Back in 1987, the American government classified a number of metals that were and still are considered strategic war and economically important metals. At that time, as today, manganese was in one of the top spots. But surprisingly, many knew long before then about the relativity of manganese availability to productivity in many sectors of military security and steel production as well as many other modern day uses. Was this 1987 classification a new revelation? Not so, judging by this 1941 editorial in Time I recently discovered by the same title I felt so appropriate, that I copied it for the heading of this editorial: http://www.time.com/time/magazine/article/0,9171,766240,00.html
Today most, if not all, of the strategic reserves of manganese and many other important imported metals are gone, sold off by the U.S. government. Many of these critical minerals are in finite supply worldwide. For the United States, these minerals include chromium, platinum and manganese, among others. As is so readily apparent, these minerals are extremely crucial to the nation's economic stability and national security.
On Jan. 7, 1987, manganese was certified by the U.S. Department of State as a strategic mineral essential for the economy and defense of the United States that is unavailable in adequate quantities from reliable and secure domestic suppliers. The problem created by this unavailability is aggravated because there is currently no satisfactory substitute for manganese among its major applications, and it has itself now become a substitute in certain alloy applications thanks to new and innovative metallurgical discoveries.
At present, the United States depends totally on imports for its manganese requirements. The main sources of manganese imports are the Republic of South Africa, France, Gabon and Brazil.
Consider This Revealing 2008 Agora Financial Report Below:
The U.S. Strategic Stockpile Is Gone...Now What?
(Excerpts) BWK ~ March 6, 2008
One of the lessons of World War II was the vulnerability of international trade. The Germans almost starved Britain with submarine attacks on British and Allied shipping. And the U.S. broke the back of the Japanese economy by sinking over 90% of the Japanese merchant fleet.
So during the Cold War, from the 1940s to the 1980s, the U.S. government was pretty worried about keeping the national economy running in case of a war with the Soviet Union. Thus, the U.S. government built up what it called a "strategic stockpile."
The Strategic Stockpile
The strategic stockpile was a large amount of metals, minerals and other items. Planners believed these things were critical for the national economy to function. The government just plain hoarded up metals and minerals in warehouses, and open camps out in the desert.
It was like a squirrel stocking up on food for a long winter. The stockpile included all sorts of things. There was helium to indium, chrome and cobalt, germanium and beryllium, diamonds, molybdenum and much more. This constituted the U.S. "war reserve."
In hindsight, it is fair to say that the planners had their basic facts straight. The items in the stockpile were -- and remain -- the backbone of a modern industrial economy. Without these metals and minerals, you can hardly keep the lights on, let alone build advanced systems like power plants or war machines like jet aircraft and submarines.
But the Cold War ended in the early 1990s, right? (Well, maybe not. But we can discuss that another time.) So in the post-Cold War euphoria of the 1990s and early 2000s, the U.S. government just sold off almost all of the strategic stockpile material. (The Russians sold a lot of theirs as well, but not all of it -- characteristically.)
The Strategic Stockpile is Gone
So today, the U.S. strategic stockpile is gone. It has been sold off. There is just about nothing left. The warehouses are empty. (Heck, the U.S. government even sold off many of the warehouses.) And maybe it seemed like a good idea at the time. Selling the stockpile raised a bit of cash for the federal coffers.
But in the broad picture, selling off the stockpile was a strategic blunder for the U.S.
The sell-off had two big effects:
- First, it depressed world prices for most of these commodities. This worked against new investment in mines, mills and factories. And few firms were hiring and training new workers.
- Second, the sell-off forced many former producers out of business. Think about it. When you are competing against government sales from a stockpile, how can you afford to keep running a mine, or mill or processing factory? So the mines closed. The mills closed. The factories shut down. The skilled employees moved on to other jobs.
And guess what? Here it's 2008 and the stockpile of many minerals and goods is depleted. Yet we are now experiencing worldwide shortages of many of these critical metals and minerals. At our Agora Financial editorial meeting we discussed it in terms of "Peak Everything." (http://www.energyandoil.com/the-us-strategic-stockpile-is-gonenow-what)
As you might expect, this foregoing Agora Financial scenario, which myself and many others believe to be the real truth of the coming situation and potential steady return of base metal prices could also mean that "one man's loss is another man's gain." To that end, it is important to raise the awareness regarding the importance of manganese as well as where would, or could, the United States find and exploit an easily accessible and economically viable large domestic source of this metal in a short period of time if needed? (Artillery Peak was used for such production during World War II.)
