The Ledger

There is a habit, both in the press and in policy circles, of speaking of manganese as though it were a single commodity. It is not. It has not been for some years now. The metal behaves, trades and is priced in two structurally separate markets, and the quieter of the two is where the consequential story lies.

The first market is metallurgical. Ferromanganese and silicomanganese, the alloys that have gone into steelmaking for a century. This market is broadly in balance. Prices are elevated entering 2026, touching a seventeen-month high, but the disruption is cyclical. South Africa continues to produce forty percent of global ore. Australia, a quarter. The trade is well understood, the flows are mapped, and the margins are what they have long been.

The second market is newer and, to our reading, far more consequential. High-purity manganese sulphate monohydrate, known in the trade as HPMSM, is the battery-grade material. It is a different product made from the same ore through a different process, at a different cost, and sold into a different supply chain. China processes ninety-six percent of the world's HPMSM. Not fifty percent, not two-thirds. Ninety-six.

This is the number worth sitting with. It is not a number that describes a market. It is a number that describes a vulnerability.

The European Union has recognised this, after some delay. The Critical Raw Materials Act, enacted in March of 2024, lists manganese as a Strategic Raw Material. The stated objective is to bring Chinese dependency below sixty-five percent by 2030. The current figure, depending on which measure one uses, sits between sixty-five and seventy percent. The EU is, in other words, sitting directly on the threshold it has declared unacceptable, and the instruments it has deployed so far will not move the figure quickly enough.

The Carbon Border Adjustment Mechanism, operative from January of 2026, applies to ferromanganese. It does not apply to silicomanganese, which accounts for roughly thirty-six percent of ore consumption. This is not an oversight, it is an artefact of how CBAM was written. The asymmetry creates an immediate regulatory arbitrage that Turkish, Kazakh and other non-European producers will work for as long as it exists. The point is not whether the arbitrage is legitimate. The point is that the EU's policy instruments, read carefully, do not address the problem they claim to address. They address the easier half of it.

There is one European project of meaningful scale. Chvaletice, in the Czech Republic, is a tailings reprocessing operation targeting fifty thousand tonnes per year at full build-out. Europe's HPMSM demand, by 2030, will exceed two hundred thousand tonnes annually. The arithmetic is straightforward. Chvaletice, at maximum capacity, meets a quarter of the deficit. The remaining three-quarters has no publicly announced European source.

This leaves Europe with three honest choices. It can accept continued Chinese dependency for the next decade and hope geopolitics do not intervene. It can accelerate alternative supply from Africa, Kazakhstan or the Americas, which requires capital commitments that do not yet exist in the announced pipeline. Or it can accept that the battery-grade manganese question will be resolved outside its borders, with Europe as a price-taker to whichever combination of jurisdictions emerges as the non-Chinese source of record.

We take no view here on which path is correct. We note only that the third is the path of least resistance, and that paths of least resistance have a way of being taken whether they are chosen or not.

The metallurgical manganese market will continue to function as it always has, with its cyclical rhythms and its established trade flows. The battery-grade market will continue to be, for some time yet, a problem looking for a solution. The operators best positioned will be those who have understood, early, that these are two different problems and that the tools required for each are not the same.