Today's Oil and Gas Update - European EV capacity boosted by major battery metal deal

Proactive Published 23/10/2018

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SP Angel – Morning View – Tuesday 23 10 18

European EV capacity boosted by major battery metal deal

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MiFID II exempt information – see disclaimer below

Anglo American (LON:AAL) – Q3 copper output rises 17%

Anglo Asian Mining* (LON:AAZ) BUY – 84p – Sterling rate for the maiden dividend

Arc Minerals* (LON:ARCM) STRONG BUY – Drilling shows higher copper grades over good intersections from surface

Bushveld Minerals* (LON:BMN) BUY - Target Price 37p – Vanadium prices jump 17% in China to US$120-140/kgV

Keras Resources (LON:KRS) BUY, Target 1.04p - 0.36p, Mkt Cap £8.1m - Calidus sell non-core gold rights to Paxton

Scotgold Resources* (LON:SGZ) BUY, Target Price 58p – Start of development works draws closer as Decision Notice is secured

Markets have switched into the risk off mode amid growing geopolitical concerns including uncertainty over the death of a Saudi journalist, Italy’s budget and Brexit.

European equities dropped to the lowest level since December 2016 with the Stoxx Europe 600 Index down 1.4% this morning.
S&P 500 Index futures are off 1.2% hitting the lowest level in 16 weeks despite Trump calls for a new tax on middle class incomes; the proposal has been deemed unrealistic to be considered ahead of November mid-term elections.
The MSCI Asia Pacific Index dropped 2.1% trading at the weakest in more than 17 months.
Investors would be closely watching earnings results and companies’ assessment of growth outlook this week with notable releases due from Amazon, Alphabet, Intel, Microsoft, Verizon, Twitter, McDonald’s, UBS, Deutsche Bank, Barclays, Total, United Technologies, Caterpillar, Haliburton and Linde.
The European Commission is due to issue a decision on the proposed Italian budget today with markets fearing the draft is unlikely to get a green light from Brussels.
Investors are bidding up safe haven assets with gold up 1.1% this morning and yen up 0.4%.

Shares of the coking coal producer are being offered at the bottom of an expected range as part of the proposed IPO amid global growth concerns among investors, FT reported yesterday.

Coronado Global Resources, one of the largest producers of metallurgical coal, has priced its shares at A$4.00 versus thte targeted range of A$4.0-4.8 and has redued the size of the offering to 193m shares, down from planned 290m reflecting weak market demand.
Following the issue, US private equity group Energy and Minerals that is behind the Company would retain 78.9% stake compared to 70% expected when the IPO was announced in September.
Coronado operates three mines in the US and one in Australia’s Bowen Basin in Queensland, Australia.

European EV drive boosted by BASF and Nornickel deal

Germany’s BASF and Russian miner Norilsk Nickel (Nornickel) have struck a nickel and cobalt supply deal to support rapidly growing demand for EV battery raw materials. Underpinned by a new BASF cathode plant in Finland, the agreement could provide fresh impetus to European efforts to create battery cell manufacturing capacity in a market dominated Chinese and Korean producers.
Chemicals giant BASF will build a plant to produce cathode materials for batteries in Harjavalta, Finland, adjacent to a nickel and cobalt refinery owned by Nornickel, the world's second-largest nickel miner and a major cobalt producer. President of BASF’s Catalysts division notes "with the investment in Harjavalta, BASF will be present in all major regions with local production and increased customer proximity, further supporting the rapidly growing electric vehicle market."
BASF elbowed its way into the cathode market with a string of takeovers and investments from 2012 to 2015, now competing with Europe's Umicore and Johnson Matthey as well as with a range of Chinese suppliers including Beijing Easpring and Ningbo Shanshan.
The industry is working to boost the nickel content at the expense of cobalt over the next two years in an effort to raise energy storage capacity and save on more expensive cobalt, much of which comes from artisanal mines in Congo where human rights abuses are rife.
Start-up of the Harjavalta plant is planned for late 2020, with enough battery material capacity for about 300,000 fully electric vehicles a year. The investment forms part of BASF plans to invest up to €400m ($462m) in expanding production plants for cathode materials in Europe.
BASF currently produces nickel manganese cobalt oxide (NCM) cathode materials in Elyria, Ohio, and lithium nickel cobalt aluminium oxide (NCA) cathode materials, which are used in Tesla cars, at its BASF TODA Battery Materials joint venture with Toda Kogyo in Japan.

