Severe weather dents Bushveld production target as firm looks to Covid-19-free 2021

Fortune Mojapelo, CEO, Bushveld Minerals

BUSHVELD Minerals would rely on its working capital and revolving credit facilities to finance the business whilst it absorbed lower-than-projected sales this year, partly owing to poor weather in November which knocked out a refinery at its Vametco facility.

Fortune Mojapelo, CEO of Bushveld Minerals, told analysts in a conference call today that the company would also supply its market upstream vanadium products which did not need to go through the refinery as a way of bolstering sales.

Ultimately, the company’s lower projected sales would be rectified in 2021 when the introduction of vaccines would ease the impact of the Covid-19 virus on industrial activity and demand. “That will bring back a level of normalcy,” he said.

Bushveld Minerals said in a third quarter production report that “severe weather conditions” at the beginning of November resulted in a longer than expected outage at its Vametco plant, impacting the refinery.

“Despite this incident, and assuming there are no further stoppages, the group still expects to meet the lower end of its full year production guidance range of between 3,600 metric tons of vanadium and 3,950mtV,” the company said.

Production for the nine months ended September totalled 2,667 tons, 37% higher year-on-year as a result of the Vanchem processing assets Bushveld bought this year. Group sales for the nine month period were 2,987 tons, but this number included inter-company sales of 446 tons comprising mainly of Vametco product being sold to Vanchem for further processing.

Repairs to the refinery would cost no more than R10m which Mojapelo said was “not catastrophic”. An investigation into the downtime was on-going. The company is establishing its own mini-grid which would assist in the future, he said.

Bushveld Minerals reported an operating loss for the six months ended June of $9.9m, largely informed by stoppages and a depressed vanadium price, down 65% to an average of $24.20/kg. Revenue was subsequently 45% lower year-on-year. The company has cash on hand of $24.6m as of end-June, down from $34m on December 31.

The company had previously downgraded full year production to between 2,700 to 2,850 mtV from initial guidance of 3,000 to 3,200 mtV.