Company Reports - DUFERCO Vanchem Vanadium Products (PTY) Ltd
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DUFERCO Vanchem Vanadium Products (PTY) Ltd
Leading vanadium producer
Written by Robert Michaels & Produced by Alex Barron
Vanchem Vanadium Products (Pty) Ltd claims to be one of the world’s top five vanadium producers. Its assets comprise various vanadium oxide, ferro-vanadium and vanadium chemical production facilities.
It is owned by Swiss firm Duferco Investment Partners. “We sell Vanadium products, manufacture ore and make into product,” Production Manager Louis Venter told our researcher. “The product is typically used in steel and aero parts; we have one site in South Africa,” Managing Director Alex Oehmen added.
He went onto explain that Vanchem also manages and owns 50 percent of South Africa Japan Vanadium (Pty) Ltd (SAJV), a joint venture company between Vanchem and Nippon Denko Company Limited, which produces ferro-vanadium exclusively for the Japanese market.
In addition, Vanchem has a 35 percent interest in Mapochs Mine (Pty) Ltd, which holds the vanadium containing iron ore reserves of Highveld Steel and Vanadium Corporation Limited.
“Vanchem’s interest, together with a formal supply agreement, secures the long-term supply of the company’s vanadium raw material,” the Duferco website says.
Duferco bought Vanchem from Highveld in 2008. Initially it focused on “establishing the necessary business and governance structures” to allow the business to “operate independently from Highveld” and restructured some of the sales and distribution channels used by the previous owners.
Today, all Vanchem’s products are exclusively marketed and distributed through the extensive global network of Duferco Trading. This allows “the business full market transparency and in-time marketing intelligence with strong and direct relationships with end-consumers,” the company says.
Collapse in demand
For most of 2009, demand for and prices of vanadium products were at close to historical lows. The global economic downturn and associated collapse of steel production output and demand from other vanadium consuming markets was tough to survive.
Prices of vanadium first started to decline in 2008. Demand and prices picked up slightly in June 2009, reaching approximately USD 35/kg V for a very short period in August 2009, but prices soon declined and were back to levels around USD 26-27/kg V by the end of the fiscal year.
Vanchem managed and reduced production output in line with demand for its various products and produced approximately 3000 mt V during the fiscal year, which is only about 60 percent of typical production levels of recent years.
“During this very difficult period, management focused aggressively on cost-management and optimisation of plant-utilisation and was very successful in reducing the cost structure of the business,” Duferco says. “This ensured that the business remained profitable on an operating level.”
The good news is that prospects have been improving. They remain weak, but there is increased optimism.
“In the first quarter of FY2010, demand remained low and prices of ferro-vanadium declined to levels around USD 20/kg V,” says Duferco’s website. “Recovery of prices will continue to depend on a recovery of demand for vanadium, which to a very large extent depends on steel production output and whether the global vanadium producing industry balances production output with demand. In this continued challenging environment, Vanchem will continue to focus on cost containment and balancing production output with apparent demand, although some significant capital projects related to our environmental rehabilitation programme will commence in FY2010.”
In April, CPM Group (www.cpmgroup.com) released its 2010 Vanadium Market Outlook. Over the 10-year projection period, strong demand and upward pressure on the cost curve are forecast to “keep vanadium prices around the high levels seen over the previous decade”.
The study includes detailed historical data and analysis, as well as detailed projections for supply, demand, and prices over the next 10 years. There are also statistics on vanadium production on a project-by-project and a country level, including operating costs for primary, slag, and secondary supplies.
The CPM Group report concludes that vanadium demand stands to benefit from the emerging recovery and restocking efforts in the steel sector. “In addition to the cyclical economic shifts currently taking place, high strength, low weight metallurgical products are increasingly being demanded as development projects require superior material performance in non-ideal environments,” it says.
“Increased utilization of alloyed steels and titanium alloys will likely have a bullish effect on the vanadium market over the coming decade.”
Vanadium, a super metal
Vanadium, when present in small amounts in certain ferrous alloys, can significantly improve their properties.
Car manufacturers were the first to recognise the toughness and fatigue resistance of vanadium alloys as far back as the early 1900s, incorporating the alloys in axles, crankshafts, gears, and other critical components.
Vanadium has since been used together with aluminium to give the required strength in titanium alloys used in jet engines and high-speed airframes.
According to U.S. Geological Survey (USGS), world resources of vanadium exceed 63 million tons and it occurs “in deposits of phosphate rock, titaniferous magnetite, and uraniferous sandstone and siltstone, in which it constitutes less than two percent of the host rock. Significant amounts are also present in bauxite and carboniferous materials, such as coal, crude oil, oil shale, and tar sands”.
USGS also says that “because vanadium is usually recovered as a by-product or co-product, demonstrated world resources of the element are not fully indicative of available supplies”.
It adds: “Steels containing various combinations of other alloying elements can be substituted for steels containing vanadium. Certain metals, such as manganese, molybdenum, niobium (columbium), titanium, and tungsten, are to some degree interchangeable with vanadium as alloying elements in steel. Platinum and nickel can replace vanadium compounds as catalysts in some chemical processes. There is currently no acceptable substitute for vanadium in aerospace titanium alloys.”
45 percent of the earth’s vanadium resources are in South Africa, according to mbendi.com.
Most sources state that vanadium production is concentrated in three countries where supply disruptions have been regular — China, South Africa, and Russia. Those three countries account for roughly 90 percent of global supplies.