- Giyani Metals focusses on production of high purity electrolytic manganese metal for batteries.
- Chinese Manganese is typically not of the grade that is required for batteries and converting it into a selenium free manganese metal is very expensive.
- With European interest in promoting the trade of raw materials used in batteries, Giyani is using export credit agencies to finance projects.
- At current stages, the company has been relatively uninterrupted by current Covid-19 lockdowns in Botswana and the UK.
- Expecting to begin full project financing and plant construction towards the end of Q2 2021.
Thomas Horton, VP of Business Development for Giyani Metals joins Core Consultants founder, Lara Smith, for a candid discussion of the manganese market, applications of the metal, and state of the industry in our locked down world. He covers some differentiators among different manganese producing countries and processes, and the importance of producing the lowest carbon footprint battery available. The following is a transcript of the video:
Lara Smith: Hello, welcome to Core Consultants, I’m live from my couch at my home in Tel Aviv. I’m joined here by Thomas Horton, who is the VP of Business Development for Giyani Manganese. Welcome.
Thomas Horton: How you doing?
Lara Smith: Good, good. Where are you today?
Thomas Horton: I’m at home, like the rest of the world, in London, central London.
Lara Smith: Central London is on lockdown now too right?
Thomas Horton: Yeah.that’s right. Yeah. it’s definitely quiet walking around central London. The only people around those that are queuing for the supermarket.
Lara Smith: Right. You look very good for somebody sitting at home, presumably getting lots of Zoom calls.
Thomas Horton: Yeah, it’s great, I mean, in the modern world, we have plenty of technology that connects us, so, for us, it’s business as usual, really. We’ve been quite productive over the last month. Yeah, it’s been a month already now. We’re all over the world. I mean, we have guys in Canada, there’s me in London, there’s some of the board members in London, the CEO’s in Amsterdam, and then we’ve got guys in Botswana.
Lara Smith: Okay. So then maybe tell us a little bit about the operation in Botswana, it would be the first of its kind for manganese, and you talk about battery grade manganese. Maybe you could just explain what that is and a little bit about the project.
Thomas Horton: Yeah, sure. So K. Hill is our flagship project. It’s in Southeastern Botswana. We have just over a million tons of 32% manganese, and the idea of the project is to produce a high purity electrolytic manganese metal. So HPEMM. We also have two other projects nearby. They are a short drive away called Otse and Lobatse, basically named after the towns and village that they are located near.
So those are the sort of future upside of the company and actually we’re sort of led to believe that they are high grade operations and that they provide good upside to the business in the future. But at the moment where we’re focusing on K. Hill, we’re in a feasibility study stage at the moment. So that’s been kicked off with three entities: SRK, Tetratech and Royal IHC, all based here in Europe who are doing the engineering studies. We appointed them in December, and the last corporate call that we had, they were all set up at home, working from home and seemed to be plodding along with the feasibility study.
So, in that respect, yeah work’s been continuing. We also recently announced that we had signed an agreement with Atradius, they are a Dutch export credit agency, and it’s an LOI, says currently nonbinding, but it shows good progress with respect to looking at export credit agency led debt, which is our preference at the moment in terms of project financing, just because, especially in these very low interest rate environments, it makes a significant impact on your cost of debt. It was actually Royal IMC which helped us with that connection with the Atradius. Anyway, we are still looking at other potential export credit agencies. There are obviously plenty around the world and with battery metals, especially Europe, is very interested in promoting the trade of raw materials used in batteries into Europe. So, those conversations are ongoing and we’re actually in the process of appointing an advisor to assist us actually with that process because it looks to be quite complicated, and those that have experience with dealing with export credit agencies would be, as, you know, a significant help to us. So yeah, that’s what’s sort of been going on more on the corporate side. On the operational side, we have a drill program which is planned for the summer, and we are in the process of receiving bids from drilling companies to do that as part of our feasibility study, we have to increase the drill spacing density across the K. Hill Deposit in order to convert the resource from inferred to indicated so we can use it as a reserve. So that’s when we will do some drilling.
And so it seems as though we’re not too badly impacted on that at the moment. So thankfully we don’t have to have anyone at site, because Botswana is in a lockdown in the same way that South Africa and London is locked down at the moment.
Yeah, so it’s sort of quite lucky in the respect that we’ve got a lot of desktop work that we can be kept busy with at the moment.
Lara Smith: So maybe just speak us through the timeline. So you’ve got the summer drill program, the feasibility study is due when?
Thomas Horton: So that will be finished up towards the end of this year, and the SIA will be done around the same time, and then we’ll kick off into full project financing and with plant construction, due to start towards the end of Q2 next year.
Lara Smith: When will you start looking for offtake agreements, or have you started already?
Thomas Horton: We’ve already started those conversations on a high level basis, so you know, a lot of time’s been spent on the phone in the last couple of weeks just sort of getting those conversations going.
We’re speaking with cathode manufacturers as well as traders. So that is a strategy that we are looking at the pros and cons on, on which route that we go. There are certainly advantages and disadvantages; we’re dealing with both, but there are lots of people who are interested in manganese material that is high purity that can be used in battery cathode manufacture. You hear a lot about the changing, or potential change in chemistries of battery going forward, but actually from everyone that we speak to, at a bear case looking at 50% of the market over the next five to 10 years being NMC type batteries, so nickel, manganese, cobalt. With the bull case being over 70 to 80%. So manganese within the battery chemistry will still certainly be there and the growth projections look huge, and it doesn’t look as though many people are producing at the moment the grade of manganese that is required in those cathode chemistries. So, yeah, we think we’re ahead of the curve and there’s very few people that are looking to supply intothat market. So it’s interesting, you know, my background, the previous company I came from is copper. So dealing with an offtake contract for copper is incredibly simple because, you know, the spec of copper is fairly generic. But with manganese there’s still a very much growing market and more and more people getting interested in that supply chain.
