The race is on between two Western Australian companies to become the first of the world’s new primary vanadium producers to go into production in 2007.
The race is on between two Western Australian companies to become the first of the world’s new primary vanadium producers to go into production in 2007.
The race is between Aurox Resources’ $200 million Balla Balla project, near the coast between Karratha and Port Hedland, and Precious Metals Australia’s $100 million recommissioned Windi-murra project, near Mt Magnet.
Windimurra has a slight edge, with production scheduled for mid 2007, followed by Balla Balla later the same year. Both plan to produce 5,000 tonnes of vanadium a year.
But WA Business News understands Aurox is close to signing an agreement with a major European steel maker to take all the vanadium Aurox can produce.
Balla Balla has a current life of 25-30 years on just its 35 million tonnes central area reserves from a total 110 million tonnes.
About 85 per cent of the world’s 60,000t/year vanadium production is used to harden and strengthen low alloy steel. A further 10 per cent is used by the aerospace industry.
Aurox’ research shows global vanadium supply is currently matching demand, but by 2010 demand is forecast to reach 80,000t/year and supply 75,000t/year.
The window to that shortfall begins to open about the time the Balla Balla and Windimurra projects go into production. The controversial Windimurra project was built by Swiss-based Xstrata AG and junior partner PMA in 1999 for over $200 million, and was the world’s largest primary vanadium mine, supplying 10 per cent of the market.
The project was mothballed in 2003 and part-demolished when the vanadium price hit record lows and the State Government invested $30 million in support infrastructure.
PMA regained full ownership of the mine in August this year.
Aurox managing director Charles Schaus told WA Business News Balla Balla is a simple open cut mining, crushing, magnetic separation and roasting operation, based on proven technology.
Pilot scale testing had returned high grade recoveries of 85 per cent, expected to make Balla Balla one of the lowest cost producers in the world.
Production will be trucked to Fremantle for shipping. There is also a bonus phosphate sub-product that sits above the vanadium magnetite layer that has to be mined and is worth between $US47/t and $US540/t depending on the product required and process used.
This could be in production within 18 months and supply some continuity to vanadium’s price volatility – from a low $US9/kg in 1999-2000, to $US130/kg late last year to around $US50/kg currently, a volatility that is aligned to world steel production and speculative trading.
Net profit after tax forecasts for Aurox is $38 million from first-year production, $45 million from the second, $48m from the third, $25 million from the fourth, then six years of around $20 million a year.