121 Mining Investment conference with SP Angel in London

20-21 November - See: https://www.weare121.com/121mininginvestment-london/

Dow Jones Industrials

-0.50%

25,317

Nikkei 225

-2.67%

22,011

HK Hang Seng

-2.95%

25,381

Shanghai Composite

-2.26%

2,595

FTSE 350 Mining

-1.22%

16,676

AIM Basic Resources

-0.54%

2,141

Economics

Currencies

US$1.1465/eur vs 1.1550/eur yesterday Yen 112.42/$ vs 112.72/$ SAr 14.366/$ vs 14.268/$ $1.299/gbp vs $1.308/gbp 0.708/aud vs 0.712/aud CNY 6.939/$ vs 6.932/$

Commodity News

Precious metals:

Gold US$1,231/oz vs US$1,227/oz yesterday

Gold prices inched up during early trading in Asia as Asian stock markets fell amidst escalating geopolitical tensions over the killing of journalist Jamal Khashoggi and concerns over Italy’s budget.
Major equity boards were in the red. China’s Shanghai Composite fell 1.57% and the Shenzhen Component dropped 1.89%. Hong Kong’s Hang Seng Index slipped 2.18%. Japan’s Nikkei 225 lost 2.39% and South Korea’s KOSPI also tumbled 2.37%.
Safe haven gold continues to find support as tensions grow on a reckoning for Saudi Arabia, as there are fresh doubts about the Saudi explanation of Jamal Khashoggi’s death after a video surfaced of a ‘body double’ leaving the consulate in Istanbul where the journalist was killed. A Saudi operative donned Mr. Khashoggi’s clothes and walked around the city as part of a cover-up, surveillance images leaked by Turkey show.
President Recep Tayyip Erdogan of Turkey has promised to give an unvarnished account of what happened to Mr. Khashoggi in a speech today. Meanwhile, the White House sent the C.I.A. director, Gina Haspel, to Turkey to help with the investigation. And Treasury Secretary Steven Mnuchin met in Riyadh with Saudi Arabia’s crown prince, Mohammed bin Salman, who is suspected of playing a role in Mr. Khashoggi’s death.
U.S. President Donald Trump told USA Today on Monday that the murder of Khashoggi was “a plot gone awry” and implied he was considering measures to halt arms sales to the kingdom.
Separately, Italy’s government refused to revise its plan for a jump in public spending and said that breaking the EU’s fiscal rules would not threaten the currency union’s stability, according to the Financial Times.
The European Commission issued a letter last Friday, saying that Italy’s member state’s budget breaks EU’s rules, and the spending was excessive. The EU is expected to ask Italy to revise its budget on Tuesday.

Gold ETFs 68.0moz vs US$67.9moz yesterday

Platinum US$827/oz vs US$838/oz yesterday

Palladium US$1,131/oz vs US$1,091/oz yesterday

Palladium is rising to near record levels as the US plans to pull out of the nuclear weapons pact with Russia, fueling tensions with one of the largest producers at a time when consumers are already scrambling for suppliers. Production will trail consumption by 481,000oz this year and deficits will persist through 2020, leading to the “tightest” market in two decades, Citigroup Inc. analysts including Max Layton said in a note in late September. The tightness in supply has created a lucrative business of lending the metal, spurring withdrawals from exchange-traded funds.
Hedge funds have been building their bullish bets on the metal. In the week ended Oct. 16, money managers boosted their net-long position for an eighth straight week, the longest streak since January 2013. Wagers on the metal’s price advance outnumbered bearish bets by 10,122 futures and options, the most since the mid-June, Commodity Futures Trading Commission data released Oct. 19 showed.
Mr. Trump has said the US will withdraw from the 1987 treaty, citing Russia’s violation of the agreement and the fact that China was not a signatory, leaving it free to develop its Pacific arsenal.
Concerns are building as Moscow-based MMC Norilsk Nickel PJSC are the world’s largest supplier, producing 2.78Moz in 2017 according to Bloomberg Intelligence data. Senior strategist at RJO Futures added Trump is “pulling out of the agreement with Russia. That could tighten up available supply for palladium”.
Chinese producers, including Sino-Platinum Metals and Eternal Asia Supply Chain, are expected to move as the price nears records highs. Palladium for immediate delivery continued to climb nearer towards the record $1,139.68 reached in mid-January.

