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VRIC 2019 in Review: Vanadium – the Next Battery Metal Surge

Stockhouse Editorial
1 Comment| February 1, 2019

Click to enlarge
(Panel: Vanadium Investment, Energy Fuels Inc. CEO Mark S. Chalmers, First Vanadium Corp CEO Paul Cowley, Prophecy Development Corp. CEO Gerald Panneton, moderated by Mickey Fulp – Mercenary

Vanadium prices have rallied in the past year to near-record highs and prices could double in the next decade.

That prediction came from uranium miner Energy Fuels Inc. (TSX: EFR, NYSE American: UUUU) CEO Mark S. Chalmers, speaking to a crowd gathered at Cambridge House’s Vancouver Resource Investment Conference 2019, which recently wrapped up at the Vancouver Convention Centre.

Despite being such a small market, vanadium had seen more action in 2018 than other headline-grabbing battery metals like cobalt and lithium. CEO Chalmers noted that with such high demand and short supply, a large portion of vanadium production comes from secondary sources – industrial waste materials like fly ash, petroleum residue, pig iron slag or spent catalysts. EFR, being a uranium-focused operation is combatting volatile prices through its vanadium operation in the southern United States. He added that secondary production of vanadium has been keeping costs low.

The rally by the numbers: Vanadium pentoxide (V2O5) flake in energy storage systems reached to $27.50/lb in China, more than 550% since September 2016.

More than 90% of the world’s vanadium is used in steel manufacturing to increase strength while reducing weight. Over 5% of vanadium goes toward energy storage for the rapidly-growing energy sector. It is the alternative of choice to lithium-ion batteries for its cost-performance benefits.

In response to the growing demand for vanadium, EFR is looking for relief from the U.S. government’s Section 232 investigation into aluminium and steel tariffs.

“Our company filed a Section 232 looking for higher uranium prices by underpinning the prices and focusing on doing things a bit differently, with new technologies, increasing recovery and whatnot, we are going to lower our costs, as low as they can be,” he said. “This is history repeating itself on how the product used to be sold, it was mined continuously and it was inventoried and sold at a price that was higher, but the swings in this business, those are pinches, every time there was a reduction in supply, those pinches created those peaks, I’m not sure how the whole market unfolds, I think it looks more positive. I would love to be producing continuously for those lower prices.”

Energy Fuels’ Utah-based White Mesa Mill is the only permitted and operational uranium / vanadium mill in the U.S. and is expected to produce four million lbs. of vanadium oxide by 2020.

Sitting next to him at the Vanadium Investment Panel was Gerald Panneton, CEO of Prophecy Development Corp. (TSX: PCY, OTCQX: PRPCF) who pointed out that a major contributor to vanadium’s spike in price is the rising cost of battery prices because when reduced to tis liquid form, it is the best way to store energy.

“It is likely the future, because we cannot store energy, we have failed to store energy for long-term purposes,” he said. “Vanadium is the best element to conserve and store energy over a period of 20-25 years without losing anything. The market will become amazing the moment they can condense the battery and be able to sell them to any residential person who wants to get rid of their generator and put a long-term storage battery. The battery sector still in development, it has made a lot of progress on energy storage … vanadium has a good future.”

Prophecy’s NI 43-101 compliant Gibellini vanadium project in Nevada boasts combined measured and indicated resource of 22.95 million tons at 0.286% vanadium oxide with drilling planned to start soon. CEO Panneton is confident projects in the U.S. are safe operations and will help ensure that domestic infrastructure and manufacturing projects won’t have to rely so heavily on imports.

A major producer and exporter of vanadium is China, where new vanadium-steel rebar standards recently took effect, adding to demand on top of battery metals. Given the slowdown of the Chinese economy and trade talks fluctuating with Washington, how confident are these companies that the industry is still viable?

First Vanadium Corp. (TSXV:FVAN, OTCQX: CCCCF) CEO Paul Cowley declared that these new standards, where 0.03% vanadium will be incorporated in grade three steel, increasing with each grade to require more than 0.1% in grade five rebar, will in-turn increase vanadium’s demand. China has several high-speed rail projects in the works, both at home and exporting to foreign markets, such as the $3.7-billion Makati City Subway Project in the Philippines. Despite the slowdown and rail manufacturing remaining a tense subject during Washington / Beijing trade talks, CEO Cowley doesn’t see this advancement slowing down any time soon.

"There are three cities building subways that require 10% of annual production of vanadium,” he said. “These are multi-trillion-dollar infrastructure projects. The economy might slow down a little, but there are still requirements that need to use vanadium in the future.”

First Vanadium recently reported results from the final exploration drill holes aimed at extending the mineralization at its Carlin Vanadium Project in Nevada, with grades of 0.60% vanadium oxide.

Click to enlarge
(Image via @FirstVanadium on Twitter - Carlin Vanadium Project in Nevada)

The majority of vanadium still comes from steel slag, a by-product of Uranium mines, major players are starting to notice the potential they were previously letting go to waste. ExxonMobil recently announced an initiative to increase the recovery of vanadium from its Gulf Coast oil refining operation, while coal fire power plants are also moving toward vanadium recovery. More demand and more producers could mean even higher prices if these trends continue. Right now, it is still a relatively small market, the 17th largest metal produced in the world at 80,000 tonnes a year, it was the best performing battery mineral over the past year.

This niche market would be of interest to investors looking for some diversity with blue sky potential. The vanadium market was just a part of VRIC, which saw 60 keynote speakers on hand at the two-day conference, made up of more than 350 mining and resource companies who gathered to connect with thousands of investors. Cambridge House returns to Vancouver for the International Mining Investment Conference tentatively scheduled for May 2019.


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