Business Profiles

Vanadium Resources: Transition

2020 was a curious time for all of us, so it’s a heck of a time to become CEO of a company. We interviewed Eugene Nel, the new CEO of VR8, a mining exploration company focusing its efforts on vanadium, a little-talked-about but essential metal. Apparently, VR8 is sitting on a huge deposit, and just in time, because apparently, we’re currently in short supply.

VR8 is a junior vanadium developer and the owner of 74% of the Steelpoortdrift Vanadium mining project in Limpopo Province, South Africa. What is Vanadium? Whilst the name perhaps isn’t thrown around as frequently, the material is about as common as copper or zinc, and it’s a chemical element that has many purposes as a transition metal that hardens other metals, particularly for producing specialised tools and construction steels for infrastructure. 

We spoke with Eugene Nel, CEO of VR8, to learn more about the industry and how his company are planning to impact the sector, as well as discussing how the past 18 months have impacted them – especially as he had the interesting experience of becoming CEO during 2020.

The Steelpoortdrift Vanadium mining project is a world class, tier 1 site and the titaniferous magnetite deposit is located in the prolific Bushveld Geological Complex within a known mineral and vanadium producing area. This area is also extremely conveniently placed, within reach of proven processing plants, railways, roads and ports. For a mining developer, it’s a dream come true. 

This vanadium deposit is projected to be one of the largest in the world. At their current stage in the development, VR8 is conducting a DFS-level study on the project, including work towards becoming fully environmentally permitted. It has recently completed a PFS study on the project and has also declared a maiden ore reserve. All told, Eugene is feeling positive about the site’s potential: “The Steelpoortdrift Vanadium Project (“SPD Project”) is one of the world’s largest and highest-grade vanadium deposits with a mining authorisation based on published Mineral Resources. We have a total JORC Resource exceeding 600mt of which 74mt have been converted into an ore reserve. More than 160mt of the resource is at a high grade of >1.1% V2O5. Based on the outcomes of our PFS we have one of the lowest production costs in industry at US$3.08/lb V2O5.” 

As well as the vanadium, VR8 has of course also begun work on exploring how best to mine and process the other elements present in their mine site’s soil. In addition to this vast project, the company also owns the Quartz Bore Project, which is located within the West Pilbara province, 80 kilometres east of Roebourne in Western Australia. This project covers an area of approximately 15km2 and includes identified copper, zinc and lead occurrences. 

When the Steelpoortdrift mine launches, the company predicts that it will have around 400 permanent employees, many of whom will be able to be sourced locally, as the mine site is in a pre-established mining area. Understanding the economic impact that a mine can have on an area, the company hopes to focus heavily on reaching out to the local community, hiring from there, promoting internally and offering further training to the people, many of whom will already be well-versed in mining.  

Out of their understanding and respect of this important relationship between mine and community, VR8 has also begun working on its CSR connections with the area, even though first production is still some way off. “We have established a ‘family’ relationship with the community we are to operate in. Both the company and the community recognise that the mine can’t operate in an isolated bubble, and thus we work together as partners rather than neighbours.” 

To support this relationship and give something to the community that houses its mine, VR8 has planned a series of projects. One is the oversizing of a solar PV energy supply system that is to be installed at the mine. The company will oversize the installation so the system will produce more energy than the mine needs, thus leaving an excess that can power portions of the local community. Similarly, the company would potentially create water supplies: “For Water Use Licence purposes, we are required to sink test water boreholes. Where these boreholes are located close to the community, we will aim to equip these boreholes with pump and water storage systems to supply water to the community.” 

Lastly, although VR8’s work has meant that a local secondary school would require to be relocated, the company sought the approval on this from the community, and its plans that whilst conducting the move for them, it will take the opportunity to upgrade the school’s infrastructure from the poor state it was in. It will also add modern schooling facilities and otherwise improve the school building as part of the move.

All of this is an elegant approach to CSR projects, smoothly integrating them with works that already need to be carried out for the mine, and extending their benefits outwards. Another fascinating project of theirs will also have a positive outward impact, not just for the local community but also globally: Eugene told us that the company is working on the development of a new processing technology that will be both carbon neutral as well as heat generating, which would greatly reduce the mine’s carbon footprint whilst also unlocking the value from other metals contained in the ore. This is all Eugene could tell us for now, but we’ll watch this space and are excited to follow up on it in the future. 

Whilst the pandemic has been difficult for many, a few of us have succeeded in making it through fairly unaffected. This was the case for VR8, through a combination of luck and planning. With only a small permanent team, and the project still at development stage, work was able to continue remotely. The only hiccups for the company were delays experienced by the groups they were working with, be they suppliers or government bodies, when these were forced to have COVID-related closures. However, VR8 thought ahead and predicted that this would be the case, so accounted for such delays in their planning and approached their work accordingly. It’s been pretty plain sailing, all things considered – if only all of us could say that! 

Not only this, but the future is looking bright for vanadium. The material is set to be in high demand, as Eugene explained to us: “The world in general has seen a significant and more purposeful shift towards the green energy supply revolution, which in turn has significantly increased future demand for our main product being Vanadium Pentoxide. In addition, the infrastructure projects announced by various countries to stimulate their economic growth has resulted in major demand for metals including Vanadium developing. Vanadium is a key component in the production of high tensile construction steel and rebar which in turn is a major requirement during infrastructure projects. This is extremely positive as it would underpin increased Vanadium commodity process for the medium to long terms.” 

Whilst these projected demands are positive news for VR8, however, there is a risk involved in it, too. Eugene explained to us that if vanadium producers can’t meet demand and a deficit occurs, then downstream users of the metal might search for alternatives. “The current Vanadium market is moving into a major supply deficit which is projected to increase even further for the next 2-3 years up to 2025. Current production capacity in industry is constrained with secondary producers in China operating at peak capacity and limited opportunity for existing primary producers to expand. There are also limited new primary producing projects projected to come into production before 2024. It is important for the vanadium industry as a whole to bring supply demand into balance again.”

Thankfully, VR8 is doing its part towards providing supply. If the deposit is anywhere near the size predicted, then this is an exciting development for the industry and could go a long way to addressing these concerns. Of course, the next few years are crucial for VR8, as its market needs to stay in place whilst it gets ready to produce. Whilst we’ve been watching 2020 and 2021 with bated breath, it seems likely that VR8 will be doing so in the next few years to come. And yet, we doubt that something as useful as vanadium can really go ‘out of style’ in that time – especially not with a supply like this waiting on the horizon and nearly ready to drop.