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Australian companies South32 Limited (ASX:S32) and Element 25 Limited (ASX:E25) are making strides in the battery metals marketplace, particularly in high purity manganese sulfate (HPMSM) projects in the United States. This initiative aligns with efforts from the U.S. government to reduce reliance on China in the battery supply chain.
Government Support for Battery Projects
Both companies have secured grants aimed at enhancing their operations in the U.S. market. South32 received a grant of US$166 million for its Clark deposit project at the Hermosa site in Arizona, where it is developing the US$2.2 billion Taylor zinc mine. The funding is expected to cover 30% of the production facility costs, which is crucial for entering the battery-grade market.
As of now, only a small fraction—less than 2%—of manganese is utilized in lithium-ion batteries, primarily as a component in nickel-cobalt-manganese and lithium-iron-manganese-phosphate chemistries. However, industry forecasts from Benchmark Mineral Intelligence suggest that demand for batteries could increase eightfold by 2030. This growing demand underscores the importance of diversifying supply chains away from Chinese dominance, which currently controls 96% of HPMSM supply.
South32's Strategic Focus
South32's CEO Graham Kerr highlighted the significance of the grant, stating it recognizes Clark’s potential to supply battery-grade manganese to the North American market. The company is already a major producer of manganese through its GEMCO joint venture in the Northern Territory, though it is currently temporarily closed for maintenance.
In addition to the grant for the Clark project, South32 is also receiving US$20 million from the U.S. Department of Defense to develop an underground decline, with access expected by the end of 2025. This funding further solidifies South32's commitment to growth in the battery metals sector.
Element 25's Ambitious Plans
Element 25 has also secured a US$166 million grant for a 71,650 tonnes per annum HPMSM facility planned for Louisiana. This project, supported by major automotive players Stellantis and General Motors, is expected to create significant employment opportunities, generating 400 jobs during construction and 144 during operations. Ore from Element 25’s Butcherbird mine in Western Australia will be shipped to the new facility, set to open in 2026.
Element 25 is currently in a trading halt but anticipates a positive market reaction once trading resumes. The company has also expressed interest in a non-binding memorandum of understanding with Nissan in Japan regarding a potential facility.
Cobre Limited (ASX:CBE) and BHP's Potential Collaboration
In another development, Cobre Limited (ASX:CBE) is in exclusive negotiations with BHP Group Limited (ASX:BHP) for a potential joint venture involving its Kitlanya West and East copper projects. This collaboration, part of BHP's Xplor incubator program, follows a successful seismic survey funded by BHP.
Cobre will maintain full ownership of its Ngami and Okavango copper projects, regardless of the outcome of negotiations with BHP. CEO Adam Wooldridge emphasized the significance of this potential transaction, which could enable Cobre to advance its exploration programs and focus on discovering significant copper deposits.
As the demand for battery metals rises, Australian companies like South32 and Element 25 are strategically positioning themselves to capture opportunities in this growing market. With government support and ambitious projects on the horizon, these companies are set to play a crucial role in the evolving landscape of battery supply chains.
