© Copyright Acquisition International 2024 - All Rights Reserved.

Article Image - Evraz Highveld Files for Business Rescue: What Will Be the Impact on the Vanadium Market?
Posted 17th April 2015

Evraz Highveld Files for Business Rescue: What Will Be the Impact on the Vanadium Market?

Whilst there have been no details released about the likely impact on short-term production, the news could have a profound impact on the vanadium market.

Mouse Scroll AnimationScroll to keep reading

Let us help promote your business to a wider following.

Evraz Highveld Files for Business Rescue: What Will Be the Impact on the Vanadium Market?
Image

Evraz Highveld Files for Business Rescue: What Will Be the Impact on the Vanadium Market?

On Tuesday, Evraz Highveld Steel and Vanadium (Highveld) announced that it “…does not have adequate funding to meet its obligations for the short term”, and that its board had filed for voluntary business rescue.  Whilst there have been no details released about the likely impact on short-term production, the news could have a profound impact on the vanadium market.  

Evraz is one of the largest entities in the vanadium industry, with operations in the Czech Republic, Russia, South Africa, theUSA, and a joint venture in Austria.  Evraz acquired its 85% stake in Highveld from Anglo American and Credit Suisse in 2007. Highveld is a vertically integrated steel and vanadium slag producer in South Africa. The company mines vanadiferous titanomagnetite ore at its Mapochs mine, and produces iron and steel products and vanadium-bearing slag at its steelworks in Mpumalanga province.  Slag is then processed at Evraz’s own facilities in Russia, at its Hochvanadium joint venture in Austria, and by third parties, to produce vanadium products.  

Any disruption in the supply of feedstock would, therefore, impact vanadium production in a number of countries, and, in the short-term, reduce global output of a range of vanadium products made by Evraz including ferrovanadium, modified vanadium oxide, aluminum-vanadium, and vanadium chemicals.  Roskill’s new Vanadium: Market Outlook to 2025 report estimates that world production of vanadium feedstocks totaled 96.6kt contained vanadium in 2014.  With production of feedstock at Highveld estimated at 7.1kt contained vanadium, the company, therefore, accounts for 7% of the world’s vanadium feedstock.  Total production of the Mapochs mine, majority-owned by Highveld, is estimated at 11.0kt contained vanadium, or 11% of world feedstock output.

Highveld’s announcement attributed developments to historical operational difficulties and sustained financial losses within a capital constrained operating environment.  Highveld had recently implemented an operational turnaround plan, in an effort to reinvigorate a company that has been impacted by weakened global steel and vanadium markets and, in particular, significantly reduced domestic demand for steel.  Like many producers in South Africa, Highveld has suffered from on-going energy supply interruptions as well as rising energy costs that have impacted ferrovanadium export prices.  South African ferrovanadium exports have gradually declined since 2009.    

Owing to these issues, Evraz was known to want to dispose of its Highveld asset.  In August 2014, it was announced that Macrovest 147 had entered into an agreement to acquire 34% of the shares in Highveld.  This agreement has now lapsed.

The Highveld board hopes that business rescue proceedings will afford the company the opportunity to consider the continued implementation of its turnaround plan and re-establish the company.  However, Highveld does not operate in a vacuum and the wider state of the market cannot be ignored.

The vanadium market remains in a state of oversupply.  During the commodities boom of the 2000s, which saw prices of vanadium and iron ore increase significantly, Chinese producers (notably Chengde and Pangang) instigated extensive capacity expansion projects.  Chinese expansion led to record global levels of vanadium production, which peaked in 2014. Whilst supply increased, demand has remained sluggish since the global financial crisis which impacted demand for steel and, therefore, for vanadium.  This has, in turn, led to a drop in prices.

In spite of significant overcapacity, particularly in China, new feedstock continues to enter the market: Largo Resources has successfully brought its Maracás Menchen project in Brazil into production and is continuing its ramp-up to commercial production.  Brazil is, therefore, expected to become a major producer of vanadium feedstocks.

As Largo is adding further to the vanadium oversupply situation, Roskill expects that its low-cost material will eventually push higher-cost producers out of the market.  This is likely to be in China, but given rising costs in South Africa, the market will wait to see if Largo’s emergence has a direct impact on Highveld’s future.

