Manganese, Powering the Nation

   

Utilized for lithium-ion (Li-ion) batteries, manganese is a commodity with a promising future since its use will continuously increase for the foreseeable future. Compared with other battery technologies today, Li-ion batteries have the highest energy densities (100-265 Wh/kg or 250-670 Wh/L). It also has a high cycle endurance and contains no harmful substances, such as cadmium, making it more eco-friendly.

Due to its capacities, the Li-ion battery tops the list of battery types used in portable electronic devices and the electric automotive industry. Currently, there are five types of Li-ion batteries that are commercially available: lithium-cobalt-oxide (LCO), nickel-cobalt-manganese (NMC), nickel-cobalt-aluminum (NCA), lithium-zinc-phosphate (LFP), and lithium manganese-oxide (LMO). Among the five types, manganese is a crucial element in two, making it a valuable commodity to invest in.

Furthermore, the electric vehicle industry and other industries are increasingly using NMC lithium-ion batteries because of their ability to provide a higher amount of energy, allowing for a shorter recharging time while lasting longer. The battery is also said to surpass other commercial battery technologies in terms of safety.

Thanks to the increasing electric vehicle market penetration, manganese consumption is projected to grow rapidly in the next decade, which in turn will significantly influence the manganese supply chain. To keep up with the projected growing demand, related industries are developing a manganese-based Li-ion battery to provide steady stock for the future.

The situation creates a high business margin opportunity for manganese products with high purity levels, such as manganese sulfate for the battery raw material. Manganese ore pyrolusite can also be found in almost all regions in Indonesia, from Aceh to West Papua, with various supply levels. Sizeable pyrolusite stocks are found in Nusa Tenggara, Tasikmalaya (West Java), Sleman (Yogyakarta), Trenggalek (East Java), and South Kalimantan, with East Nusa Tenggara holding the highest manganese grade of 56% purity level.

According to data from the Geology Body of the Ministry of Energy and Mineral Resources, Indonesia possessed 142,734,023 tons of manganese ore in 2019, while stocks reached 108,623,329 tons. East Nusa Tenggara holds the largest manganese supply, contributing 61.89% of the country’s overall stock, which can fulfill domestic smelter needs for more than a century. However, this amount is still relatively small, therefore there is a big potential for further development of manganese ore. While Indonesian manganese ore has a very high quality, the local manganese ore processing has yet to be fully realized.

The central and provincial administrations have been working together to create a special economic zone for developing manganese ore processing investment. There are five regions proposed as special economic zones: Alor, Lembata and Larantuka (Altaka), East Sumba, Amfoang, Batutua, and Wini. All are located in East Nusa Tenggara.

From a financial standpoint, the government has prepared a series of tax facilities in the sector. This includes revising the tax holiday incentive facility, which refers to fixing the scheme on corporate income tax (PPh) reduction of up to 100% within five and 20 years, depending on the investment value. The policy covers a two-year transition with 50% corporate income tax for a pioneering industry, of which the manganese industry can be classified as such.

The second facility is tax allowance, which reduces net revenue by up to 30% from the investment and accelerated diminution/amortization. The tax allowance also gives a corporate income tax of 10% for taxpayers with an overseas domicile certificate and loss compensation exceeding five years (maximum ten years). Other financial facilities include value-added exemption, import duty exemption, and economic zones. With proper support and development, the industry is hoped to employ a substantial number of workers while also being a sustainable sector for investors.