Largo Resources Delays Capital Return Amid Falling Vanadium Prices
Despite a record performance in 2018, vanadium producer Largo Resources “has adopted the conservative strategy” of not returning capital to shareholders “at this time” against a backdrop of lower vanadium prices, the company said in the week ended Friday June 28.
In 2018, Largo Resources benefited from a period of strong vanadium prices which helped it to achieve revenues of $521.4 million in 2018, compared with $167.7 million in 2017. That 211% year-on-year increase led to the company’s highest-ever annual revenue.
Ferro-vanadium prices in the Chinese and European markets both hit all-time highs last year, partly due to an expected increase in demand arising from the implementation of new rebar manufacturing standards in China on November 1.
But prices began to drop sharply late last year, when market participants realized that enforcement of the revised rebar policy was not as stringent as had been expected, and mills increased their use of ferro-niobium to minimize their consumption of more costly vanadium.
European ferro-vanadium prices have fallen by more than 50% since the beginning of March 2019.
Fastmarkets’ latest price assessment for ferro-vanadium, min 78%, delivered Europe, fell on June 28 this year to its lowest level since June 2017, at $33.00-34.50 per kg. This was down from the assessment two days earlier at $34.20-35.50 per kg.
The European vanadium pentoxide (V2O5) market was at its lowest level since October 2017. Fastmarkets’ latest weekly price assessment for V2O5, min 98%, in-warehouse Rotterdam, was $7.00-7.95 per lb on June 28.
Against the backdrop of falling vanadium prices, the Toronto-based producer has decided to focus on optimizing production at the Maracás Menchen mine, in Bahia in northeast Brazil, and on making the required strategic investment to build the company’s new vanadium sales and trading business.
