Wednesday 17 November 2021

Why I Remain As Bullish As Ever On Manganese (X)

There are two themes I see a lot of in the investment community lately. Inflation and battery metals. Well, let's combine the two. EV battery manufacturers are under pressure to reduce the cost of their batteries, which is made doubly difficult during inflationary pressures. Therefore they will be motivated to find the cheapest materials possible.

Right now one of the cheapest materials on a per pound basis within a battery is manganese. That means manufacturers are motivated to use more manganese at the expense of other more expensive materials. I have pushed the manganese narrative and specifically MN for a while, but that narrative hasn't changed. See this recent article:


When people ask about lithium, they have a few choices in the billion dollar range - LI, SLI and LAC. Along with a bunch of smaller players like VLI and AN which I have mentioned before. This isn't the case for manganese.

There are a few larger conglomerates like South32 in Australia that have significant manganese operations but aren't exclusively so. In Canada there are only a handful of microcap choices for manganese pure-plays - MN, EMN, EMM - AMY has manganese in its name but isn't a miner or explorer in the traditional sense. What I'm trying to say here is that lithium speculative dollars are spread among quite a few players, some of them with significant market caps that can handle a lot of those dollars. That's not the case for manganese. A manganese craze only needs to be a small percentage of the lithium craze to ignite a similar bullish action on manganese stocks.

My past MN bullish investment thesis has been based on its position as a potential North American supplier (no current manganese production in the US or Canada) as well as the Dahn brotherly connection to Tesla. But the truth is, that stuff doesn't even matter. When you type in "manganese" into Yahoo Finance, MN is the first one that comes up. Just like how LAC is the first thing to come up when typing up "lithium". AMY will undoubtedly benefit from this effect as well, rightly or wrongly, because of its name.  

Just like how people are asking about lithium now, they are eventually going to ask about manganese. Especially if Elon Musk Tweets or farts out something about manganese and doesn't just let his capable technical underlings handle all of it. MN has been slowly trending upwards, but is still way off last year's highs and has generally been underperforming the battery metal market. I don't expect that to last for long and I expect those highs to be challenged. I don't own any EMN, EMM or AMY but I do watch them all and expect them to do well too.

I'm an investor who lives by the buy low, sell high principle. I have sold all of my lithium plays but remain fully invested in MN, expecting a bull run into manganese that is going to be led by this stock. 

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