One such source, and the only one currently at an advanced stage being brought forward in the continental United States is in the Mojave mining district of Arizona at Artillery Peak by a company called Rocher Deboule Minerals Corp. (http://www.rdminerals.ca/).
Rocher Deboule's claim blocks of the Artillery Peak deposit have been known since the 1950s as one of the largest single low-grade manganese deposits in the continental United States. With this resource being in mine friendly Arizona, water close by in the Big Sandy River drainage and the Alamo Reservoir and Dam for flood control of Bill Williams River nearby as well as high-tension powerlines immediately to the west of the Peak, extremely low mine Capex costs, with roads into and through the claims area, it would seems this project is ideally suited for the times and a proven helmsman who likes to make mines happen.
Could there be a bonus in store here? Most certain, as there are many, many more holes to be drilled over the course of this areas mineral life and that will likely mean a lot more added to the manganese resource side of the equation, potentially far beyond the already known vast resource as outlined by past and present research and exploration.
Artillery Peak Report From Arizona Geological Survey
"The Manganese deposits of the Artillery manganese district are the largest and perhaps the only significant group of Manganese deposits in the United States." (http://www.azgs.az.gov/Mineral%20Scans/Artillary%20Mn%20District%20%20Arizona.pdf)
Over the course of recent mining history, many changes have come about with regard to the viability of low-grade mineral deposits. For example, we used to have many copper mines running in multiple percentage points of copper. Now most are in decimal points and making vast profits at that. One of the main key factors besides the higher metal price itself lies in a term called "beneficiation."
Beneficiation is the treatment of raw material (such as pulverized ore) to improve physical or chemical properties in preparation for further processing. Beneficiation techniques include washing, sizing of particulates, and concentration (which involves the separation of valuable minerals from the other raw materials received from a grinding mill). In large-scale operations, various distinguishing properties of the minerals to be separated (for example, magnetism, wet-ability, density) are exploited to concentrate the desirable components.
Beneficiation involves refining an ore, or separating the valuable material of an ore from the waste material, for further processing or direct use. It may be conducted via a range of techniques including:
- magnetic separation
Beneficiation enables operators to improve the quality of their end-product and to enhance the overall processing performance of an ore. To the modern forms of beneficiation, you can now add new and improved methods of mining recovery systems: high pressure grinding roll systems (HPGRS), milling, floatation, electrolysis, bacterial and chemical leaching refinements, etc.
For many of the once considered low-grade known mineral deposits in our earth, this means that which was once considered an uneconomic grade for some deposits is now potentially very viable and profitable, so one shouldn't let the term "low grade" be a deterrent or distraction in this new era of mining.
A few important points about the Artillery Peak deposit:
Manganese is the most essential mineral, aside from iron in the production of steel. You cannot produce steel without adding 10 to 20 lbs. of manganese per ton of iron. Manganese is the fourth largest traded metal commodity at approximately 30 billion pounds per year, just behind copper. The steel industry in Canada and the United States has vast amounts of domestic iron deposits, yet no production of manganese in either country, even though it is a strategic metal. The following items are the highlights of Rocher Deboule's Arizona manganese project:
1) The Artillery Peak Arizona manganese district contains the largest resource of manganese in the southwestern United States with a historical resource of 175 million tonnes of 3.5% to 4.0% Mn. (Where historical estimates are referred to, the Company has no classification of the resource or reserve, and the Company has not obtained enough of the original data and has not done the work necessary to verify the classification of a resource or reserve. The Company is not treating the estimates as a NI 43-101 defined resource or reserve verified by a Qualified Person and the historical estimate should not be relied upon.)
2) Rocher Deobule is the first company in 50 years to have tied up all of the Artillery Peak Manganese district.
3) Diamond drilling by Rocher Deboule in 2007- 2008 resulted in a 43-101 resource on Rocher Deboule's initial claims as follows:
INDICATED: 9,272,442 Tonne, 3.79% Mn, 772,475,549 lbs.
INFERRED: 2,553,000 Tonne, 3.82% Mn, 215,050,000 lbs.
4) Diamond drilling (66 holes) by the U.S. Bureau of Mines resulted in a historical resource at Maggie Canyon as follows:
Cross section: 25,129,693 tons, 4.73% Mn, 2,377,000,000 lbs.
Polygon: 27,387,872 tons, 5.45% Mn, 3,001,000,000 lbs.
Triangle: 27,596,489 tons, 5.35% Mn, 2,925,6000,000 lbs.
