Vanadium in steel projected to grow at a 6.5% compound annual growth rate
Over the phone from Brazil I could hear the excitement of Largo Resources Ltd.’s (TSXV: LGO) President and CEO Mark Brennan. He is onsite in Brazil, completing production ramp-up at the company’s Maracás Mine.
The company aims to reach full Phase 1 capacity in Q3, 2015. This is an alluring project with a Net Present Value of $554 million and an after tax Internal Rate of Return of 26.3%. At full capacity the mine will produce 11,400 tonnes Vanadium pentoxide (V2O5) equivalents. An off-take agreement with Glencore covers all production for the next 6 years.
One kg of Vanadium in one tonne of steel doubles the strength of the resulting steel.
Like titanium and niobium, vanadium can produce stable carbides that increase strength at high temperatures. By promoting a fine grain structure, ductility can be retained. Vanadium is by far the most used element to improve wear resistance in tool steels, providing increased strength per weight basis. A general trend in steel use has been a move from basic carbon steels towards highly specified alloyed steels. High strength low alloy steels (HSLA) are the largest market for Vanadium in the steel industry totalling 48% of the global demand for vanadium. HSLA steels account for approximately 40% of global steel demand and are consumed in a wide range of end products, including, the transport, construction and energy sectors where high strength and low cost are essential requirements. HSLA consist of carbon steel, manganese and small amounts of other alloying elements that increase weldability and greater resistance to atmospheric corrosion, abrasion and seismic events. Vanadium HSLA can be produced in many different product forms such as sheet, plate, sections and bar.
The use of Vanadium in steel is projected to grow at a 6.5% Compound Annual Growth Rate (CAGR). Global apparent steel use is forecasted to increase by 3.2% in 2013 to 1.46 Billion tonnes. The construction and engineering sector is also the largest consumer of Vanadium where Vanadium strengthened steel is employed in the production and engineering of buildings, bridges, tunnels and pipelines. However, the need for lighter automotive and aircraft components should increase the Vanadium demand.
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There are two traditional sources of vanadium: by-product from the steel industry which currently accounts for 70% of the world’s production and mining which accounts for the remaining 30%. The standard production costs across the industry is $4.00 per lb of V2O5 whereas the expected production costs at the Maracás Mine is forecasted at roughly $2.80 per lb at full capacity.
In the gold industry Goldcorp’s Red Lake mine in northwestern Ontario is seen as the gold standard. Mr. Brennan ascribes this low production cost advantage to superior grade of the Maraca ore, which is twice the grade of the current mining operations elsewhere in the world. Because of this, the Maracas project may become its own industry standard: the Red Lake of Vanadium mining.
The company’s current emphasis is to ramp up its processing plant. Since commissioning in December 2014 the company has worked toward increasing equipment availability to fully operational status. Current equipment availability is 30% whereas the final target for Q3 2015 is 90%.
Largo’s management team show 148 years of experience in mining development and operations, including Vanadium mining, which tells us we should be watching this company’s progress over the next months
To access their latest PPT presentation, click here
Dr. Luc C. Duchesne is a Speaker and Author with a PhD in Biochemistry. With three decades of scientific and business experience, he has published ... <Read more about Dr. Luc Duchesne>