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Could one of the largest producers of vanadium be on the verge of collapse?
Evraz Highveld Steel and Vanadium (OTCMKTS:HGVLY), a South African steelmaker, last week published the rather surprising statement that it may be forced to shut down. Surprising in that companies almost invariably put a positive spin on bad news, but even more odd considering that Evraz made a profit in the first half of the year — 49 million rand compared to a loss of 200 million rand in H1 2012.
Yet there it was, clear as day, in the company’s results for the six months ended June 30:
“The Board believes that the Company is a going concern. However, there are matters that may cast significant doubt about the ability of the Company to continue as a going concern.”
Evraz cited labor unrest in South Africa, which just resolved a potentially crippling strike in the gold sector, and the health of the market as potential threats to its operations. The company is currently locked in wage negotiations with NUMSA, South Africa’s largest metalworkers’ union.
According to Oilprice.com, the news is significant because if Evraz goes down, 10 percent of the world’s vanadium will be prevented from entering the market — enough to move the price of the metal, which is used to strengthen steel and as an ingredient in vanadium-flow batteries.
The oil and energy news website states that Evraz produced over 6,200 tonnes of vanadium in the form of slag from its steel operations — or 10 percent of global vanadium production.
Will it happen? It’s hard to say, especially since Evraz is currently in the black, but vanadium investors should watch developments closely; any appreciable price increase in vanadium will have a knock-on effect on vanadium producers and explorers.
Price update
Ferrovanadium prices fell this week after at least one large European consumer was able to secure significantly lower-priced material than a week earlier, said Metal Bulletin. European prices were in a range of $25.80 to $26.85 per kilogram on September 25 compared to $26.70 to $27.10 on September 20.
Company news
Australian company TNG (ASX:TNG) said on Wednesday that its Mount Peake vandium-iron-titanium project has been awarded Major Project Status by the chief minister of the Northern Territory. The award means that the territorial government has recognized the significance of the project and the benefits it could deliver, said TNG. A definitive feasibility study is currently underway and is due for completion in the first quarter of 2014.
Triton Minerals (ASX:TON) reported drill results from its Cobra Plains prospect, located on the Balama North project in Mozambique. Downhole intersections ranged from 2 meters at 0.21-percent vanadium from 64 meters, up to 2 meters at 0.33-percent vanadium from 81 meters.
“The drilling program has intersected numerous high and medium grade vanadium zones, extending over the 3 km area. Vanadium can be economic to mine at 0.05%, so intercepting numerous very high grades of vanadium mineralisation with grades of up to 0.36% is again an exceptional result,” Triton said in its press release.
Fancamp Exploration (TSXV:FNC) provided a metallurgical update on its Magpie iron-titanium-vanadium-chromium project in Quebec. “Hydrometallugical test results show a significant improvement in the quality of the TiO2-grade to approximately 98%. Positive results from the beneficiation tests that were carried out by SNFT resulted in two marketable products – Fe-concentrate and TiO2-concentrate. Both are considered Grade-A concentrates,” said Fancamp.
EMC Metals (TSX:EMC) sold its interest in the Springer tungsten mine, and other Nevada properties, to Americas Bullion Royalty (TSX:AMB) for US$5 million in cash. The sale included the Carlin vanadium property in Elko County, Nevada.
Rapid City Journal reported that Powertech Uranium (TSX:PWE) will mine vanadium as well as uranium if granted a permit to operate near Edgmont, South Dakota. If it mines vanadium, the company must inform the Department of Environment and Natural Resources, Powertech’s project manager said during a public hearing this week in Rapid City, South Dakota.
Securities Disclosure: I, Andrew Topf, hold no direct investment interest in any company mentioned in this article.