Vanadium, the silvery-grey specialty metal found in over 60 minerals, has long been acknowledged for its corrosion resistance, structural strength and stability characteristics.
Steel industry accounts for the largest share of vanadium demand with increasing intensity of vanadium usage in China. In the Chinese steel industry, most of the increase in vanadium use is being witnessed in vanadium nitrogen alloys.
Future Demand from Energy Storage Sector
With growing renewable energy adoption, there remains a dilemma of storing energy efficiently, and the industry believes the solution is – Vanadium Redox Flow Batteries (VFRB).
VRFB is considered as a game changer for energy storage safety, as it provides improved safety (non-flammable) as against Li-ion batteries and can discharge completely with no damages. Further, it provides high energy storage capacity and a reliable and long-lasting solution (~20,000 cycles). With expected upsurge in demand in the upcoming years, the sector would require supply of high purity vanadium product.
Vanadium Price Movements
Chinese vanadium supply spiked during the initial period of 2019, as a reaction to the unsustainably high vanadium prices during late-2018. Moreover, several operations by vanadium players were commenced during the period to the right of the cash cost curve. Vanadium prices during the second half of 2019 experienced a steady decline in supply, as high-cash cost players exited the market, especially the Chinese stone coal producers.
At the beginning of the December 2019 quarter, global vanadium prices declined and later stabilised in the range of US$5.50 to US$6.00/lb V2O5. Post the end of the quarter, European vanadium prices increased significantly after falling below the Chinese levels during Q419, majorly due to the period observing restocking and a decreasing supply in China.
The strong demand from China, in addition to weaker supply, would power vanadium prices to inch closer to the long-term historical average price during 2020, however the current price levels are conducive to growth and restricting high-cost producers from restarting their operations.
This scenario highlights the importance of development of stable, long-term, low-cost quartile, high-quality greenfield projects such as Western Australia-based Gabanintha Vanadium Project (GVP) of mineral explorer & developer Technology Metals Australia Limited (ASX: TMT).
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