Silver US$14.69/oz vs US$14.69/oz yesterday

Base metals:

Copper US$ 6,209/t vs US$6,320/t yesterday

Chinese copper fabricators and importers are scrambling to divert or resell cargoes of US copper scrap en route to China after Beijing struck imports with a 25% duty as the trade row with Washington deepens.
Scrap materials were not on the original draft list released in June, as US scrap metal, waste paper and plastics cargoes arriving in China from Aug. 23 will incur the new levy after China announced on Wednesday its final list of tariffs on $16bn of US goods.
During the first quarter, there were almost 2,200 cargoes of copper scrap per month sent to China from the US, according to Reuters’ estimates based on customs data. The average cargo of scrap copper totaled 20 tonnes.
One executive at a metals recycler with processing yards in Zhejiang province reported he has several cargoes of US scrap copper due to arrive in Ningbo port after the deadline or about to load on the US East and West coasts. “We don’t have a solution yet, but we’re discussing it with the supplier”, adding he was looking for buyers of stranded cargoes in Japan, South Korea, India and even Europe.
An executive at a Zhejiang-based copper rod maker, which uses scrap as raw material, also said shipments via a third-country were an option, although cargoes could even be sent back to the United States after docking in China.
The penalties are China's latest blow to the U.S. recycling sector, after Beijing hit aluminium scrap with hefty duties in April as part of the trade dispute. President of Lion Consulting Asia and Chinese metals industry veteran added “the impact will be draconian on both US scrap processors and Chinese consumers”.
Last year, the United States sold almost $6bn worth of scrap commodities to China and was the second-largest supplier of copper scrap behind Hong Kong, exporting 535,371t worth roughly $1.8bn in 2017. Hong Kong sent 627,180t, according to Chinese customs data.
The global recycling sector is also reeling from Beijing's tighter restrictions on waste imports introduced over the past year as China aims to stop being the dumping ground for the world's garbage. China's scrap metal imports dropped by a third in the first half of 2018 to 2.86Mt, while the country has barely imported waste plastic this year.

Aluminium US$ 2,011/t vs US$2,028/t yesterday

Nickel US$ 12,425/t vs US$12,665/t yesterday

Zinc US$ 2,654/t vs US$2,673/t yesterday

Lead US$ 2,010/t vs US$2,025/t yesterday

Tin US$ 19,290/t vs US$19,190/t yesterday

Energy:

Oil US$79.2/bbl vs US$80.4/bbl yesterday

Natural Gas US$3.114/mmbtu vs US$3.200/mmbtu yesterday

Uranium US$27.70/lb vs US$27.60/lb yesterday

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$72.9/t vs US$71.7/t

Chinese steel rebar 25mm US$693.0/t vs US$690.2/t

Thermal coal (1st year forward cif ARA) US$97.2/t vs US$99.0/t

Coking coal futures Dalian Exchange US$206.9/t vs US$205.1/t

Other:

Cobalt LME 3m US$60,000/t vs US$60,000/t

China NdPr Rare Earth Oxide US$45,899/t vs US$45,944/t

China Lithium carbonate 99% US$9,800/t vs US$9,809/t

Parties embroiled in a legal dispute over an expansion at the world’s biggest lithium mine are in talks over an agreement and have reached an in-principle commercial settlement, according to Talison Lithium Ltd. Talison “is pleased that a reasonable in-principle commercial settlement has been achieved” with Global Advanced Metals (GAM), confirming negotiations are continuing.
GAM had sought an injunction aimed at halting Talison’s expansion of lithium production at the Greenbushes mine. While Talison owns rights to produce lithium from the mine, GAM has rights over other minerals, including tantalum, and had argued the expansion plans would impact its business.
Talison Lithium is a 51%-49% joint venture between Tianqi Lithium Corp. and Albemarle Corp. Tianqi and Albemarle said in July A$516m project will lift capacity at Greenbushes to ~260k tons a year of lithium carbonate equivalent, which compares to 2017 output of ~90k tons.

Tungsten APT European US$275-295/mtu vs US$275-290/mtu

Company News

Anglo American (LON:AAL) 1618.6 pence, Mkt Cap £20.92bn – Q3 copper output rises 17%

