Element 25 cuts costs with new manganese shipping strategy

Manganese producer, Element 25 says a new shipping strategy will deliver a freight tariff reduction of 45 per cent from peak tariff rates for an upcoming shipment of manganese concentrate sourced from its Butcherbird mine in the Pilbara region of Western Australia. The company will now transport its manganese concentrate in a larger capacity Supramax vessel to lock in the shipping cost savings.

The first two shipments of manganese concentrate from Butcherbird were recently shipped to a smelter in China owned by Element 25’s offtake partner, OM Materials.

A third shipment of concentrate is set to depart the Utah Point facility at Port Hedland later this month.

Unlike the first two shipments which used Handymax sized vessels for transportation of the concentrate, the upcoming shipment will be moved on a Supramax ship.

The company says a shift to the larger capacity Supramax vessel will cut shipping tariffs and the new ship has been booked at a rate in the low USD$30’s per tonne, a reduction of about 45 per cent from the previous peak tariff rate.

The Supramax vessel has been booked by Element 25 to carry a nominal cargo size of 47,000 tonnes of manganese concentrate with potential to increase the load further at the reduced tariff rate, according to the company. The first two shipments of Butcherbird product carried 27,000 tonnes of concentrate each.

Element 25’s shift in strategy comes on the back of a rise in global transport costs driven by COVID-19 related shipping congestion. The company anticipates capacity in the global shipping fleet to improve as the world recovers from pandemic related restrictions.

Element 25 has a multi-stage strategy in place to realise the full value of Butcherbird, where a 263 million tonne resource going more than 10 per cent manganese oxide has been defined.

Butcherbird recently achieved a ‘steady state’ of manganese output from ‘stage one’ of the venture.

The company is looking to expand the concentrate business as part of ‘stage two’ of its strategy that could see either a doubling or trebling of plant throughput at Butcherbird.

Under a subsequent ‘stage three’ development, the company aspires to convert concentrate material from Butcherbird into high-purity manganese sulphate monohydrate product for use in lithium-ion batteries in the burgeoning electric vehicle industry.

Element 25 aims to complete a scoping study on the ‘stage three’ operation later in the year, with a pre-feasibility study projected for release in the first half of 2022.

Management says manganese could play a key role in electric vehicles due to potential supply constraints for nickel and cobalt, presently key components of lithium-ion batteries. It believes battery manufacturers could turn to manganese cathodes as a cheaper alternative to meet the projected booming demand for electric vehicles around the world.

By 2040 some 58 per cent of new vehicles are forecast be either electric or hybrid, according to Element 25.

The improved shipping rates for current manganese concentrate production at Butcherbird will likely bode well for Element 25 as it continues to advance development of battery-grade manganese product at its Pilbara operation whilst continuing to supply the steel industry.

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