Lara Smith: Yeah. So maybe you can just tell people, because I don’t have everybody’s familiar. So 90% of the manganese is used for the steel industry and you want to produce EMM, electromagnetic manganese for the manganese battery industry, or the lithium battery industry. What then is the difference or the major difference besides from grade or purity? It’s low in deleterious elements from what I understand, but which ones?
Thomas Horton: Yeah, so the deleterious elements is very key. So the type of product that we’re looking to produce, there’s a high purity electrolytic manganese metal, so that is 99.9% manganese. And the important thing is that there is very little in the way of heavy metals in the non-manganese part of that makeup. And so especially selenium, and the manufacture of manganese or higher purity manganese in China uses a lot of selenium. So you’ve got a lot of product that is being produced in China, which is not of the grade that is required for batteries and converting it into a selenium free manganese metal is very expensive. Our process is an SXEW process. So, we are taking a manganese oxide solvent extraction into electrowinning, and then electrorefining. So it’s quite a simple off-the-shelf process. But we are lucky enough in the fact that we are starting with a manganese ore that is oxide and it’s not a carbonate or any other form. And so, you know, especially with a carbonate, you have to sinter it, which means, you know, you’re heating it in a gas oven. And what’s very interesting with everyone that we talk to in manganese is that they want to produce, or the cathode manufacturers more specifically want to produce the lowest carbon footprint battery that they can, and so they want to know that everything you’re doing in your process is as green as possible. And so they want to know the footprint, the carbon footprint of taking that ore and delivering it to them. Now we have the advantage that there’s no other manufacturers that I am aware of in the world that produce the HPEMM onsite where the ore is mined. What’s very common in a number of the mines, there’s obviously a huge manganese market in South Africa where that manganese is shipped DSO to a port. It is then sent to some refinery around the world, whether it be Asia, where it is then converted and processed. So that transportation cost, we don’t have that because it’s all done on site, and also SXEW means it’s all done by electricity. So we don’t have big sintering processes where we’re burning hydrocarbons onsite. So yeah, we believe that what we’ve got is actually a very low carbon footprint product, and that is of interest to the battery manufacturers.
Lara Smith: So just on manganese, I know yours is a specific subset of the manganese market, but manganese has been particularly volatile and we’ve seen prices, just last year it was about $7 per pound. Now it’s around $3 per pound, but it did increase recently with China back into production. Where do you see manganese prices going given the background, given that South Africa is on shutdown and supplying most of the world’s manganese, but China’s restarted, where do you see manganese going for this year and then maybe sort of middle of next year, end of the year, whenever you see Covid19 ending?
Thomas Horton: Yeah, sure. So obviously at the moment we are seeing a supply shortage in manganese. A lot of that is driven by the fact that Covid19 response in South Africa means shutting all mining operations, so a large proportion of the world’s manganese comes out of South Africa, and none of those mines are operating at the moment, they’re all on *unclear*. So for those manganese mines that are producing, like the Comilog mines that’s owned by Aeromet in Gabon, they’re seeing a huge spike in prices. So, you know, 20- 25% in a week, two weeks, they’re doing very well out of that. I can imagine that there will be a logistics issue once the mines start being allowed to reproduce and stop producing rather, and, delivering to port because the supply chain will have been disrupted. So I think it’ll take a bit of time to iron out once the mines are back up and running again. In terms of stability, from what I’m reading, the battery manufacturers in China are still producing. I mean there’s already press that I’ve read about certain companies that have reduced their forecast of battery manufacturing just because they can’t get hold of the materials, and manganese being one of those. We were expecting prices to remain steady throughout the rest of the year, and over the short to medium term, the prospect for manganese pricing looks incredibly strong. And, when I say manganese, I’m talking about the high purity product, which will go into cathode manufacture, not the manganese ore, there is a sort of separation between the two because obviously the manganese ore, as you stated, is mostly going into the steel industry. The sort of specialist manganese, so flake production, is not going into into steel, it’s going into battery as well as chemicals and fertilizer as well, which are other sort of minor sectors that require high purity manganese.
Lara Smith: Thank you very much. So we’ll leave it there. Any final words on the project, on Covid19, on London in lockdown?
Thomas Horton: Yeah, London lockdown, I mean, it’d be nice to get on public transport and not feel like you’re breaking the rules. I feel like every time I go out and about I’m breaking the rules, like I was at school… many years ago, but it’s important that everyone stays safe and stays at home. I was very lucky to have only had Covid quite mildly, so I feel lucky in that respect, but also, you know, at the moment I read that our prime minister is in intensive care and that is incredibly scary. It’s important that we all stay home and stay safe and hopefully this thing blows over without causing too much economic disruption. And I’m sure the countries like South Africa and Botswana are looking forward to getting their economies back up and going, especially because they’re hugely reliant on natural resources and hopefully we can be a huge contributor to their economy.
Lara Smith: Absolutely. Well, thank you very much. Good luck and stay safe.
