OM Holdings' subsidiary OM Materials has locked in a binding take-or-pay deal to purchase up to 1.1 million tonnes per annum of manganese concentrate from Element 25's Butcherbird Mine, underpinning Element 25's expansion and financing plans.
- Binding take-or-pay agreement for 100% of Butcherbird manganese concentrate
- Initial five-year term with option to extend for another five years
- Market-linked pricing tied to global manganese ore benchmarks
- Supports Element 25’s 1.1 Mtpa Butcherbird Expansion Project
- Includes carve-outs for future battery-grade manganese feedstock
Long-Term Offtake Deal Anchors Butcherbird Expansion
Element 25 Limited (ASX:E25) has secured a crucial long-term offtake agreement with OM Materials (S) Pte Ltd, a subsidiary of OM Holdings Limited (ASX:OMH), for up to 100% of the manganese concentrate produced at its Butcherbird Mine in Western Australia. This binding take-or-pay contract covers an initial five-year term with an option to extend for another five years, providing Element 25 with a clear sales pathway as it advances its Butcherbird Expansion Project (BBX) targeting 1.1 million tonnes per annum (Mtpa) of manganese concentrate.
The deal is a significant milestone for Element 25, offering revenue certainty and supporting project financing efforts, including conditions tied to board approvals and regulatory clearances. OM Holdings, with its established smelting operations in Malaysia, offers a downstream industrial customer base, anchoring the supply chain from mine to market.
Pricing, Terms, and Strategic Flexibility
The agreement employs a market-linked pricing mechanism aligned with internationally recognised manganese ore benchmarks, incorporating quality adjustments and freight normalisation on a free on board (FOB) basis. Structured shipping and payment arrangements, including take-or-pay obligations and staged payments linked to production and shipment, aim to balance revenue stability with market exposure, allowing Element 25 to participate in potential upside conditions.
Importantly, the contract includes carve-outs to support Element 25’s plans to produce high purity manganese sulphate monohydrate (HPMSM), a battery-grade material vital for electric vehicle (EV) batteries. This preserves Element 25’s strategic flexibility to pursue value-added downstream processing alongside the concentrate sales.
Butcherbird Expansion and Project Outlook
Element 25 is targeting mechanical completion and commissioning of the Butcherbird Expansion in the first quarter of calendar year 2027, based on an updated feasibility study and Ore Reserve of 101.4 million tonnes at 10.4% manganese, supporting an 18-plus year life of mine. The offtake agreement complements recent contracts for mining and haulage services, collectively de-risking the project’s development and financing pathway.
Justin Brown, Element 25’s Managing Director, highlighted that the agreement extends the existing relationship with OM Holdings and provides a strong commercial foundation for the project’s initial five years and potentially beyond. The deal is structured to give lenders and investors confidence, delivering revenue certainty without sacrificing exposure to market gains.
Positioning for the Battery Materials Market
Element 25 is also advancing its proprietary technology to produce HPMSM for the US EV market, planning a refinery in Louisiana supported by major automakers and a substantial US Department of Energy grant. The strategic carve-outs in the offtake deal reflect the growing importance of manganese in emerging lithium manganese rich battery chemistries, which could increase manganese demand by up to tenfold compared to traditional high nickel batteries.
This offtake agreement thus not only secures a critical sales channel for manganese concentrate but also aligns with broader industry trends towards electrification and battery innovation.
Bottom Line?
This offtake deal anchors Element 25’s Butcherbird expansion while maintaining strategic flexibility for battery-grade manganese ambitions.
Questions in the middle?
- How will progress on project financing and regulatory approvals influence the timing of Butcherbird’s commissioning?
- What impact will carve-outs for HPMSM feedstock have on manganese concentrate volumes available to OM Materials?
- How might evolving manganese market dynamics and battery demand shape pricing and contract extensions beyond the initial term?