Investing In Vanadium A Sure Bet

By Cyrus S Darabshaw Exclusive To Vanadium Investing News

Will 2010 be the ‘leap’ year to propel vanadium into the limelight? Here’s what we think.

2009 is passé. The first week of the new year is always full of predictions – whether it is political, economic, the markets, or, what-have-you.

So, we at Vanadium Investing decided to flow with the spirit and try and tell investors what to expect in this sector in 2010, as well as for the long-term. For that, a quick review of the past 365 days is in order.

For minor metal vanadium, 2009 was a very volatile year, full of ups and downs. The chart for price shows a steady decline in the first two quarters, followed by a sudden spurt between July to September and then a fall, followed by the graph holding steady at a slightly lower level than its January 2009 opening. Overall, there was no gain, at least where the price movement was concerned.

Besides the recession, the limited number of suppliers in China and South Africa added to the price volatility. Also compounding the problem was the shutting down of the production of vanadium oxide and vanadium Ferro in these countries, early 2009.

However, the second price fall in September was attributed to one of the South African producers announcing a restart in mining operations. China, too, stepped up production of vanadium.

The Panzhihua New Steel &  Vanadium Co Ltd is now producing over 3,000 tonnes of nuclear power steel pipes, indicating that the company has stepped into the stage for batch production.

From November onwards, even though vanadium prices stabilized, the demand for the metal remained weak.

But before we start the prediction process, for those of you who came in late, here is a little bit of explanation as to why vanadium is so important in the scheme of things.

Vanadium, a chemical element with the symbol V and atomic number 23, is a soft, silvery-grey, ductile metal, used to strengthen stainless steel and titanium alloys. What makes it highly precious is the fact that metal is not to be found in its natural stage in nature. Instead, it occurs in about 65 minerals and fossil fuel deposits. Thus, there is no single mineral ore from which vanadium can be recovered.

Much of the world’s vanadium is sourced from the vanadium-bearing magnetite. It is found in China, Russia, South Africa, the USA and Canada. Around 60,000 tonnes of vanadium is produced annually in these regions. Of this, 95 per cent is accounted for by South Africa, North West China and Eastern Russia.

While China and Russia extract the element from steel smelter slag, the remaining nations produce it either from the flue dust of heavy oil or as a by-product of uranium.

Almost 85 per cent of the world’s vanadium is used as a critical component in high grade steel alloys such as high speed tool steel, which are used to manufacture surgical instruments.

So, coming back to our original question – what does 2010 have in store for this metal? So far, analysts have refrained from hazarding a forecast. But let that not be a worry.

Vanadium is one of the “metals of the future”, and investing in it is a sure bet, at least for the long-term. There is also optimism on the immediate horizon since much hope is riding on the fact that the global demand for vanadium is expected to rise in 2010.

This is borne out by some of the indicators of the past year. Obliquely supporting this forecast, global news agency Reuters, towards the closing weeks of last year, said that more and more battery makers were set to realize vanadium’s energy storage potential for electric cars, ensuring demand.

In a sense, what will push vanadium prices upwards is the fact that the metal has a lot of potential for new world use. Besides its crucial use in traditional steel applications, the more exciting growth story is the emerging battery technology, electric cars and big batteries that could store renewable energy.

Those in the lithium ion battery industry have now realized that if one were to combine vanadium and lithium to make an electric car battery, it could stay charged for a much longer time.

The vanadium-redox battery invented in New South Wales, Australia, is said to have stolen a march over its Lithium cousin. Said to be the ideal rechargeable battery, it is non toxic and with a rechargeable cycle far superior to that of lithium-ion and an ability to charge and discharge at super speeds.

Since the world is set to see more eco-friendly cars entering the market, vanadium too is bound to piggy-ride the wave.

Vanadium’s other uses only underlines the fact that it is a key metal of the future. Vanadium foil is used for cladding titanium to steel, as a superconductor in magnets (a vanadium-gallium mixture is used in producing the superconductive magnets); vanadium pentoxide is used as catalyst in the manufacture of sulfuric acid.

The last is also used in making ceramics. Vanadium dioxide (VO2), on the other hand, is used in the production of glass coatings, used to block infrared radiation.

And, of course, last but not the least, the world is coming out of the depressing recession, which, too, shall have a positive impact on vanadium’s price.

Players in this sector, too, at various points in time last year, did predict a better 2010 for vanadium. Atlantic Ltd, for example, had said that the intensity of use per tonne of steel would increase from 0.046 kg/tonne in 2008 to 0.0511 kg/t in 2011.

This increase would be driven by a range of factors including increased use of higher strength micro alloy steels in the Chinese construction industry.

So, watch this space for more forecast related stories in the days to come. Email us with your views, predictions and position, if any, on vanadium.

Company news

Atlantic Ltd (ASX: ATI) is all set to re-launch the stalled Windimurra project in Western Australia. In fact, it has found not one but two saviours. Both claim to have production go online in 2010.

The company told the Australian Stock Exchange recently that it had signed an agreement with Mineral Resources Ltd (ASX: MRL) to re-launch the Windimurra project in the southern Murchison region.

Under the terms of the agreement, Atlantic would become a 25 per cent equity holder in the project vehicle, Midwest Pty Ltd (MWVPL), and arrange the new secured debt funding required to complete commissioning of the project.

Atlantic’s managing director Michael Minosora told the media that the final funding amount was to be determined, but was expected to be “sufficient to complete the plant construction and ramp-up to full production.”

“This is a highly attractive project that in the past has suffered from a combination of adverse factors and circumstances, including high gearing, construction cost over-runs and variable commodity prices,” said Minosora.

The project had originally been developed by Windimurra ‘s predecessor Precious Metals Australia with Xstrata but after a relatively brief operating life,  Xstrata mothballed the operation and dismantled the plant.

Precious Metals took action to re-establish the project and was awarded legal compensation from Xstrata.

China’s Hebei Steel has completed its integration and registered convertible shares on December 29. The reorganization not only enhanced the strength of Heibei Steel, but also exerted a great impact on the domestic steel industry.

On December 26, Tangshan Steel, a subsidiary of Hebei Steel, issued the announcement of integrating Handan Steel and Chengde &Titanium via convertible shares.

Tangshan Steel would add a total of 3.251 billion shares.

After the merger is completed, Tangshan Steel will remain as a surviving company and become a unique listing steel company of Hebei Steel. From the perspective of steel production scale, Hebei Steel would rank in China’s second place and become the global fourth steel giant.

Northern Shield Resources (TSX-V: NRN) has completed a private placement of 2,780,000 common shares on a flow-through basis at a price of $0.125 per flow-through share for gross proceeds of $347,500.

Finder’s fees of $18,000 in cash and warrants entitling the holder to acquire an aggregate of 144,000 common shares at an exercise price of $0.17 per common share for a period of eighteen months were paid in connection with the private placement.

Northern Shield is a Canadian company focused on Platinum Group Element (PGE) exploration in Ontario.

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