American Manganese Inc. (AMY.V) is a critical metal company that seeks to pave the way for a new future of recycling lithium ion batteries. While the company may not be the first to hit upon the idea to recycle metals from batteries, President and CEO Larry Reaugh wagers American Manganese has made a quantum leap forward and is leading the race. In an evolving day and age, one where a tech giant like Apple plans to start recycling its iPhones, can this promising company emerge as a viable contender to meet deficit supplies in a high-tech realm?
As we move towards a world to come that embraces environmentally friendly technology, Reaugh believes his company has a process that can go toe-to-toe economically in what he proudly deems a key “breakthrough”, one that has beaten out many competitors who tried but failed to achieve the same milestones in a decade-long pursuit. This week, I held an interview with Reaugh, and we discussed American Manganese’s commercial potential as he looks to dot the “i’s” and cross all the final “t’s” on patent protection for the unique technology, apply for major government grants, and find the right collaborators for a “win/win” partnership.
Sure, there is always a space for competitors to arise, but in the name of the game of rivalry, momentum matters- one that is clearly tilted in favor of this critical metal company and its disruptive technology. Reaugh has his eyes set for capturing the top of the leaderboard, and his company has invested millions to develop an adaptable, feasible process. Long-term, Reaugh hopes that not only will his company’s name be recognizable, but that American Manganese’s cutting edge cathode recycling technology will take it right to the top five percent of the battery recycling arena.
Let’s dive in to discover the behind-the-scenes advanced hydrometallurgical process, how the company intends to become a meaningful resource in a cobalt-deficient time, and why Reaugh asserts American Manganese has a process to satisfy a growing demand:
Julie Lamb: Your company’s emerging lithium-ion battery recycling technology is based on its patents in the United States, China as well as South Africa for its manganese recovery process. Meanwhile, American Manganese just successfully completed proof of concept on a program to extract up to 100% of metals like lithium, nickel, manganese, and cobalt from the most popular lithium-ion battery chemistries.
Can you elaborate on recycling technology American Manganese utilizes to capitalize on those raw components of lithium-ion batteries, turning rejected materials into advantageous profits?
Larry Reaugh: I would start by offering you just a brief history of our process.
Lamb: Please do.
Reaugh: The process has a long history so it’s not like we just stumbled on this overnight. That history involves the US Bureau of Mines who spent 60 years or so trying to develop a process that would extract manganese from very low-grade deposits, which the US only has. I’m talking about deposits of 2% to 3% manganese. The end products, electrolytic metals, have a higher value but you need a low-cost extraction process to make these deposits economic. They worked and spent millions on it, did a lot of pilot testing work and everything else, but they were never able to achieve that.
We took over the manganese deposits at Artillery Peak and we engaged Kemetco to work on this process. So, we had all that history the US Bureau of Mines had and we knew what not to do, what we couldn’t do and within two to three years, we developed a process that worked and that was cheap. We did the pre-feasibility work. We had one of the biggest engineering firms in the world perform the pre-feasibility and collaborated on the pilot plant work making sure that this process did work. Basically, we ended up with a process that would produce manganese at a cost comparative to what the Chinese have. The Chinese were using manganese metal grades of 30% to 55% and we were right in the same area as they were, as far as costs go, which is about 90 cents to a dollar per pound of metal.
But unfortunately for us towards the end of our pre-feasibility study, the prices of manganese metal, including EMD which is used in batteries and other specialty applications, went down along with other commodities during the global economic downturn. So, the manganese project wasn’t economic and we had to put it on the shelf for the time being. But Kemetco recognized that our process would work on other chemistries, particularly those contained in the cathode materials of lithium-ion batteries such as lithium, nickel, manganese and cobalt. Especially cobalt.
So we proceeded to get proof of concept that the process works on other metals, which we did last year and was extremely successful in that. We extracted the metals by leaching and some of the precipitation tests basically confirmed that we could get up to 100% extraction rates. Now, we’re working on moving forward to finalize patents that we filed for.
So, that’s the history and the process; it’s a hydrometallurgical process. A lot of people have been working on it for several years, up to ten years, and we made the breakthrough on it. As far as I know, we are the most advanced out there as far as hydrometallurgy goes. So, we’re very happy with what we have.
Lamb: You said that other people had been working ten years on it and yet your company had the breakthrough. How do you think you were able to strike that gold- so to speak?
Reaugh: First of all, we were not looking initially to develop a process to recycle batteries, so we did not go down the traditional path that most recyclers took, which is to basically melt down the used battery. No, we were looking for a low-cost way to extract manganese and you have to know that the management of American Manganese has over 80 years of combined experience in mining, so we had the experience and knowledge to make the breakthrough. We understand metals and metallurgy, and just as we were able to deliver the breakthrough where other people couldn’t, we can see an opportunity where others can’t. Right now, people are still skeptical about recycling cathode materials because they’re saying that there won’t be enough batteries and that’s not exactly true. They’re talking about reuse of batteries, which is going to cost them the same as developing a new battery, except for the cathode materials. And by the way, cathode materials represent 25% of the value in a lithium-ion EV battery or a half of a small application battery. That’s a lot of money for battery manufacturers and we’re confident that their supply managers will be interested in our process.
