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Summary

At $14.2/lb, vanadium pentoxide’s price is up 55% in 2108 and up 280% from the 2017 low of $5/lb.

Vanadium is used in both the cathodes and the anodes of utility grid scale flow batteries that supercharge wind and solar farms.

The global vanadium supply, which is mostly Chinese, will be limited in coming years due to Chinese environmental restrictions.

With a low global inventory and growing demand, vanadiumprices are likely to be propelled higher than the current eight-year high.

Besides buying the vanadium metal, anotherway to  invest in  vanadium is through buying shares of vanadium miningcompanies.

Author's note: I am the executive chairman of Prophecy Development Corp., a vanadium mineral exploration company discussed later in this article.

In this article, I will outline an investment case for vanadium, the best performing electric metal in 2017 and 2018, and share some of fundamental vanadium supply and demand drivers. Lastly I will share some industry quotes and ways to participate in the vanadium bull cycle.

After the Bank of Montreal’s star analyst published bullish research notes on vanadium in January (2018), the price of vanadium pentoxide (v2o5) went up another 55%. That made it the best-performing electric metal, surpassing cobalt and lithium by a wide margin.

Vanadium Pentoxide Prices

2018 gain: approx. 55%

Gain since 2017: approx. 280%

Source: vanadiumprice.com.

Cobalt Price Chart

2018 gain: approx. 22%

Gain since 2017: approx. 250%

US$88,000 per tonne [PB1] = US$40/lb

Source: LME

Lithium Carbonate Price

2018 gain: flat

Gain since 2017: 30%

Source: Zacks

Vanadium is used in redox flow batteries, which are superior to lithium batteries in storage capacity, discharge duration, and battery life. Vanadium and lithium are comparable in unit price and annual production.

Annual production of vanadium pentoxide is 136,000 tonnes at $30,000/t ($4 billion). By contrast, lithium carbonate annual production is 186,000 tonnes at $25,000/t ($4.6 billion)

As for cobalt, the price is now $88,000/tonne, with an annual production of 110,000 tonnes ($9.7 billion).


Note: vanadium = 1.79 vanadium pentoxide

The following January BMO note is as relevant today as it was in January:

We see a situation where over the coming months Chinese exports of ferrovanadium could drop sharply on the back of increased domestic demand and raw material constraints.

Chinese vanadium supply is also under pressure. As with many other commodities, China's vanadium mine supply has already been impacted by more stringent environmental monitoring. Moreover, as of January 1 this year imports of vanadium slag have been banned, cutting ~6% of China's raw material supply.

According to following notes by Metal Bulletin on March 14, the European and US vanadium markets surged on significant supply concerns:

Major domestic V2O5 producers reported no cargoes to sell in spot market, and ferro-vanadium producers raised prices and are selling in small amounts.

Metal Bulletin has learned that major V2O5 producers including Tranvic Group, Jianlong Group and Desheng Group are fulfilling long-term orders and claimed to have no stock to sell into spot market.

There were very few export offers for V2O5 last week, with only one source concluding a deal for two containers of the material at $14.60 per lb. [PB3]

Persistent demand, restrained supply, and limited available inventory could drive vanadium prices further upwards well beyond the current eight-year high of $14.2/lb.

While lithium and cobalt mining stocks have been benefiting from an investor frenzy, the valuation of vanadium mining companies has been laggard.

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