Bushveld Minerals PLC (LON:BMN) is to push ahead with the expansion of its Vametco vanadium plant to take advantage of soaring demand for the steel additive.
Vanadium prices jumped 24% over the quarter to September to US$85.8/KgV (R1,222) and have risen by 137% over the past 12 months.
Industrial and community action, however, disrupted production, with output of Nitrovan or vanadium nitride, almost 15% lower quarter-on-quarter at 537 mtV (metric tonnes of vanadium).
"While higher vanadium prices partially mitigated the impact of the production shortfall, with the company expected to generate healthy cash flows, Bushveld intends to use this opportunity to sustainably maximise production volumes and drive operating costs down,” said Fortune Mojapelo, Bushveld’s chief executive.
“Accordingly, we are pleased to have commenced with Phase 3 of our expansion plan, which will increase capacity at Vametco to 5,000 mtV per annum.
“Phase 3 will also benefit from the advancement of the Brits Vanadium Project, which has yielded encouraging drilling results.”
Because for the third quarter disruption, annual production expectations at Vametco have been reduced.
Bushveld has since settled its industrial dispute with the AMC Union, but the 16-day action now means output for the year will be 2,600 and 2,650 mtV compared to a previous estimate of 2,850 mtV to 3,000 mtV.
Production costs on the quarter rose 11% due to the lower volumes, and the full year estimate has also been revised to R250/KgV and R255/KgV.
Mojapelo added: "We continue to benefit from a rising vanadium price supported by China's new high-strength rebar standard which came into effect on 1 November 2018.”