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Largo Resources plans to expand its Maracás Menchen mine in Brazil, with an eye on increasing vanadium pentoxide production.
With plans underway to expand production capacity at its Maracás Menchen mine in Brazil, Largo Resources (TSX:LGO) expects to see a 25-percent increase in vanadium pentoxide output by next year.
According to a Monday (April 16) press release, the company intends to spend an estimated US$15.5 million to expand its mine to accommodate a production rate of 1,000 tonnes of vanadium per month, compared with its current monthly capacity of 800 tonnes.
The expansion, which will focus on the fusion, milling, leaching and filtering areas of the mine, is set to begin in June, with completion set for June 2019.
Largo believes a capacity as high as 1,100 tonnes could be reached if the kiln refractory receives certain upgrades and improvements.
The company began production at Maracás Menchen in August 2014 after starting construction at the property in June 2012. The mine achieved nameplate capacity in June 2016. Largo has a take-or-pay agreement with Glencore (LSE:GLEN) for all vanadium material produced for the first six years that the mine is in operation.
Vanadium has been a resource on the rise lately, with prices increasing more than 130 percent last year. The industrial metal experienced a jump in demand due to lack of supply, along with big orders to fill in the steel industry.
In particular, the metal has been boosted by China’s push to strengthen buildings with stronger steel in areas that are prone to earthquakes. Vanadium is a key component in steel production.
Demand for the metal is expected to continue rising as other industries make the shift to greener, more eco-friendly operations. Aside from steel, the metal can be used in grid-scale batteries, which provide a longer life than lithium-ion technology.
As mentioned, prices for vanadium have been growing as steadily as demand increases, and V205 (vanadium pentoxide) was listed at $14.50 to $15.80 per pound in early April, according to Metal Bulletin.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.