Anglo American reports that copper production rose across each of its operations to 171,800t during the quarter ending 30th September – an increase of 17% compared to the equivalent quarter in 2017 and a 9% rise compared to Q2 2018.
Year to date copper output of 484,800t is 13% higher than in 2017. Anglo American is maintaining its full year copper production guidance in the range 630-660,000 tonnes.
Output at the Los Bronces mine in Chile increased by 23% to 95,800t of copper as a result of “continued strong mine and plant performance, supported by significantly lower than usual winter snowfall and planned higher grades (0.76% vs. 0.69%).”
Attributable copper output from the 44% owned Collahuasi mine rosew by 5% to 61,500t “reflecting planned higher grades (1.33% vs. 1.24%). Production increased by 12% compared with Q2 2018 owing to the completion of planned three-month major maintenance on 8 July” while the Soldado mine increased production by 33% “due to a combination of strong mine and plant performance and planned higher grades.”
Diamond production at De Beers declined by 4% during the quarter and by 5% compared to Q3 2017 to 8.67m carats bringing the total for the year to date to 26.17m carats (2017 – 25.32m carats).
Lower levels of diamond output are attributed to “expected lower grades at Jwaneng and lower volumes at Venetia, due to a shutdown to upgrade its processing plant ahead of its transition from open cut to underground operations”.
The company notes, however, that quarterly South African production from the Venetia mine fell by 14% compared to 2017 “due to a planned shut down at Venetia to upgrade the processing plant ahead of the transition from open cut to underground operations.”
The company is maintaining its 2018 diamond production guidance range at 34-36m carats but advises that, it “is expected to be at the higher end of the range”, implying final quarter production of 8-9m carats.
Platinum production rose by 4% compared to Q3 2017 to 649,000oz with a 1% increase in palladium output to 410,800oz, however, excluding output arising from purchased concentrates, “Own mined platinum production decreased by 7% to 332,900 ounces and palladium production decreased by 5% to 250,200 ounces due to the sale of Union mine to Siyanda Resources on 1 February 2018, after which its production was purchased as concentrate. Excluding Union, own mined platinum production increased by 5% and palladium production increased by 2%.”
“Due to strong operational performance across the portfolio, 2018 platinum production guidance has been revised upwards to 2.45-2.50 million ounces (previously 2.40-2.45 million ounces) and palladium production guidance has been tightened to 1.55-1.60 million ounces (previously 1.50-1.60 million ounces).”
Iron ore production remains suspended at Minas Rio and at Kumba, “Iron ore production volumes decreased by 9% to 10.5 million tonnes, as planned, following rail constraints in H1 2018, and a small decrease in plant yields as Kumba produced higher quality products to maximise the value of tonnes railed to port.” Full year “production guidance for Kumba is unchanged at 43-44 million tonnes”. Guidance for Minas Rio remains at the 3m tonnes delivered prior to the suspension of operations.
Export metallurgical coal output fell by 3% to 5.4mt (Q3 2017 – 5.5mt) while South African export thermal coal production increased by 16% to 5.1mt (q3 2017 – 4.4mt) as a result of operational improvements “and the impact of a 100-hour safety stoppage in Q3 2017, partly offset by conveyor issues at Zibulo.” Domestic thermal coal production in South Africa “decreased by 68% to 2.7 million tonnes due to the completion of the sale of the Eskom-tied operations (New Vaal, New Denmark and Kriel) to Seriti on 1 March 2018.”
Thermal coal production from Cerrejon in Colombia increased by 6% to 2.7mt (Q3 2017 – 2.5mt). Overall, Anglo American is maintaining its full year production guidance pf 20-22mt of metallurgical coal and 28-30mt of thermal coal.
Nickel production guidance is unchanged at 42-44,000t following a 6% production increase during the quarter to 11,500t.
Exploration and evaluation expenditure rose by 25% compared to Q3 2017 reaching $74m. A total of $36m is attributed to exploration “driven by new greenfield opportunities in Brazil (copper-gold), Ecuador (copper-gold) and Canada (diamonds) as well as near-mine drilling. Evaluation expenditure increased by 27% to $38 million driven by increased work at Los Bronces.”

Conclusion: Performance during what Chief Executive, Mark Cutifani, described as a “strong quarter” was dominated by the performance of the copper operations. It is interesting that exploration expenditure is being directed at expanding the Canadian diamond portfolio as well as on copper and gold targets in both Brazil and in Ecuador where BHP recently increased its holding in Solgold*, the discoverer of the Alpala copper/gold deposit at Cascabel, and where an update to the previously announced 1.08bn tonnes indicated and inferred resource estimate at an average grade of 0.5% copper and 0.4g/t gold is expected during December following an extensive drilling campaign during 2018.

*SP Angel acts as broker to SolGold

Anglo Asian Mining* (LON:AAZ) 73p, Mkt Cap £83m – Sterling rate for the maiden dividend

BUY – 84p

The Company announced the sterling exchange rate for the maiden dividend payment due on 8 November 2018.
The interim dividend to be paid amounts to 3USc or 2.2864p at the 1.3121 exchange rate.
This amounts to $3.4m in interim dividend payments.

