A half-century-old company on the outskirts of South Africa’s Kruger National Park has found itself in a fortuitous spot as Western automakers push to move their electric-vehicle supply chains away from China.
Manganese Metal Co., based in the sleepy town of Mbombela, is the largest of just a handful of refiners of battery-grade manganese located outside China. Used mostly for making steel, manganese is increasingly replacing more expensive and harder-to-source minerals such as cobalt and nickel in the lithium-ion batteries that power electric cars, smartphones and laptops.
South Africa is the world’s No. 1 producer of manganese ore, but China refines more than 90% of battery-grade manganese. That dominance has stoked concerns among Western governments—including the U.S.—about their dependence on Beijing as they work to decarbonize their transport and energy systems.
Closely held MMC receives ore mined in the Kalahari Desert at its sprawling refinery. The small black stones are milled into a powder before being dissolved in acid and purified by a mix of chemicals. The purified manganese solution is then fed into tanks, where electricity is used to get it to stick onto plates. The manganese is then stripped from the plates, washed and dried before it is packaged for shipment.
Currently, more than half of the manganese metal refined at MMC is exported to Japan, where some of it is used by Panasonic —which supplies batteries for Tesla cars —and other battery-component makers. About a third goes to the U.S. and around 10% to Europe, according to the company.
MMC’s chief executive, Louis Nel, says his company has been visited by virtually every major Western battery and auto manufacturer over the past two years, as they seek to string together new supply chains that bypass China.
“We have been inundated by people looking for refined manganese,” Nel said, adding that MMC is in talks on potential supply deals with several Western companies. “I’ve signed more [nondisclosure agreements] in the last 12 months than the last 20 years,” he said.
The sudden attention is a big change for MMC, which Australian mining giant BHP sold to a consortium of South African investors in 2010—a time when few Western companies worried about the regulatory and logistical risks that are increasingly associated with China today.
Demand for manganese used in rechargeable batteries, which currently accounts for just 1% of global manganese use, is expected to grow sixfold over the next 20 years, according to energy consulting firm Wood Mackenzie, largely thanks to electric vehicles. That trend has put manufacturers at risk of a supply crunch, as well as rising prices.
“The bottleneck is with refining capacity,” said Teboho Sebetlela, research manager for steel-alloy markets at Wood Mackenzie in London. There are plans for about 20 new battery-grade manganese refineries globally, 13 of them outside of China, he said.
MMC, says Sebetlela, has a leg up on non-Chinese refineries that are still raising funds or under construction. MMC has “an understanding of what’s needed,” he said. “They already do it.”
Nel says he expects around 26% of MMC’s refined manganese metal to go to the battery industry this year, up from 8% in 2015. Much of the rest goes into the production of specialty steels and aluminum, which also require high-grade refined manganese.
Carmakers are generally tight-lipped about their supply chains, industry experts say, especially as many are still in the process of deciding which parts of batteries to make on their own, sometimes through joint ventures, and which to source from traditional component makers.
In July, Chrysler parent Stellantis invested $15 million in Australian-listed Element25, a manganese miner. A month earlier, General Motors agreed to provide Element 25 with an $85 million loan to partially fund the construction of a new battery-grade manganese refinery in Louisiana that will process ore from Australia.
Other high-purity manganese refining plants are planned in the Czech Republic, Botswana and Mexico, among other countries, but most of those projects are years from their first production.
Since 2018, Washington has placed tariffs on hundreds of billions of dollars’ worth of Chinese goods as part of a wider effort to reduce American dependence on China. That shift was accelerated by the Covid-19 pandemic, which interrupted the flow of goods, especially from China, and snarled global transportation networks.
Western companies are also increasingly worried about the reputational risks of working with Chinese suppliers amid reports of forced labor and large-scale environmental damage.
“We are diversifying the sourcing of our raw materials and are constantly screening the market for all battery materials, including prospectively manganese,” said Pia Droldner, a spokeswoman for Mercedes-Benz. Droldner said MMC isn’t currently a supplier.
MMC’s metal is far more expensive than China’s—two to three times as much—largely because of high costs of production linked to stricter labor and environmental regulations and higher electricity costs in South Africa. But Nel says it is a premium its customers are willing to pay to avoid buying manganese from China and because of the consistent quality and bespoke solutions it offers, including extremely small quantities and specific-sized containers.
MMC refines its manganese using sulfur dioxide, which it says requires more electricity than processing the mineral with selenium dioxide, the preferred process at Chinese refiners. But there are more health risks associated with selenium, high intake of which, according to the U.S. National Institutes of Health, can cause nervous-system problems as well as kidney and heart failure.
In the U.S., MMC’s manganese is more competitive thanks to the African Growth and Opportunity Act, which provides duty-free market access for some products including refined manganese from participating countries in sub-Saharan Africa.
MMC is in the midst of a 500 million South African rand expansion, an outlay equivalent to $27 million that will allow it to produce 5,000 tons of high-purity manganese sulfate, in addition to the 28,000 tons of 99.9% pure manganese metal it currently produces. The company doesn’t publish its finances.
The manganese sulfate requires less electricity in the refining process but can require more steps depending on the quality of the ore, analysts say. Battery-component makers can later dissolve it in water, rather than sulfuric acid, making it easier to process and more environmentally friendly.
That new production is expected to come online in 2026, when MMC also has plans to begin construction on a new plant capable of putting out 30,000 tons a year.
In parts of the MMC plant where dust particles are prevalent because of the milling of ore, eye protection and dust masks are required. The company is in the process of closing down its landfill site. Instead, it has started turning waste left from processing ore into bricks that can be used for paving or building.
Those policies add to the cost of MMC’s manganese, says Bernard Swanepoel, chairman of the board at MMC and former chief executive at Harmony Gold, one of the world’s biggest gold miners.
“You will have to pay an appropriate price to get a second source of manganese that you aren’t embarrassed by,” he said. “We can only be ready to supply.”