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Bushveld Minerals plans for long-term vanadium presence


What it does

Bushveld Minerals Ltd (LON:BMN) is a low-cost, vertically integrated primary vanadium producer.

It is one of three operating primary vanadium producers, owning two of the world’s four operating primary vanadium processing facilities, currently producing approximately 3,000 metric tonnes per annum, which represents 3% of the global market.

Its target is to organically grow production to more than 8,400 metric tonnes per annum in the medium term.

Bushveld has doubled down on vanadium with the acquisition of Vanchem, which has producing vanadium assets in South Africa plus extensive downstream capability.

How it is doing

Production in 2020 clocked in at 3,631mln tonnes of vanadium (mtV), which was 24% higher than in 2019 but marginally – less than 1% – lower than production guidance of 3,660-3,940 mtV.

Sales of 4,264 mtV were up 78% year-on-year, partly as a result of the inclusion of sales from Vanchem this time around but also because of increased demand from customers in the second half of the year.

Group production for 2021 is projected to be between 4,100mln tonnes of vanadium and 4,350 mtV. Volumes should be weighted towards the second half of the year due to a 35-day maintenance shutdown at the Vametco plant in South Africa scheduled for the first quarter of the year. As well as doing the maintenance work, the group will seek to remove certain production bottlenecks at the plant.

What the boss says: Fortune Mojapelo, chief executive

“Production for the year was 24% higher than the prior year, despite the challenging environment during the year. The fourth quarter was characterised by strong vanadium demand and sales which has carried [on] in 2021,” said Fortune Mojapelo, the chief executive officer (CEO) of Bushveld.

“We have entered the new financial year on a positive footing with the secured funding, the higher production for the year and a rising vanadium price. While COVID-19 remains a part of our everyday lives, we continue to concentrate on executing the goals that are within our own hands, including meeting our 2021 production guidance, reducing our costs and advancing the development of vanadium redox flow batteries as a major source of energy storage,” he added.

What the broker says

Stockbroker Peel Hunt said the 2020 production number was 2% below the consensus forecast of 3,679mtV.

“Sales were higher at 4,264mtV, just below our 4,298mtV forecast, mainly due to destocking in Q4.

“The lower production at year-end was mainly due to mill stoppages (at Vametco and Vanchem), as well as additional maintenance at Vanchem,” the broker noted.

“Realised pricing in 2020 came in at just US$21-23/kg, 15% below consensus forecasts of US$25.9/kg. Costs for 2020 also came in higher than guidance, at both Vametco (3% above) and Vanchem (20% higher), due to the lower production and also optimising the feedstock at the Vanchem kiln,” Peel Hunt continued.


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