Bushveld outlines R2.3bn growth plan but market takes dim outlook with share hitting 5-year low

Fortune Mojapelo, CEO, Bushveld Minerals

BUSHVELD Minerals has outlined a plan to grow vanadium production 50% through the expansion of its processing facilities and the possible development of a new mine estimated to cost a total of $151m (R2.3bn).

The market has not responded favourably, however. The company is currently capitalised on the London Stock Exchange at £84m or $104m representing a five-year low for the firm.  Shares were nearly 8% weaker today.

Steel production is forecast to be holding up in China currently, despite Covid-19 lockdowns. But from a longer term macroeconomic perspective, there’s rising concerns that inflation will eventually lead to a global recession.

The ambitious expansion – which a feasibility study published today said would take vanadium production to 8,000 tons a year – comes with a caveat which is that the company completes its current plans to grow output to 5,000 to 5,400 tons annually.

Fortune Mojapelo, CEO of Bushveld Minerals, said the company had “… the liberty to pursue the new growth plans only once we have achieved our production performance targets” as well as improve the company’s balance sheet capacity “… to invest in such when funding has been secured”.

Speaking January, Mojapelo said the vanadium producer had “turned the corner” after a difficult 18 to 24 months of undershooting production promises. “We have had three solid quarters of production and we are getting a better time in the vanadium market in a way that supports primary producers,” he said.

The company has targeted production of 4,200 to 4,400 tons of vanadium for the current financial year which compares to production of 3,592 tons in 2021.

Bushveld producers pelletised vanadium – or Nitrovan – from its Vametco facilities situated near Brits in South Africa’s North West province, and grades of oxide from Vanchem, a facility near Witbank in Mpumalanga province.

About nine-tenths of world vanadium production, about 110,000 tons, is used in the production of steel as a hardening agent; the balance is supplied into niche chemical end uses such as vanadium batteries. Strategically the company has importance as a supplier of a battery metal deemed critical to global decorbonisation.

It has previously invested in downstream manufacturing of vanadium batteries which are critical in large stationary battery production.

Mojapelo said the feasibility study “puts us in a position to rapidly respond to growing vanadium demand … Growth in demand for vanadium is supported by rising intensity of use within high-strength-low-alloy-steel, as well as the significant upside potential for vanadium redox flow batteries given the increasing requirement for energy storage applications for renewable energy sources,” he said.

The feasibility outlining Bushveld’s production growth potential is divided into four phases beginning with the expansion of Vametco as well as a requirement for “reliable supply of concentrate feedstock of up to 6,800 tons a year. To boost feedstock supply Bushveld has the option of building its Mokopane resource or acquiring third party ore.

Three other phases identified involve kiln expansions at Vanchem as well as a further expansion of Vametco’s processing facilities. The phased nature of the expansion was to ease pressure on Bushveld’s financing abilities, the company said.

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