BUSHVELD Minerals’ $100m, five-year vanadium growth plans could prove decisive as the market was forecast to enter a supply deficit from next year, the company said.
“There is a real opportunity on the supply side,” said Fortune Mojapelo, CEO of the UK-listed firm in an interview today. “There are very few producers of vanadium who can scale up. We see a deficit in vanadium from as nearly as next year.”
Vanadium is used as a hardening agent in carbon steel. Bushveld has also put investment into developing the vanadium redox flow battery, a type of stationary energy storage, by taking stakes in technology development partners.
Bushveld Minerals plans to expand vanadium production to 8,400 metric tons a year (mtV) from 2,931 mtV it produced in its 2019 financial year.
Whilst the expansion programme was significant for a $210m organisation, Mojapelo said the company was generating cash and had access to finance. “We will be judicious, we don’t have to spend everything in one year,” he said of the firm’s capital expenditure plans.
The company today announced a 68% decline in earnings before tax, interest, depreciation and amortisation (EBITDA) for the year ended December to $32.6m owing to a decline in the vanadium price. Taxed earnings, however, were $69.2m compared to $49m after the re-evaluation of its Vanchem acquisition.
Vanchem, which was bought last year for about $53m, is the asset through which Bushveld’s expansion strategy is to be realised. The long-term goal is for Vanchem to be supplied from Mokopane, a vanadium deposit in the northern Bushveld Complex.
Mojapelo said the market in China had recovered relatively well from lockdowns associated with the COVID-19 pandemic.
“I think we will be back at pre-COVID-19 levels in the third quarter,” he said. “The implications for vanadium is that there will be relatively strong demand.”
Bushveld has guided to production of up to 4,100mtV for its 2020 financial year of which 960 to 1,100mtV will be Vanchem and the balance from its flagship Vametco facilities. A further incidence of COVID-19 lockdowns would result in new guidance, however.
Bushveld suspended 2020 production guidance in the wake of the South African 35-day lockdown announced by the government in March.
Total capital expenditure for the year was put at R135m of which about R85m would be at the Vanchem facilities during the second half of the financial year.