JOHANNESBURG (miningweekly.com) – Vanadium producer Bushveld Minerals, which on Monday provided an operational update on Bushveld Vanadium and Bushveld Energy for the three months to March 31, is implementing a detailed programme in response to the Covid-19 pandemic and drawing down its full R375-million of bank debt facilities to enhance liquidity and financial flexibility.
“I’m pleased that these difficult circumstances found Bushveld Minerals in a sound state financially, with a set of quality low-cost production assets,” Bushveld CEO Fortune Mojapelo stated in a media release to Mining Weekly.
The vanadium resource base of the London Aim-listed Bushveld consists of the Vametco, Brits and Mokopane mineral assets and the Vametco and Vanchem processing facilities.
The company stated in the first-quarter operational update that it had continued to pay its 500 employees during lockdown, had continued to meet customer orders and was prioritising the protection of its employees and host communities through the rapid implementation of health and hygiene controls in the workplace, protocols for dealing with suspected cases of infection and business continuity measures to minimise the business disruption during the pandemic.
Despite the impact of Covid-19, the vanadium price had been resilient across all regions. China’s Purchasing Manufacturing Index indicated improved rebar production and demand driven by the restart in the construction sector. China’s rebar consumption was tracking up 10% year on year, with China being a net vanadium importer during the month of March.
Vametco’s first-quarter production of 652 mtV of nitrovan was marginally ahead of production for the corresponding period last year and sales of 898 mtV, 77% higher than last year’s first three months.
Vametco’s underlying production cost of $18.9/kgV was 8% lower, supported by a weaker rand/dollar exchange rate.
Vanchem’s first-quarter production of 219 mtV was 31% of total Bushveld attributable vanadium production and sales of 182 mtV comprised a range of products.
Vanchem’s underlying production cost for the quarter was $18.5/kgV.
Capital expenditure (capex) of R85-million on refurbishment would be required in 2020 to enable Vanchem to continue to operate sustainably and most of this capex would be spent in the second half of the year.
Bushveld Energy approved the construction of a vanadium electrolyte plant supported by the receipt of funding approvals for equity and debt from the Industrial Development Corporation.
In line with its strategy of partnering with vanadium redox flow batteries companies, Bushveld on April 1 acquired an 8.71% shareholding in Invinity Energy Systems plc. Due diligence relating to the acquisition of Enerox as part of an investment consortium was complete and Bushveld said it would continue to update the market on developments around the progress and structure of the transaction.
The group drew down the remaining revolving credit facility of R125-million at the end of March to enhance liquidity and provide financial flexibility during this uncertain environment.
Overall, the group’s unaudited gross cash and cash equivalent position as at March 31 was $34.4-million, which includes the full R375-million Nebank facilities.
Operational expenditure would be reviewed where necessary and some non-critical growth capex across the mining, processing and energy businesses would be deferred, the company stated.
Production and cost guidance for both Vanchem and Vametco would remain under review until the impact of the pandemic and the nationwide lockdown could be evaluated.
A Covid-19 task team had been established to deal with health and safety, human resources, information technology, supply chain security, customers and host communities.
Looking ahead, Bushveld said that it expected vanadium demand to remain robust in the medium to long term spurred on by supportive fiscal stimulus and increased infrastructure investments.
Growing calls to take advantage of the fiscal stimulus opportunities to accelerate the energy transition were also expected to provide further support to the growth of the energy storage industry in which vanadium redox flow batteries had a significant role to play.
“Our intention is to continue adapting to this fluid environment and to do everything necessary to protect our people and our business, while doing our part to fight this global pandemic,” said Mojapelo.
Protocols had functioned effectively and the company would continue to monitor the situation and update its measures in line with the guidelines from the South African health authorities and government.