| Slumping vanadium prices hit Bushveld Minerals, but company still eyes JSE listing thumbnail | Slumping vanadium prices hit Bushveld Minerals, but company still eyes JSE listing

Vanadium is used in steel production. (iStock)

Vanadium is used in steel production. (iStock)

Vanadium is used in steel production.

  • Vanadium prices declined nearly 52% in 2020, on the back of Covid-19 effects.
  • Bushveld Minerals is the world’s third largest producer of vanadium.
  • The opening of global economies is expected to stimulate stimulate prices and demand.

While commodity producers in the country have received a boost from strong prices over recent months, vanadium prices have lagged the trend – weighing on the performance of Bushveld Minerals, the world’s third-largest producer, which is based in South Africa.

The price of vanadium, which is used in a steel production, was hit by the pandemic, which impacted demand and global supply chains.

The company said the vanadium prices it received, declined by some 52% – “consequently eroding group profitability and cash flows”.

However, the company is confident that the price outlook and the opening of economies around the world would stimulate growth in the sector.

“Prices have significantly improved from their lows of 2020 and are currently trading above $40/kgV, supported by various fiscal stimulus measures, which are expected to drive demand for raw materials,” said financial director Tanya Chikanza.

Bushveld, which is listed on London’s Alternative Investment Market (AIM), reported a $14.9 million loss in earnings – down from $32.6 million in 2019, while revenue dipped to $90 million, 23% lower than the previous reporting period.

Organic growth

The decline was partly offset by an increase in sales volumes, following the inclusion of production from Vanchem, a vanadium asset it acquired in 2019.

“While 2020 witnessed depressed vanadium prices, we believed, as we still do, that the market fundamentals for vanadium are robust and supportive of price upside,” said Bushveld CEO Fortune Mojapelo as the company released its annual financial statements for 2020. 

The country’s top vanadium producer says it remains open to the prospect of listing on the JSE said it remained open to the prospect and will explore the opportunity “when conditions are suitable”.

“Our commitment to organic production growth remains…yet, in a capital constrained environment we must sequence the multiple expansion initiatives in a way that prioritises the cheapest next vanadium unit in our expansion initiatives, while promoting stability at our operations,” said Mojapelo.

The weak financial performance in the 2020 financial year prompted it to renegotiate its revolving credit facility of R125 million with Nedbank. 

China is the world’s top producer of vanadium, followed Russia and then South Africa, which in 2019 was responsible for with 7% of global supply.

A 35-day maintenance shutdown at Vametco, Bushveld’s mine near Brits, in the first quarter of 2021 and a downward revision of targets for the plant resulted in the downward revision of production guidance for 2021. The company has revised its production guidance to between 3 400 million tons and 3 600 million tons.

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