Upcoming Vanadium Projects

With talk of supply tightening, vanadium suppliers are preparing to expand production. Continued strong demand for both ferrovanadium and vanadium pentoxide from emerging markets—used primarily as an alloying agent in steel and iron to increase durability, strength and weathering capability—combined with expanding opportunities from clean energy storage solutions have led to the development of some promising sites outside of the dominant vanadium producing countries, South Africa, Russia and China.

Demand Drivers

In 2010, there were only 57,000 tons of vanadium was produced globally, with an additional 13.7 million tons of reserves globally. However, even small levels of growth in demand have the potential to quickly make an impact on vanadium markets. As the mineral is typically recovered as a by-product or co-product, its development is more diverse and challenging to bring in to production despite demonstrated world resources not being fully indicative of supplies.

Vanadium growth has the potential to occur in a number of areas. One area is infrastructure. With the specter of faltering consumer demand in the U.S. and Europe, compounded by softening economic growth in India and China, strong infrastructure investments could emerge from the U.S. Congress that have the potential to boost vanadium demand. China too has also recently implemented a new regulation for their rebar grade that will result in an additional 27,000 million tons of vanadium in China, a 40% increase in global vanadium consumption in the next few years.

The other area, while currently representing less than 10 percent of vanadium world demand, is in clean energy applications. Both lithium-vanadium and vanadium redox batteries (what President Obama referred to as "one of the coolest things I've ever said out loud") are looking to make significant forays as energy storage solutions. Recently, Chris Berry of House Mountain Partners, LLC said that vanadium redox batteries are one of the best solutions energy storage solutions for the electricity grid, which has the potential to power the electrification of the U.S. vehicle fleet.

As a result, vanadium production growth is poised within the next few years at a number of emerging sites. The following companies are some of the producers receiving a lot of talk.

Largo Resources (Brazil)

The Largo Resources Ltd. (LGO:TSX.V) Maracas Project in central Bahia State, Brazil is one of the world's highest quality grading of vanadium pentoxide. The titaniferous magnetite mineralization at Maracas ranges from 2 to 100m in thickness with an average true width of 40m. Deposits of 23.2 million tons grading 1.27% vanadium pentoxide and 13.1 million tons grading 1.34% vanadium pentoxide provide for a production period of approximately 23 years, with an initial annual production of 5,000 million tons commencing in 2013.

Drilling at the advanced-staged project began in April of 2011, at which time Largo Resources CEO Mark Brennan said "With the recent completion of the $115 million (M) equity financing, the soon to be completed debt financing and the subsequent start of construction we anticipate that this exploration program will provide Largo the potential opportunity to expand the current scope of the project as we become a significant player in the Vanadium market."

John Hykawy Head of Global Research of Byron Capital said in an interview that "Maracas is one of the most obvious mines that you're ever going to see. . .the vanadium is effectively contained in iron ore in magnetite. It's very easy to just grind that and magnetically separate it from the other materials."

American Vanadium Corp. (USA)

American Vanadium Corp. (AVC:TSX.V) has recently entered into an arm's length agreement with Vanadium International Corp. to purchase certain mining claims located in Eureka County, Nevada. The project will expand upon AVC's open-pit, heap leaching Gibellini Project, whose NI 43-101 compliant resources stands at 122 million pounds of vanadium pentoxide grading 0.339% with an additional 16 million pounds of inferred vanadium grading of 0.282%. From this resource production is expected to begin by Q113, with an output of approximately 2,800 million tons, which would make it the largest vanadium producer in the US.

AVC's focus, while still engaged in steel and iron alloy markets, is also heavily focused toward off take agreements and vertical integration with clean tech mass energy storage/battery production industries. John Hykawy, commenting on American Vanadium's Gibellini Project, noted that "it's a relatively small vanadium deposit at this point, but there's more material in the area. It's also weathered and shallow. Those two things together can help keep the costs down and help that project develop relatively quickly."

Apella Resources Inc. (Canada)

Apella Resources Inc. (APA:TSX.V; APAFF:OTCQX) has two primary projects based in Quebec, Canada. It has 100 percent ownership on the Lac Dore Project where it began drilling in 2011 the 102 MT of 0.45% grading vanadium pentoxide, which stretches 7km long, 340km NW of the major port at Saguenay Lac Saint-Jean on the St. Lawrence River. Its other project, Iron-T is a longer deposit, stretching 22km, but is still in development with updated resource estimates expected to build upon its initial 11.7 MT of 0.45% grading vanadium pentoxide. 660km NW of the Saguenay Lac Saint-Jean port, its first phase production is expected to begin in 2012-13.

Apella recently participated in a trade delegation to China, led by Quebec Premier Jean Charest, in hopes of furthering mining relations between the province and Chinese steel producers. The company did so in the wake of new Board member additions, recently appointing Chris Chu as General Counsel to the Board of Directors, Tanvir A. Khandaker and P.Eng Gaston Gagnon to its advisory board, and P.Eng Dennis Bordon to its Board of Directors. -Vanadium Investing News