Reed likes vanadium story
Staff reporter, 24 November 2010
DAVID Reed, the former Kalgoorlie stockbroker, has the region’s lifeblood – gold – in his own veins but is currently working with son Chris, the managing director of Reed Resources, to develop world-class lithium and vanadium projects in Western Australia. He explained last week why he was a believer in vanadium, and the company’s high-grade Barrambie project.
“Just to give you an idea of why vanadium is so important,” the 2002 Order of Australia Medal recipient told journalists at a briefing in Perth,“80% of vanadium is used as a hardening agent in high-strength steel, reinforcing mesh, girders, pipelines, ships, machinery – any application where the quality of the steel is important. It has been used as a steel hardening agent since the 1950s and as a result vanadium demand is closely linked to the demand for steel.
“As we are all more than aware these days steel demand is being driven by China. The Chinese government have instigated massive urbanisation programs (and) to put that into perspective, in 2008 there were 35 European cities with more than 1 million people. There are 35 cities right now in China [with more than 1 million people] and in 2025 there will be 200 Chinese cities with more than 1 million people. More steel will be consumed in the next 20 years than was consumed during the entire 20th century.
“China has issues of course. Traditionally it wasn’t required to put the same amount of vanadium in the steel that the Western world puts in.
“And what can happen ... is we see tragedies occur. These are photos of the aftermath of the earthquake in China in 2008, when 50,000 people were killed. Newspaper reports said at a Sichuan primary school, where 239 of the 500 students and teachers were killed, there was no steel rods or rebar in the concrete.
“In 2005 China introduced a standard requiring increased usage of vanadium and the price went up by over four times in two weeks. They had to repeal those new standards because they couldn’t get enough vanadium. China puts 25% of the amount of vanadium in strengthening steel as the rest of the Western world. If Chinese steelmakers were to use the same amount of vanadium in their steel as North American steel producers they would need to source an extra 30,000t of vanadium each year, which is equivalent to five Barrambie operations.
“We believe that they are going to introduce in the very near future a requirement especially for rebar, for building and for export rebar, so that will put upward pressure on the price and we believe that’s one of the reasons the Chinese are interested in our vanadium.
“China is the world’s largest exporter of finished steel yet it’s still a net importer of high quality steel.
“Who controls the world vanadium market? We see China and Russia control the bulk of it, then Xstrata, and then the rest of the world. Total world production is 56,100 tonnes, and we’re going to produce about 6400 tonnes per annum – about a tenth of the world’s supply. So it’s not insignificant the amount we’re going to produce. It’s a strategic mineral – vanadium has now become known as a strategic mineral. Without it infrastructure costs rise dramatically as more steel is required than is otherwise the case.
“So vanadium has the benefits of the steel investment. It also has quite considerable additional upside evolving in other areas. As we’re all aware there is a global demand for emissions free technology. China consumes 350 million tonnes of oil a year: 10.5 million barrels per day. The US consumes 20 million barrels a day. China builds one new 300MW coal-fired power station each week. Coal supplies 78% of china’s power and consumes 2.4 billion tonnes of coal per year. David Hale, noted US economist, predicts that in 2050 china will have 500 million cars, up from 20 million at the present time. India will have 600 million cars, up from 8 million at the present time. The US will have 280 million, up from 120 million. China is predicted to make 10 million cars in 2010, and by 2016 will be the largest automaker in the world.
“Subaru are working on a car battery that they suggest could possibly travel 200km on a single charge and recharge 80% capacity within 15 minutes. Vanadium is a critical component of this battery. The University of Massachusetts in the US have developed a vanadium fluoride fuel cell which they say has twice the practical energy and density of petrol.
“Scientists in Spain have announced that they have developed a material which will allow photovoltaic solar cells to operate at double their efficiency. Again vanadium is a critical component of this material. Renewable energy utilities have already started using vanadium redox batteries to store power from various power sources such as solar and wind. In Japan, where they have a lot of power requirements in the winter and not so much in the summer, they generate all this extra power ... for about the last 10 years they’ve been putting it into huge vanadium redox batteries, which are about the size of a house, and that stores it for the winter when they have to actually use it.
“Global pressure to decrease our dependence on oil and reduce CO2 emissions is forcing these changes to occur quicker than many realise as you can witness here (see image at top of page) where electric car-charging stations are already being rolled out in London.
“In 2001 the [ferro] vanadium price was $US63/kg, then in 2005 when they put in that requirement in China to put the same amount of vanadium as the Western world into steel the price went to $130/kg but there wasn’t enough vanadium in the world so they had to repeal the law.
“The price has run along, and it got its way back up to $US91/kg [pre-GFC] and now it’s dropped back and it’s currently around $30.
“The latest forecast from Roskill has the price of ferrovanadium reaching $75 per kg by 2015. In the last five years it’s averaged $50/kg. Currently it’s $30/kg and we’re doing our sums on $30 and they’re predicting it’s going to go to $75.
“So if they’re right this project will make a lot of money.”
Also in the November 24 - 30, 2010 edition
- High-grade will add to Impact
- Location underpins growth story
- PlatAust strategy on track to deliver
- North America warms to coal
- People, ports and precipitation hold back Oz output
- Queensland mining takes the initiative
- Unite and conquer
- Overland at a loose end
- A share of the action
- All’s well that ends well
- Investors see red at gold company meeting
- Magnetite draw fades
- Major independent Aussie mining house is tomorrow’s goal
- Thomson aims to strike above the Belt
- BHP’s objections all in the numbers
- Quiet day, big year ahead
- Holding on to its options
- Mining people on the move: Terramin, Rey Resources, Sedgman
- PROJECT WATCH
- Back to the future
- Western Desert eyes ambitious schedule
- Gold project now ex-debt
- Golden Grove back on growth track
- In brief: Daisy Milano switch; longwall changeover? Good as new
- Wanted: a new supplier or two, and many more skilled people