Lamb: You mentioned cobalt is going to be kind of a heavyweight player. Can you elaborate on why cobalt specifically is going to be so meaningful?
Reaugh: Cobalt has the density to give high performance. Like Tesla winning all the drag races, it takes the power and it gives extra longevity when it comes to kilometers per charge. Cobalt’s just totally necessary to have a superior battery. So, although they’re reducing the amounts of cobalt that they’re using, that’s not going to make much difference in the overall run of it, because cobalt demand is going up. For example, 45% of all of the cobalt produced in 2016 went into batteries and that’s expected to be 65% in 2020.
Now what does that mean for us? Well, there’s a shortage of cobalt. They will have a deficit in cobalt by the end of this year and that shortage is going to grow, because the prices of commodities in general are down (except for cobalt, which is up to $55,000 a ton.) When the prices of commodities are down, that makes it difficult to produce cobalt as a byproduct. 96% of the cobalt production in the world comes as a byproduct of two commodities: nickel and copper, especially copper. But the price of copper’s down and nickel’s down, so nobody’s going to be starting up a big copper mine in order to produce cobalt as a byproduct. That’s not going to happen. So, it’s not going to fill that gap.
There are other companies out there that are looking at high grade deposits, which are standalone cobalt mines. There’s only one that I know of that could come on in the next three to four years and it’s only going to produce about 1,300 tons a year. So, cobalt’s going to be the winner and let’s be honest: there’s a lot of cobalt in these lithium-ion batteries that can be recycled.
Lamb: Additionally, I see that Apple has announced its intention to gravitate towards recycled materials in a closed loop supply chain where for the first time in history, they will no longer use mined materials for any of their appliances or applications. How could your process work for helping Apple reach some of their new goals?
Reaugh: Well, Apple is looking at recycling the entire iPhone 5, Ipads and MacBooks. They have robotics that take those apart but I don’t believe that they have a method that would allow them to recycle the cathode materials in their lithium-ion batteries and that’s, as I say, 25% of the value of the batteries. Now when you look at what Apple’s done, they’ve raised the bar and they’re saying, we’re socially conscious. We don’t want to be digging anything from the Earth and we want to recycle our entire product and that includes the cathode material. I think that a lot of companies will be taking the same stance as Apple and that’s going to be good for the recycling of lithium-ion batteries.
Lamb: Your process is also notably environmentally friendly, making recycling batteries not only a viable option but a cleaner one. This is exactly what a company like Apple is seeking for its new closed-loop supply chain. How does this make the business opportunity for American Manganese more compelling?
Reaugh: Well, the opportunity for us is —as far as we know, the most advanced recycling company out there with a process to hydrometallurgically recover the cathode materials. We’re there if Apple ever wants to discuss our process.
Lamb: How does American Manganese hope to lead the closed-loop pathway towards benefiting worldwide sustainable energy?
Reaugh: On the world-wide scale, we would certainly take a lot of toxic materials off the market and that would include cathode materials from lithium ion batteries. We would be able to recycle those and that would reduce the amount of dependency on byproducts or products taken from the ground. We can actually alleviate a lot of the shortages over a short term. For example, 280,000 EV cars reached their end of life in 2015. That’s expected to be close to 400,000 by 2020. Then, if you look out further, you’ll see that people are predicting there will be 40 million EV cars in 2040. Our recycling plant is designed to be stationary, but it can also be made portable so one that is built in BC, Canada can be transported anywhere in the world.
Lamb: As we march towards the future where not only companies like Apple seek recycled materials but the auto world which becomes more and more electric vehicle centric, lithium demand is forecast to surge with subsequent cost is climbing as well. With the supply deficit for lithium seemingly just around the corner and cobalt which is already in deficit supply, the market could be bullish for companies that discover ways to meet that demand. How does American Manganese intend to maximize on this opportunity moving forward from its cathode recycling technology to beyond? Do you have any partnerships in the works?
Reaugh: Well, we have a process that will definitely alleviate some of the cobalt shortages. Lithium is one of the smallest components of a battery. For example, 60% of the cathode material could be cobalt, nickel, manganese and aluminum, but lithium’s only 4% of that. I don’t think there’s going to be a real shortage of lithium, but regardless, our process can produce lithium far quicker than waiting for some of these lithium mining projects to go into production. But the real story is cobalt. We could become a major resource of cobalt and when you talk about partnerships, we’re actually looking for a partner right now.
We are talking to several companies and we will approach then regarding a partnership. We could have the potential to produce four or five thousand tons of cobalt from scrap
The scraps are what’s rejected by the battery manufacturer. For example, they produce thousands of sheets of aluminum foil, coat them with the cathode material which could amount to several tons, and they select a hundred or so sheets and run a batch of batteries. If there’s something wrong with them, they reject the entire batch of foils. That’s called scraps and that represents about 10% of the total amount that’s used in battery manufacturing a year. So for 45,000 tons of cobalt, just as a rule of thumb, somewhere in the neighborhood of up to 4,500 tons of cobalt scraps could be recycled now, every year.
