On the other hand, the supply side of vanadium is limited. According to the U.S. Geological Survey, estimated mine production of vanadium globally in 2016 was 76,000 tonnes, which was a 2.3% decrease from the 2015 production of 77,800 tonnes. One of the reasons for the shortage is the constrained supply due to economic downturns, said Algar.
According to S&P Global Market Intelligence, there are 24 primary active mining properties globally. The majority of the mines are located in Australia, with seven (29%), followed by four mines each in South Africa, China and the U.S. (17% each). In this analysis, the number of active properties only includes properties where there is reporting and some countries may be underrepresented.
Most of the active mines, however, will still take some time to contribute to the vanadium supply. "There's different scales of operation that can be brought into play," said Algar. "Any project you look at are a minimum of two to three years to get them up and running."
The Kongshan, Rhovan and Vanadio de Maracas Menchen mines, located in China, South Africa and Brazil, respectively, are three of the main vanadium mines that are in production. In Australia, the Windimurra mine may be the quickest to respond in vanadium production if restarted, said Algar. The mine was put under care and maintenance after a fire caused considerable damage to the processing plant in 2014.
Exploration and acquisitions on the way
The increasing interest in vanadium is evident in rising drilling and deal activity surrounding the metal since 2016.
There was a significant increase in drill holes reported in 2017 from 2016, a good sign that exploration for vanadium in the mining industry is underway.
In the third quarter of 2017, 203 projects reported primary vanadium drillholes, and 77% of these assays contained significant mineralized intervals. This was easily the highest drilling activity recorded, and the only quarter with significant assays reported during the 2016-2017 period. The highest valued interval was from the Newman zinc mine in Australia owned by Marindi Metals Ltd.
The mergers and acquisitions activity surrounding vanadium has also shown significant changes over the past two years. So far in 2017, as of Sept. 28, 11 primary vanadium deals have been announced, which is almost triple the number of deals announced in 2016 and 2015.
However, it's a different story in terms of deal value. Among the deals that reported a value, the total so far this year is only US$2.7 million, compared with the US$20.3 million value recorded in 2016. The deal involving the primary vanadium Vametco mine in South Africa, valued at US$16.4 million, accounted for the lion's share of last year's deal value. The deal was announced in April 2016 and involves Yellow Dragon Holdings Ltd. and Bushveld Minerals Ltd. acquiring Evraz Plc's 59.1% stake in the Vametco mine, which produced 2,804 tonnes of vanadium in 2016.
Judging by the way the energy and power market is moving at the moment, the demand for vanadium looks bright, and early activity around the metal is promising on the supply side.
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