Conclusion: Using our FCF estimates for H2/18 would imply 10.4% annual dividend yield for 2018e on the average share price for the year (49.3p). The yield comes in at 6.3% for 2019e highlighting upside potential to the current share price of 72.5p.

The team is actively engaged in the extensive exploration programme launched this year that is due to provide a series of catalysts to the share price moving forwards including maiden mineral resources/reserves at Gadir as well as results from exploration works across other targets at the Gedabek and Ordubad contract areas.

(Dec year end)

2014

2015

2016

2017

2018E

2019E

2020E

Gold price

US$/oz

1,267

1,161

1,253

1,261

1,275

1,300

1,350

Copper price

$/t

6,828

5,505

4,872

6,196

6,714

7,000

7,500

Gold production

koz

60.3

72.0

65.4

59.6

73.9

83.0

76.7

Copper production

0.8

1.0

1.9

2.0

1.8

4.1

GE production

koz

65.0

77.0

75.2

71.6

85.9

107.8

101.9

AISC (incl PSA, reported)

US$/oz

1,050

858

616

604

562

540

561

Revenue

US$m

68.0

78.1

79.2

71.8

91.2

118.5

116.4

EBITDA

US$m

10.1

18.7

33.7

32.0

40.3

49.0

46.5

FCF

US$m

-6.9

3.4

14.6

16.3

32.0

27.1

27.7

EV/EBITDA

7.7

3.1

1.7

2.7

2.3

2.4

10.4

6.3

6.4

PER

5.5

13.9

12.1

11.5

8.5

Net Debt

US$m

52.4

49.0

34.6

18.1

-10.5

-29.7

-50.7

We have previously erroneously considered an interim dividend for 2018 as a final one for the year with current estimates fixing for that mistake. The revision means 2018e dividend yield should by 10.4% as opposed to previous 4.6%. Following years are little changed and the revision does not affect our DCF and EV/EBITDA multiples based valuation.

Source: SP Angel, Company

*SP Angel acts as Nomad and Broker to Anglo Asian Mining

Arc Minerals* (LON:ARCM) 3.8p, Mkt Cap £24m – Drilling shows higher copper grades over good intersections from surface

(ARC Minerals currently owns 66% of Zamsort which holds 100% of the Kalaba copper/cobalt mine and associated mineral licenses)

STRONG BUY

ARC Minerals is to fly an Ultra-low level Magnetic and Radiometric airborne geophysical survey over its entire Zamsort license area in Zambia.
The two-week survey should highlight new areas of interest for further exploration and drilling as well as areas to be offered for joint venture partnership.
The Zamsort licenses cover a large area which offering significant potential for further discovery and joint venture mining opportunities.
We expect one or more significant joint ventures to follow with a number of potential suitors showing interest.
Recent drilling shows very promising intersections of copper and cobalt at Kalaba in Zambia.
It is worth referring to recent maps and plans at: https://www.arcminerals.com/gal.php?gID=148

For other SP Angel reports: CLICK FOR 12/09/18 PDF & site visit report: CLICK FOR 14/08/18 PDF

Conclusion: It is very encouraging to see such positive and generally improving grades and intersections so soon in the drill campaign given that we have seen only 11 of the holes drilled so far. We await news of the next batch of assay results and metallurgical work so we can see what sort of processing route should be used and what type of recoveries might be expected.

*An SP Angel analyst has recently visited the Kalaba open pit mine, stockpiles, process plant and drilling operations.

Our analyst and his ‘Chinese’-looking co-driver drove to site from Lusaka and back again briefly stopping at the very excellent Royal Solweizi hotel on the Old Chingola Road. Stopping at the Royal Solweizi is to be recommended after several days of navigating roadblocks, other prospects and the remains of crushed lorries on the road through the Zambian Copperbelt.

The Royal Solweizi appears to have an unusual dress code for dinner involving high-viz jackets. Local knowledge tells that a high-viz jacket in Zambia denotes that the wearer has a good quality job in a mine and therefore is a suitable prospect.

*SP Angel acts as nomad and broker to Arc Minerals.