5) NA Tribe & Associates is currently developing an "up-dated" NI43-101 resource study on the Artillery Park Manganese camp incorporating the Maggie deposit and using geological information on thirteen other manganese targets.
6) First stage metallurgical studies contracted by Rocher Deboule confirmed a high extraction (>90%) of manganese from a sulphurous column coarse particle leach using sulphurous acid EMEW electrolysis technology produced manganese metal.
7) Due to the ability to leach coarse particle manganese material, crushers and ball or sag mills will not be required, which significantly reduces the capital costs to about $10,000/tonne. The company believes a 3,500 tonne/day operation would be optimal. (Capex for Copper concentrators average $25,000/tonne.)
8)The company plans to proceed with second stage metallurgical and electrolytic studies to maximize recoveries and electroplating costs and recoveries for a total all-in cost of $0.35 to $0.50 per pound.
9) Comparing the manganese open pit operation to a copper open pit leach operation indicates an advantage on the manganese side as follows (estimates only); the values for copper are listed first, manganese second:
- Grade: 0.70%/tonne (typical); 5%/ton
- Recovery: 90% (14 lbs.); 90% (90 lbs.)
- Price/lb.: $1.80; $1.45
- Value: $25.20/tonne; $130.50/ton
- Cash Cost/lb.: $0.30; $0.45
- Cash Cost: $4.20/tonne; $40.00/ton
- Net: $21.00/tonne; $90.50/ton
Electroplating costs remain constant at $0.40 lb.
Manganese is a strategic metal and the U.S., with its large steel production, is extremely vulnerable to having to import all of its requirements.
A must-read report on manganese is http://www.laplaceconseil.fr/LaplaceConseil/htdocs/admin/upload//File/Steel%20&%20Mn%20prospects%20to%202012.pdf. An excerpt is below that highlights steel and manganese prospects to 2012.
2007 International Manganese Institute Report:
- Manganese Demand Prospects Have Never Been So Good
- Steel demand to exceed 6%/yr for many years to come
- Specific Mn consumption growing again
- Mn intensive steel grades to grow faster than average
- Non steel applications also facing good prospects
- Limited downside risks for next ten to fifteen years
America's Vulnerability To Imported Metals Being Cut-Off:
Russian Manganese & The American Market (http://www.jstor.org/pss/2492033?cookieSet=1)
Don't ever think that the above type of history won't repeat itself as we enter the growing uncertainties of the 21st century and finite mineral resources become more and more crucial, valuable and less available. How many other countries could and would halt all exports of manganese and other valued strategic metals to the western powers in the event of shortage or crisis as was the case with Russia long ago? It's already happening in China. Constant is this Asian nation's feeding frenzy for new and existing mineral deposits worldwide as it continually increases export taxes on its own domestic supplies of many minerals to keep them "in country." China's manganese export tax is currently at 15% with more hikes expected in near future)
The world is experiencing a financial crisis at present, granted, but it is subsiding and it will correct, but never think that it will deter sustained growth of China, India, Russia, Brazil, et al, over the longer term. Gold may hold the majority of investors allure for mining investment at present but base metals and a never ending worldwide demand place my interest in the undervalued and fire-sale-priced base metals sector right now because I like to invest in something that is currently on few people's radar screens and one of the best in that category is in manganese and a junior miner with a management track record of building mines.
PM investment excitement has hit the mainstream, even for some I know who have little to no understanding of markets and investing or gold itself. Yes, I'd definitely keep what gold investments I have, but I'd sure be looking to capitalize on certain junior miners in base metals while they are currently trading for mere pennies on the dollar compared to the highs we've seen them at over the last two to three years. They'll have their day again, and that day isn't far off.
Mines aren't found, they are created, and at this point in time when one can actually participate in ridiculously cheap financings by juniors such as Rocher Deboule Minerals at a paltry $0.10 p/share, then I see another golden opportunity outside of the PM sector. Remember being taught "pennies make dimes, dimes make dollars" as a child? Well, the same simplistic principle applies to the right penny mining stock if management is competent and the mineral resource is sizable, realistic and viable, not to mention "needed" by a nation as great and demanding as the United States. Some great fortunes, not to mention world-class mining company giants have been created by investing in junior miners, and that's a fact.
For the time being, a depressed base metals market coupled with current up/down stock volatility is your friend; lack of vision and foresight is your enemy. When the world gets back on the growth, lending and spending track in the months ahead, as it always does, this lack of confidence in the markets will just be another blip in history and perhaps the greatest investment opportunity in a lifetime.
Ken Reser can be e-mailed at email@example.com.