Ann: SRK concludes High-Grade Vanadium Mineralisation at Nelly, page-75

You guys may be interested in this article, as you get a mention:


Vanadium Follow-Up


EXTRACTS


Vanadium As A Commodity

There were three reasons for my bullish call of Vd:

- New Chinese building standards that mandate stronger rebar for construction. Vd is commonly used to alloy rebar. These standards are being phased in as expected. So, this continues to be bullish.

- Reduced supply due to Chinese steelmakers shifting from Vd-containing domestic iron ore to Vd-absent seaborne ore. Vd reclaimed from steel slag in China was about 20% of supply. This is also continuing.

- The potential for a large new market for Vd in redox flow batteries which could be used for load leveling of wind and solar power. I am less bullish on this than before. I have seen some cost analyses of redox vs. Lithium Ion batteries, and I think that LiIon will get the better of it for most applications. For example, the investment company Lazard (NYSE:LAZ) has been analyzing the levelized cost numbers for years. In their November 2017 report, they say:

Among commercially deployed technologies, lithium-ion continues to provide most economic solution across all use cases; however, flow battery technologies claim to offer lower costs for longer duration... applications.

They also note that future costs for LiIon will likely decline faster than redox costs. LiIon Batteries are produced by production processes somewhat similar to microchips. Redox is produced by traditional mechanical/chemical fabrication. Much of the cost is in the Vd itself, which has risen by 40% since the report.

Some readers are probably going to disagree with this. Read the report and let me know your views.
So, the bullish case for Vd is pretty much intact. OTOH, prices are up a lot. My view is similar to the metals consultancy CRU: Vd prices are above their long-term levels but will probably stay high for several years.

What could go wrong with this scenario? The major risk, as in all industrial commodities, is an emerging market slowdown, especially in China. This may already be in progress. Many of the large EMs have seen sharp devaluations in their currencies, even China. Although China is a Vd exporter, the currency volatility may indicate future lower economic growth. The rise in US interest rates is also staunching the flow of capital into EM, reducing investments in commodity-intensive infrastructure. Make no mistake about it: the import regime being put in place in the USA is a big negative for these commodity-using countries. OTOH, this is well known, and most spot commodity prices, including Vd, have held up well so far. Time will tell.

There's also a risk of additional supplies from new Vd miners. I get a daily report of all Vd related news. In the last few months, there has been a deluge of juniors who have apparently decided that Vd is the new cobalt. My guess is that few of these will ever see production, but some will. However, we are probably looking at a 2-4 year timetable on most of these projects. More importantly, I haven't seen any reports that the existing heavy hitters are doing anything in this space. They may just be playing it close to their vests, but the lack of news here is a good sign.

.....................................................................................................................................................................


I would never recommend micro-juniors, but I know some SA readers do trade that sort of stuff. One worth a look is Hardey Resources Limited (ASX:HDY). Hardey wants to reopen a shut-down Vd mine in Argentina. Hardey claims that according to Argentina law, approval is much quicker for reopening an old facility than opening a new mine. They are talking about 12 months for all approvals. According to the Diggings database, the mine was only operated for a while in small-scale production. Hardey is specifically trying to copy Largo in opening a small but low-cost project. If you do invest in this, be prepared for the possibility of total loss.



Additional disclosure: I may go long BMN and HDY at some point.

https://seekingalpha.com/article/4203890-vanadium-follow