Date: Oct 4, 2018

Summary

Vanadium mining companies provide a great investment opportunity.

Steel demand protects a vanadium investment from downside risk, and uptake of Vanadium Redox Flow Batteries could send demand soaring.

Vanadium is now at the highest spot price since 2005.

A drop in commodity prices has punished the holders of lithium and cobalt stocks. The future demand for these metals is all but guaranteed based upon the increasing adoption of electric vehicles and grid storage, yet the stocks of even the most promising lithium and cobalt companies are in a heavily oversold state.

Generally, the stock price of a mining company is tied to commodity they mine. This can be a good or bad thing for up and coming explorers of metals. Lithium and cobalt have fallen out of favor for now, but another battery metal, Vanadium, is becoming the new market favorite.

Vanadium demand

The Chinese spot price for vanadium is near record highs. The only time it has been higher was briefly in 2005. Obviously, commodity prices can spike and retrace quickly, but there is evidence to support vanadium staying at elevated spot prices for some time.

The market for vanadium is heavily tied to steel demand. 91{3a701354f219a57e7e7d46a505b70225e975b940de2dd07556e20488ab77339d} of all vanadium produced is used to strengthen steel, with the remaining 9{3a701354f219a57e7e7d46a505b70225e975b940de2dd07556e20488ab77339d} going to specialized uses such as Aerospace and Vanadium Redox Flow Batteries. Since 2010, vanadium inventory has been steadily shrinking, and now we are in an undersupply situation.

There was a 9,309 ton vanadium supply deficit in 2017, which equates to about one mine’s worth of production. The shortage is the result of several factors:

  • Mapoch’s Vanadium mine closed, which removed 11000 tons of yearly vanadium supply.
  • China banned imports of vanadium bearing slag, mostly from Russia.
  • China’s new strict environmental regulations and rationalization caused the closure of numerous domestic iron ore mines, which were a source of vanadium.
  • Chinese environmental regulators refuse to issue permits for stone coal operations; another potential source of supply.

To read full article please click here