Bushveld Minerals* (LON:BMN) 28.8p, mkt cap £319m – Vanadium prices jump 17% in China to US$120-140/kgV

BUY - Target Price raised to 37p (from 34p). (Bushveld Minerals now hold 74% of Vametco)

SEE LINK FOR PDF NOTE

Vanadium prices have jumped to US$120-140/kgV, double the US$69-71/kgV seen six months and are also four times the price this time last year.
Vanadium prices in Europe rose 0.3% on Friday to US$113-118/kgV possibly reflecting a lag in pricing and a potential shortage of available material for sale in Europe
Vanadium prices were previously held back by high levels of by-product vanadium in China from slag production as a by-product of titano-magnetite and other iron ore feedstock processing.
Rebar standards - Implementation of new rebar standards in China start in November with consumer stockpiling and traders selling into the local market as prices rise.
Virtually no exports – Traders who have been exporting out of China for years are said to be offering very little in Europe and elsewhere as local demand absorbs almost all supply.
It looks as if European consumers may struggle to buy vanadium with so much Chinese production now being directed back into the Chinese market.
Steel Slag production (~73% of total vanadium supply):
China’s new Green Shield environmental policies combined with high power costs have caused many steel producers to shift to higher-grade Australian iron ore which does not contain much vanadium. Eg they have cut back on the use of iron ore concentrates which more often contain vanadium.
Using higher grade iron ore in steelmaking reduces energy consumption, cuts process times, increases capacity and cuts emissions. Rio Tinto and BHP are also reliable shippers delivering their high-grade product on time and according to specification reducing the need for high port stock levels and so much inventory financing.
Details regarding the scale of environmental inspections and restrictions across China are thin at best, but the trends are still observable with Chinese vanadium production falling 35% in August 2017 as environmental inspections restricted production in Sichuan province.
China’s average vanadium production is ~3,480 per month (or 7,200tpm V2O5), with more than 60% originating from Sichuan.
Substitution (Niobium):
Niobium can be used as a substitute for vanadium but only for certain grades of steel and under certain conditions. Given the relatively small scale of the Niobium market, the few companies with niobium metal stocks and a total market of just 64,000tpa with just one mine producing some 89% of the global market we do not expect many users to turn to Niobium in place of vanadium.
Stone coal environmental restrictions – The processing of stone coal produces by-product vanadium in China accounting for >87% of China’s vanadium reserves. The extraction of vanadium via roasting is associated with environmental pollution, with Chinese environmental restrictions removing significant portions of production off the market. Alternative experimental, cleaner leaching methods may or may not restore production from this source.
Scrap (Secondary 10% of market) – China’s ban on scrap imports is forecast to remove approximately 4,500-5,500tpa of V2O5 production. According to an announcement on the Chinese Ministry of Environmental Protection website, all four categories of vanadium scrap are “forbidden” to be imported into China under new regulations came into effect after December 31, 2017. This is creating serious tightening in the scrap market limiting the availability of raw material.
Primary (Mine) production (17% of market) – There is limited primary production entering the market with a number of projects with primary JORC resources undergoing scoping studies to meet the growing requirement for vanadium pentoxide. Many will require time for further resource definition, feasibility study work and significant capital before commissioning and eventual production.
Developers and explorers with high grade projects are:
Australian Vanadium: Gabanintha (Australia) – 175.5Mt Resources @ 0.77% V2O5
TMT Ltd: Gabanintha (Australia) – 16.7Mt Reserve @ 0.96% V2O5
VanadiumCorp: Lac Doré (Canada) – 99.1Mt @ 0.43% V2O5
Tando Resources (South Africa) – 513Mt Inferred (SAMREC) @ 0.78%
Golden Deep (Namibia) – 1.12Mt Inferred @ 1.28%
Ferro-Alloy Resources (Kazakhstan) Balasausqandiq vanadium deposit – proposed 5,600tpa V2O5 in Stage 1 rising to 22,400tpa in Stage 2
Production may also be supported from a number of proposed poly-metallic projects in future years, although project viability will also be tied to the production of associated metals including iron, graphite, titanium and uranium. The fastest of these new co-product supplies is likely to be from smaller graphite mines but will still take time to build co-product process lines.

In conclusion: If China maintains its Green Shield environmental policies and steel producers continue to use Australian iron ore in preference to other, less clean, sources of iron feedstock then the vanadium market should see a very substantial deficit and prices could remain at relatively high levels for the next few years. The risk is that the market situation may become so severe so quickly that that consumers will have to either slow production or find ways to either substitute vanadium or to increase the tensile strength of steel in other ways.

Either way, it looks as if vanadium prices are going to remain stronger for longer.

*SP Angel act