Lamb: I know you said that you have your eye on some partnerships. What do you think will help you choose because if you have several companies that are interested in collaborating with you? What are some of the qualities you’re seeking in a fellow partner?
Reaugh: Well, we think that there should be an opportunity for them to get involved in the company at the pilot plant stage and I’m optimistic that one of them will take it up. It depends on the agreement going down the stream, because we’re not going to give away a lot of — let’s put it this way, we’re not going to give away most of the opportunity to the company, but we will make it a win/win deal.
Lamb: That sounds fair. It is worthy of note that your company’s technology can recycle many kinds of lithium batteries and that ranges from electric vehicle to cell phones to tablets. Lithium batteries exist beyond the realm of the electric vehicle spectrum, powering the personal electronics market as well even though I know a lot of buzz is about electric vehicles. Lithium-ion batteries are valuable. They’re not only energetic but they’re also lighter, rechargeable. This could be attributed to the power of lithium, the nature of the element. Those atomic bonds allow for the battery to store a lot of energy. What are your goals for establishing a foothold in the sphere of renewable power and what untapped value exists down the line for you?
Reaugh: Our process could be partnered with some battery manufacturers in which we would take their batteries and process them. Then, you’d have a turnaround of having the materials back. We’ve actually made recyclable batteries out of lithium cobalt and they were successful. This is a big advantage really for EV cars and especially the battery manufacturing division to get involved with us.
The reality is that we could eventually deliver tens of thousands of tons of cathode material for reuse on a yearly basis utilizing portable plants that can be based throughout the world. Some of those plants will have individual agreements whether they’re licensed, or utilizing our process on a royalty basis to recycle their own batteries. There’s a multitude of ways that we can maximize returns.
Lamb: I know that we’ve discussed that American Manganese passed through proof of concept evaluation, first successful recycling of lithium cobalt cathode material. I believe it was November, 2016 that the company filed the US provisional patent application. What are your plans for commercializing this technology and how do you hope to impact the quickly advancing electric vehicle market?
Reaugh: Well, the next step after we complete the work that we’re doing is to file for our patents in November and that clears the decks for us to actually be more heavily involved with partnerships. We expect that right after that we’ll be doing the pilot plant work and we will be applying for government grants to take a large part of the costs in our pilot plant work. What we want to show is that we’re able to utilize the pilot plant and prove the feasibility of the process, the plant build-out, and then commercialize it.
Certainly, we don’t have to go through all the steps that a mine does. A mine from drill hole to production can be anywhere from say 7 to 15 years before it ever sees production and the cost is extremely high. We’re talking about a recyclable plant that utilize robotics to disassemble batteries and then the hydrometallurgical process would be immediately wrapped into that.
When it comes to scraps, like I say, we could be in production even if it was only 2,000 tons a year. That’s significant value for cobalt produced each year just from scraps alone. That’s where we would like to wrap our heads around and look at the scraps, because we don’t need disassembly. We just need to scrape off the cathode material, put it in a solution, and we take it out in a hydrometallurgical process. The cathode operating costs- we are pretty familiar with, we’ve done a lot of hydrometallurgical works and have been involved in producing mines.
We know what the cost of reagents for the hydrometallurgical side is. Hydrometallurgical reagent cost is about $800 a ton. Then, you have your labor on top of that and some of the other miscellaneous things that are not that huge, like power (Solar?). This would be the best route for us: to get our hands on the scraps and then start producing immediately at a very low cost.
Lamb: On a closing note, what would you like investors to remember about American Manganese and its long-term prospects?
Reaugh: Our long-term prospects are well-addressed on our website which is www.americanmanganeseinc.com and if anybody wanted to correspond with me, they can reach me at email@example.com or they can phone directly and talk to me at 778- 574-4444.
But what I would really like to them to remember is the disruptive technology we have. It’s the future for lithium-ion batteries. I’m not saying that we will be the only one out there recycling, but as far as we know, we have the lead and there’s going to be lots of room for competition. So, they should look at this as an opportunity.
Lamb: How do you feel about competition?
Reaugh: How do I see it? Well, eventually there’s going to be competition just like there is in the production of batteries, where you have hundreds of companies that produce lithium-ion batteries. You’ve got a few leaders at the top like the LG, Chem and Panasonic, and we would hope that we’ll fit in that leading role.
I don’t know when anybody else is going to develop a process, but we’re certainly going to have our patents. Nobody’s going to be able to infringe on that and we’re just very fortunate through the company and the shareholders that we had spent all that money, spent millions of dollars to develop a process for manganese that’s adaptable, I think we’d be in the top five percent of recyclers of cathode materials, down the road somewhere.
Lamb: Sounds like an excellent head start. You’ve got the advantage here.
Reaugh: Oh, yeah. Well, we think that the company is just really unrecognized at this point, even though we’ve seen a real resurgence ofinvestors over the year. You can just sit back and imagine the real value in all this and what this could mean as a business opportunity
American Manganese is a sponsor of Smarter Analyst. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.