compete with the US’ Inflation Reduction Act, the Federal Government has flagged it will roll out production tax credits starting from 2025 in a bid to shore up domestic downstream production.
The $17.6b scheme gives a 10 per cent tax break for processors of critical minerals.
It comes as part of a broader bid to keep Australia relevant in the global critical minerals race, where competitors like China and Indonesia have built up capabilities to churn out and sell refined nickel, lithium and rare earths, while Australia still largely relies on digging and exporting.
Australia and the US both have manganese on their respective critical minerals’ lists.
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