It’s been ongoing for more than half a decade and still happening today; the shutting down of manganese production in China. In 2006 a British Geological Survey showed that China was producing 6 million tonnes of manganese each year. Today that number is only about half of what it was in 2006. Why? The Chinese government has put the squash to numerous manganese production facilities because of widespread pollution.
In an effort to reduce costs, the Chinese used selenium which is toxic to local waterways, not to mention exposing workers and families to the deadly mineral. That was one of the issues that shut down nearly two-thirds of all smelters in China’s largest manganese production bases in 2005 with the resulting upheaval lasting for over a year. To boot, the resulting manganese metals that were produced -- manganese is used in aluminum and other metals -- was contaminated. Production in China has never been the same.
The simple fact that manganese is crucial in metal products creates a great demand across the planet as China control the lion’s share of the electrolytic manganese production (EMM) by producing and supplying 98.44% of the world’s requirements each year. Currently, there is no production in the United States. EMM is only one of the by-products of manganese.
Other products are electrolytic manganese dioxide (EMD) for the battery industry. Total global production is 31 million pounds of manganese annually. At $1.81 per pound, it is a healthy industry. The fact that China is rapidly slipping in supply and production is creating a reverse effect as the major exporter may soon become a large importer is seen as a potential money making opportunity.
Looking to capitalize on the aforementioned situation, American Manganese Inc., (TSX Venture:AMY) (Pink Sheets:AMYZF) is moving quickly forward with its Arizona efforts to begin extracting manganese from the ground. Currently, the diversified specialty and critical metal company is completely focused on its Arizona Manganese Project in an attempt to become the lowest cost producer of electrolytic manganese in the country.
Today, the Company reported that it has received results for 10 drill holes from its 2011 Artillery Peak drilling program. This is not the first batch of results as 38 other drill holes have been assayed and previously reported on by American Manganese. Hitting the ground hard, a reverse circulation drill technique was used as 86 holes were drilled totaling more than 10,000 metres.
Drill Hole 87 showcased the potential of the project with the hold returning 6.47% manganese over 15.6 metres within 37.5 metres of 3.95% manganese. Also impressive, Hole 93 also cut 10.67 metres grading 4.43% manganese.
Investors may have already priced-in the China factor as shares of AMY have surged from around 25 cents at the end of 2010 and beginning of 2011 to touch 80 cents in February. Shares have since settled back around 60 cents, but got a slight boost today of about 1.5% to close at 59 cents.
With the ongoing drill process delineating the parameters of substantial manganese control, American Manganese just may be a company to keep an eye on in the future as developments continue to occur and manganese demand continues to rise. Proper due diligence is encouraged.
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