This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Could South Africa's Vanadium Loss Be South America's Gain?

Could South Africa's Vanadium Loss be South America's Gain?

Major vanadium producer EVRAZ (LSE:EVR) is getting out of South Africa, marking a critical turning point for the vanadium sector.

EVRAZ announced late in March that it will divest its 85-percent stake in South African vanadium mining and processing operations. The move is widely seen as a condemnation of South Africa's mining sector, where EVRAZ's operations have lately been disrupted by the labor unrest plaguing the country.

The company is selling the operations to its black empowerment partner for total consideration of $320 million.

The move is in line with the activities of other firms, such as Rio Tinto (LSE:RIO,ASX:RIO,NYSE:RIO) and India's GMR Infrastructure (BSE:532754), which have decided that South Africa's political and operational risks are simply too high.

But for the vanadium industry, these circumstances present a quandary.

South Africa produced 35 percent of the world's vanadium in 2012, according to estimates from the US Geological Survey (USGS). It holds a quarter of the world's known reserves of the metal.

The type of vanadium that it holds is also important. South Africa's magmatic deposits are largely vanadium-bearing magnetite, which can produce shipping-grade iron and also titanium as a by-product.

Having these co-metals to sell significantly lowers the unit production cost of a pound of vanadium. Because of this financial advantage, a large part of the world's vanadium output comes from combined iron-vanadium mines, which are generally more profitable than mines producing vanadium alone.

But with a third of the world's cheap vanadium-in-magnetite production now in jeopardy because of South Africa's deteriorating mining sector, where can the vanadium sector turn to fill the gap?

South American magnetite

South America may be the answer.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 -1.15%
FB $117.58 0.73%
GOOG $693.01 0.29%
TSLA $240.76 -2.81%
YHOO $36.60 0.03%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs