Vanadium, a silvery-grey transition metal, had a tough time in 2015, largely due to China’s less-than-stellar economic performance.
The metal is mainly used to make ferrovanadium, an alloy of iron and vanadium that is used in the production of steel and other alloys, but with the Chinese economy not growing as much as anticipated, demand for steel (and the components that make it) is down.
At the moment, it’s uncertain when vanadium’s prospects will improve. While some steelmaking metals have other key applications, vanadium is tied more closely to steel than most. And though some market watchers believe vanadium demand from the battery sector will eventually increase, that hasn’t happened yet.
In fact, the Merchant Research & Consulting says the market is on the rise. The report predicts the global demand for vanadium to more than double by 2025.
With all of that in mind, it’s perhaps unsurprising that world vanadium output fell in 2015. According to the US Geological Survey’s report on the metal, production clocked in at 79,400 MT, down from 82,700 MT in 2014. Interestingly, only four countries were responsible for that output: China, South Africa, Russia and Brazil. Here’s a brief overview of those vanadium producers.
Mine production: 42,000 MT
China was the world’s top producer of vanadium in 2015, putting out 42,000 MT of the metal. That’s slightly off from the 45,000 MT it produced in 2014, but still ahead of the rest of the world by a large margin.
While Chinese demand for steel isn’t as high as many would like it to be, the country still uses a lot of the material, and thus also consumes a lot of vanadium. Indeed, much of the vanadium that China produces is used within the country. As mentioned, it’s uncertain when Chinese demand for steel (and thus for vanadium) will pick up — expert opinions vary widely.
2. South Africa
Mine production: 19,000 MT
South Africa produced 19,000 MT of vanadium in 2015, down 2,000 MT from the amount it put out the previous year. Because China retains much of the vanadium it produces, many countries that need vanadium import it from South Africa. In fact, South Africa’s Bushveld Complex is responsible for more than 20 percent of global vanadium supply.
Mine production: 15,000 MT
Slightly behind South Africa, Russia produced 15,000 MT of vanadium in 2015, just off from the 15,100 MT it put out in 2014. There’s often little information available on Russian metals production, and for vanadium it’s no different; however, it’s worth noting that EVRAZ (LSE:EVR), a vertically integrated steel, mining and vanadium business, is a key vanadium producer in Russia, as well as worldwide.
Mine production: 2,800 MT
Finally, Brazil produced 2,800 MT of vanadium in 2015, up from 1,030 MT in 2014. While that’s far below the output from China, South Africa and Russia, Brazil’s lower output is understandable — that’s because its main vanadium producer only just got up and running.
That company is Largo Resources (TSXV:LGO), which bills itself as the only pure-play vanadium producer in the world (other companies produce vanadium as a by-product of other metals, meaning that they produce it as a secondary product when they mine other metals). It achieved first production at its Maracas Menchen mine in Brazil midway through 2014.
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This is an updated version of an article first published on the Investing News Network on June 10, 2015.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.