Vanadium: Initial Signs Are There

- January 11th, 2010

The vanadium market this year is expected to start moving into surplus, as new capacity is brought on-stream. Watch out for a price surge!

By Cyrus S Darabshaw Exclusive To Vanadium Investing NewsGet ready for a surge in vanadium

In our last dispatch, we had forecast that 2010 would be a much better year for vanadium as compared to the previous year, which was very volatile. In our on-going coverage of this previous metal, we will, of course, be keeping track on whether our prediction does bear fruit or not.

It is our view that in the long-term, too, vanadium is the metal you must invest it, for plenty of reasons (See our previous posts).

So, not surprisingly, the new year got off on the right note. In the first week of January, Asian and European markets have reported an “improvement” in vanadium prices (We told you so).

In a parallel development, there has also been a spike in the price of molybdenum which, according to some analysts could mean a renewed interest in vanadium and niobium prices.

We completely agree with analysts who predict that the vanadium market this year is expected to start moving into surplus, as new capacity is brought on-stream.

The lust for vanadium is driven by the fact that the metal has always and will continue to be a critical component in the making of high-grade steel alloys. It is added for strength in the steel. Of course, vanadium has managed to “re-invent” in its modern-day avatar as a crucial metal in the making of electric batteries, which means it is much sought after buy car and other battery manufacturers for its “green” value.

What makes it even more previous is the fact that pure vanadium is never found in nature, it occurs in 65 minerals and fossil fuel deposits.

Asian markets, between January 4-January7, led by China, one of the main producers of various vanadium products, showed an upward trend.

The Vanadium-nitrogen market remained firm. Market quotes was in the 0.17-0.175 million (yuan) per ton. The ferro vanadium showed slight volatility as manufacturers raised prices, but also a slight recovery in turnover.

So far, ferro vanadium market quoted at 0.105 million yuan per ton, the highest bid reached 0.108 million per ton. Vanadium pentoxide powder and flake prices, on the other hand, so a “nice little” price rise in the above-mentioned period. 98 powder quoting price was in 94,000-96,000 yuan per ton, closing at 95,000 yuan per ton. 99 powder vanadium priced in 98,000-102,000 yuan per ton, not much turnover. And flake priced rose from 92,000-93,000 yuan .

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.

Many experts, at the start of this year, had in a tacit agreement with our prediction, said vanadium, lithium and rare earths are the way in the investing future. Ian Cooper of the Wealth Daily said, “To be honest, if we see real signs of economy recovery, 2010 could be an explosive year for energy… and even metals. With metals, I’m advising my readers to diversify with rare earth, lithium, and vanadium.”

Cooper has even gone to the extent of predicting that investors who buy vanadium today stand to make a fortune in the coming years.

Company news

News agency Reuters reported on January 8 that iron ore explorer African Minerals had signed a deal with China’s CRM to buy a 12.5 per cent stake in the firm for 152.6 million pounds (RMB 2 billion) to develop its flagship project in Sierra Leone. The London-listed firm said on Wednesday the funding from China Railway Materials Commercial Corporation (CRM) would fund the first stage of its Tonkolili project.

Shares in the firm rose 5.5 per cent to 441 pence by 14:50 SA time, after jumping 9.0 per cent on Tuesday, compared to a flat UK mining index.

CRM will subscribe for about 30.5 million new shares at 500 pence each.

African Minerals welcomes the signing of this conditional agreement with CRM, one of China’s large-scale state owned enterprises and one of China’s largest steel trading companies,” said chief executive Alan Watling.

The deal includes a 20-year off take agreement under which CRM will buy between five and eight million tonnes of iron ore annually from the first stage of the mine.

In another vanadium-related news development, shares in Stonehenge Metals (ASX: SHE) spiked 57 per cent after the company entered into an acquisition to acquire 100 per centof Chong Ma Mines Inc  in South Korea from Yellow Sun Mines, early January.

Chong Ma holds the rights to 4 uranium projects comprised of 42 granted mining rights and 14 uranium mining right applications in South Korea.

Executive Director Bruce Lane said the company believed the historical exploration provided a solid foundation to rapidly upgrade the existing historical foreign uranium resource estimates to JORC compliant status ahead of a mining feasibility study.

The acquisition is important for vanadium since the projects also hold significant potential for economic quantities of vanadium and molybdenum and may have a bearing on vanadium supply and prices.

Strategic Resources Inc (TSX VENTURE: UVR) has announced that it had closed a portion of its previously announced non-brokered private placement through the issuance of 2,700,000 units at a price of $0.05 per unit for total gross proceeds to the company of $135,000.

Each unit is comprised of one common share and one common share purchase warrant of the company. Each warrant entitles the holder to purchase one common share of the company at a price of $0.10 per share until January 7, 2012.

The common shares and warrants comprising the units are subject to a hold period that will expire on May 8, 2010. The private placement remains subject to the final approval of the TSX Venture Exchange.

In connection with the closing, the company paid Blackmont Capital Inc a finder’s fee of $800 and issued it an aggregate of 16,000 common share purchase warrants, each of which is exercisable to purchase one common share of the company at a price of $0.10 per share until January 7, 2012.

The funds raised from the offering will be used to advance development of the Corporation’s mineral exploration projects in the USA.

Strategic Resources is a Canadian based junior exploration company with uranium, vanadium and rare earth exploration projects in Catron County, New Mexico, Lincoln County, New Mexico, Apache County, Arizona and Malheur County, Oregon.

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