Vanadium Resources strikes offtake deal with Chinese heavyweight

Vanadium Resources (ASX:VR8) has inked a memorandum of understanding (MoU) for the sale of vanadium from its Steelpoortdrift and Tweefontein operations in South Africa to one of China’s largest vanadium nitride producers.

The five-year MoU is with Panjin Hexiang New Materials Technology Co for the supply of vanadium pentoxide (V2O5) flake, with the option to extend for a further five years.

This is roughly 37% of Vanadium Resources’ planned annual V2O5 flake production capacity of about 11,000 tonnes per annum (tpa) for the initial phase-one operation. 

Hexiang is one of China’s largest vanadium-nitrogen alloy manufacturers with an annual production capacity of 3,200 tons of vanadium-nitrogen alloy products to the steel industry. 

Vanadium-nitrogen alloy is a lower cost additive that can replace ferro-vanadium for the production of micro-alloyed steel to improve strength, toughness, ductility and thermal fatigue resistance, as well as enhance weldability.

Vanadium Resources says the MoU with Hexiang provides a framework for further negotiations in relation to price, product quality and other offtake parameters.

“Through this strategic MoU, VR8 has provided additional evidence in support of our progress in the project debt and equity markets,” Chief Executive John Ciganek says.

While Hexiang plans to use this vanadium for supply to the steel industry, Ciganek says Vanadium Resources will also explore options to provide offtake for the ever growing energy storage market. 

According to Vanadium Resources, Hexiang is a major supplier to the surrounding steel mills with long-term cooperative relationships with a number of well-known Chinese steel groups.

“VR8 is attracted to Hexiang’s processes to take vanadium pentoxide and produce vanadium-nitrogen alloys for use in the steel industry, which forms the majority of the vanadium market,” Ciganek says. 

“VR8 retains production capacity to explore offtakes in other locations or into the vanadium redox flow battery market.”

Vanadium Resources says it is in further talks regarding offtake MoUs and agreements with Chinese, Japanese, Korean and European end-users and traders for the balance of its planned phase-one production of about 7,000tpa.

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Images: Vanadium Resources
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Written By Angela East
Managing Editor Angela East is an experienced business journalist and editor with over 15 years spent covering the resources and construction sectors and more recently working as a communications specialist handling media relations for junior resources companies.