Mining Small-Cap

Vanadium is Going Parabolic

Vanadium prices in China have more than tripled over the course of 2018 with China spot prices have risen dramatically from USD $20/lb to above USD $33/lb in October 2018. Energy Metal bull markets come and go very fast and offer the opportunity for investors material profits to investors. Last year we had a cobalt bull market, 2016 lithium and 2018/19 will be the year of Vanadium.

What is Vanadium? 

Vanadium is a chemical element  this is a hard malleable transition metal. Vanadium is rarely found in nature, but once isolated artificially creates an alloys that is very tough and is used for armor plate, axles, tools, piston rods and crankshafts.

About 80% of the Vanadium produced is used as a steel additive that makes steel shock resistant and vibration resistant. Vanadium alloys are used in nuclear reactors because of vanadium’s low neutron-absorbing properties.

Vanadium is revolutionizing energy storage. This is because batteries with the metal are fully containerized, nonflammable, compact, reusable and do not degrade for more than 20 years. This type of battery can offer almost unlimited energy capacity, better maintenance and a lower cost of storage compared to other batteries.

 

Why Vanadium prices have been increasing?

The Chinese government has increased the requirements of the strength of rebar increasing the demand for the metal. The Government is using regulation to eliminate bad quality steel. Adding just one kilo of vanadium to 1 ton steel effectively doubles the strength of the steel. Given China’s dominance of global steel production, this change is one of the main reasons why this metal’s prices are soaring. The market was already in an 8,000-ton supply deficit last year and SP Angel Financial experts expects demand to continue exceeding supply through 2020.

The second reason for the surge in demand has been the metal’s use in redox flow batteries.  These types of batteries offer an economical, low vulnerability means to store electrical energy at grid scale. They have more flexibility of competitors allowing them to independently tailor power rating and energy rating for a given application than other electrochemical means for storing electrical energy. As you can see in the chart below this demand is exploding worldwide.

 

Source: https://seekingalpha.com/article/4225871-brief-update-vanadium-boom

Bushveld Minerals Limited PLC (LON:BMN)

Bushveld Minerals is one of only a handful of primary Vanadium producers in the world. The company owns a 74% stake in Vametco, a vanadium open pit mine in South Africa. Bushveld said it will expand its vanadium plant. The company will increase its production to 10 tonnes per year by 2023. This will make them one of the world leading producers.

 

The stock has quintupled this year, after a rise of nearly 250 percent in 2017. Analyst are predicting another doubling in the shares in the near term.

Delrey Metals Corp. (DLRY:CSE)

Delrey explores and develops mineral resource properties, specifically in the strategic battery metals sector. The company just IPO’d this October and has a small market cap and great upside potential.

The company has been undertaking extensive geological surveys finding Zink, Copper, Cobalt in recent samples. Reports from the US Geological Survey of their Porcher Property estimated that a medium sized Valadium resource exists on Porcher island with an ore grade of >25% Fe, 2% TiO2, and 0.2- 0.35% V205 with a magnetic concentrate grade of 60% Fe, 0.3-1.5% TiO2, and 0.3-0.9% V20.

This exploration company has promising properties that can get investors exposure not just to Vanadium but also other battery metals.

 

Bottom Line

The vanadium market is prone to sharp spikes and violent drops. This is a speculative buy but with current supply constraints companies producing this metal look like a sure-fire winner.