For R1.93bn Bushveld Minerals will double production and position itself as a serious player in the global vanadium market as it scours SA for further growth opportunities.
Bushveld, which is traded on London’s Alternative Investment Market (AIM), has agreed to buy Vanchem and Ivanti Resources for $68m and will spend a further $45m refurbishing those assets while spending $20m to build its Mokopane vanadium mine.
The entire cost of R1.9bn comes to 45% of the projected cost of building the Mokopane mine and a new processing plant.
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With its Vametco mine and plant and the new assets all in production Bushveld will have production capacity of 10,000 tons of vanadium a year, which, when measured against global supply of about 90,000 tons, is a significant source of vanadium.
“The vanadium market is in a structural deficit and the only way to sustainably and meaningfully close this gap is from primary vanadium producers,” Bushveld CEO Fortune Mojapelo said in an interview.
“A primary production facility on a greenfield basis needs a lot of money, so our focus is on brownfield assets, which SA is blessed with. After Vametco, Vanchem is the next most attractive asset and it will get us to our production target to become a significant player,” he said.
The consolidation of the assets would make Bushveld the “largest primary vanadium producer by a long shot as well as one of the lowest-cost producers,” he said, adding it would “make us comparable to the largest producers in China.”
In China and Russia, vanadium is extracted from slag, or the waste product from steel mills as well as other secondary sources.
Vanadium is mainly used to make speciality steel alloys, other high-strength alloys, the making of sulphuric acid and increasingly in large stationary batteries that can be used by power utilities or industry.
What is important in the Vanchem transaction is the restarting of production that stalled in 2015 instead of adding a fresh source of vanadium, Mojapelo said, adding Bushveld would be able to supply the broad suite of vanadium products for its internal use as well as external markets.
This would prevent a supply shock to the market and negatively affect vanadium prices.
Vanchem restarted limited production during 2018. “There is some spending required to get the assets to a standard we’re happy with and that when the plant is running at full speed complies with all regulations, including environmental regulations,” Mojapelo said.
Vanchem has three kilns but is only using one. Refurbishing the kilns will bring the number of kilns in Bushveld to four.
The Vanchem assets will generate vanadium chemicals, vanadium trioxide and vanadium pentoxide as well as ferrovanadium, which is used in specialty steels. The ferrovanadium plant, which converts vanadium trioxide to ferrovanadium is in the old Highveld Steel & Vanadium complex.
Vanchem generates 960 tons of vanadium a year, but will have capacity once it is refurbished over the next five years and supplied from the Mokopane mine of 4,200 tons a year.
Mokopane is 200km from the Vanchem plant, but there is a nearby railway line that will lower the costs of transporting material from the mine to be processed, Mojapelo said.
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