Bushveld Minerals Limited (AIM:BMN, OTC:BSHVF) expects its vanadium production in 2022 to be toward the lower end of its guidance following a weaker performance from its Vanchem facility in the second quarter.
The company, which owns two of the world’s four operating primary vanadium processing facilities, said group production in the second quarter dropped 25% from the year-earlier period to 668 metric tonnes of vanadium (mtV).
Production at Vanchem was adversely impacted by lower recoveries associated with end-of-life Kiln 1, power supply issues, and a slower than planned ramp-up post commissioning of Kiln 3.
Bushveld also completed a 26-day planned maintenance shutdown at its Vametco facility during the quarter and said production volumes are now back to first-quarter levels.
It produced 1,641 tonnes of vanadium in the first half, up 4.3% year-on-year.
In January, it announced its full-year production guidance of between 4,200 and 4,400 tonnes of vanadium with volumes weighted towards the second half.
Vametco is on track to meet the upper end of guidance, it said today in a trading update.
“The focus on operational stability at Vametco is pleasingly bearing fruit in the form of reliable production levels supportive of Vametco meeting the upper end of production guidance for the year,” said chief executive Fortune Mojapelo.
However, Vanchem’s guidance is under review on account of the slower-than-anticipated production ramp-up in June and July following the commissioning of Kiln 3 and the impact of unprecedented electricity load shedding (planned supply interruptions) by South Africa’s state-owned power utility Eskom.
The company will provide an update on Vanchem’s guidance alongside its interim results.
“Whilst both Vametco and Vanchem are adversely impacted by load shedding, for Vametco this means curtailment of power usage, however, this does not affect Vametco’s production, while for Vanchem, which is on the municipal power grid this means a complete loss of power and reliance on standby diesel generators,” said Mojapelo.
“Although it was encouraging to see the South African government send a strong message on how it plans to overcome the country’s energy crisis, it is unfortunate that in the short term, Vanchem’s ability to operate smoothly is being affected by the ongoing electricity load shedding, like many other industrial plants in the country.
“We are hopeful that with increased maintenance efforts at the country’s power stations and the end of the winter season, we will see reduced incidences of load shedding.”
He added that the ramp up of Kiln 3 is making steady progress and Vanchem is still expected to meet the anticipated 2,600 mtV per annum production run rate by the end of the year.
The company remains confident it can achieve its overall production run rate of 5,000-5,400 mtV per year by the end of 2022.
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