Over the short-term, a spike in vanadium prices is possible – often the case when there is perceived supply shortage in the vanadium market.  Prices rose sharply in 2008 in response to interruptions to production in South Africa (and China) but fell again once the effects of falling steel consumption were felt.  There was no visible price impact earlier this year from the news that the owners of the Windimurra mine in Australia had entered administration, but given the relative importance of Highveld’s feedstock to the supply chain, uncertainty over future production might drive prices upwards.  

Categories: Finance


You Might Also Like
Read Full PostRead - Eye Icon
Money-Making Magic: Discovering Exciting and Profitable Investment Ventures
Finance
19/07/2023Money-Making Magic: Discovering Exciting and Profitable Investment Ventures

Investing has always been a gateway to financial growth and security. Even so, it doesn't have to be all about numbers and charts. Investment ventures not only generate significant returns – they bring excitement and thrill to the table.

Read Full PostRead - Eye Icon
451 Research Identifies Nearly 300 M&A and IPO Candidates in its Annual 2016 Tech M&A Outlook
Innovation
25/02/2016451 Research Identifies Nearly 300 M&A and IPO Candidates in its Annual 2016 Tech M&A Outlook

According to 451 Research’s recently published Tech M&A Outlook 2016, acquirers will spend hundreds of billions of dollars on tech acquisitions in the coming year to adapt to a rapidly changing marketplace with notable hotspots in information security, IoT a

Read Full PostRead - Eye Icon
Beyond Bitcoin hype, can blockchain transform financial services?
Finance
10/05/2021Beyond Bitcoin hype, can blockchain transform financial services?

The UK financial industry faces a wave of disruption. Customers are demanding digital, personalised and seamless client experiences. Meanwhile, regulators are driving best practice around data security and industry professionalism to ensure clients’ prized a

Read Full PostRead - Eye Icon
Discover Why the Leaders in Cell Therapy are Expanding with Title21 Health Solutions
Innovation
18/02/2020Discover Why the Leaders in Cell Therapy are Expanding with Title21 Health Solutions

Top Blood and Marrow Transplant and Immunotherapy programs depend on Title21 Health Solution’s (Title21) technology to manage the patient, product and process data from collection to infusion. We had a chance to catch up with Lynn Fischer, the CEO at Title21

Read Full PostRead - Eye Icon
2016 Intellectual Property Practitioner of the Year – Hong Kong
Leadership
31/07/20162016 Intellectual Property Practitioner of the Year – Hong Kong

Established in 1970, Fairbairn Catley Low & Kong is one of Hong Kong’s major law firms advising on all aspects of law.

Read Full PostRead - Eye Icon
Best Independent Investment Management Firm – Canada
Leadership
17/05/2016Best Independent Investment Management Firm – Canada

Matco Financial Inc. is an independent, privately-owned investment management firm.

Read Full PostRead - Eye Icon
Cybersecurity A Growing Risk As Companies Rely On Technology To Overcome Increasing Regulatory Requirements
Strategy
04/04/2019Cybersecurity A Growing Risk As Companies Rely On Technology To Overcome Increasing Regulatory Requirements

With regulations across a wide variety of industries on the rise, companies are increasingly focusing on technology to help bear the strain. However, this comes at a cost, with cybersecurity now a growing threat, as Acquisition International explores. As incre

Read Full PostRead - Eye Icon
Treasured Island
Finance
29/09/2016Treasured Island

Baker Tilly Isle of Man are a part of Baker Tilly International which is the 7th largest advisory company, and are a leading firm of chartered accountants and business consultants.

Read Full PostRead - Eye Icon
Hyper-short-term investments: what are millennials investing in?
Finance
02/09/2019Hyper-short-term investments: what are millennials investing in?

Despite the stereotype of the younger generation being frivolous with their money, it seems they are actually one of the savviest generations when it comes to turning a profit on their own. While they are hesitant to invest in stocks, millennials and generatio



Our Trusted Brands

Acquisition International is a flagship brand of AI Global Media. AI Global Media is a B2B enterprise and are committed to creating engaging content allowing businesses to market their services to a larger global audience. We have 14 unique brands, each of which serves a specific industry or region. Each brand covers the latest news in its sector and publishes a digital magazine and newsletter which is read by a global audience.

Arrow