Cutting carbon emission is good for Vanadium
China aims to reduce carbon emission. The ambitious goal is to cut carbon dioxide emissions by about 130 million tons by the end of 2025 before reaching carbon peak in 2030 and carbon neutrality (net-zero) by 2060. The implementation of China decarbonization plan will impact the supply/demand equation of Vanadium in a big way, as follows:
Supply
In China the exploitation of “coal stone” (a carbonaceous shale) is an important source of primary vanadium production (primary vs co-product). The exploitation of ‘coalstone’ causes severe environmental problems. Although the majority of China vanadium is produced as a by-product of steel making, strict environmental restrictions on this extremely carbon-polluting primary source will definitely reduce significant tonnages in the supply of vanadium.
Demand
China's construction industry is one of its leading carbon-emitting sectors with a massive carbon footprint that is derived from the making of steel and concrete. The 2024 quality steel standards will enforce the new specifications of high strength microalloyed steels used in construction. Microalloyed steel or High Strength Low Alloy (HSLA) offers significantly higher strength than conventional steel of similar thickness. The superior strength-to-weight ratio of HSLA steel means that substantially less carbon steel is required to meet the performance demands of similar load-bearing applications. Thus the use of green HSLA will allow China to cut carbon emission considerably by producing less conventional carbon steel. The green HSLA steel requires higher consumption intensity of vanadium. As such the implementation of the new 2024 quality steel standards will undoubtedly increase the demand of vanadium.
Furthermore, as the majority of China vanadium is produced as a by-product of steel making, reducing the production of low-grade carbon steel also reduces the supply of vanadium.
DYODD