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Atlantic turns focus to Europe, Asia

Keywords: Tags  Atlantic, ferrovanadium, Windimurra, Michael Minosora, ferrovanadium demand, ferrovanadium prices, North America, Europe Asia

NEW YORK — Atlantic Ltd. said the narrowing price gap between the North American ferrovanadium market and the rest of the world has led the company to turn its focus to European and Asian consumers as it continues to ramp up its Windimurra project in Western Australia.

The Perth, Australia-based company has noticed European and Asian transaction prices catch up in recent years, after initially being most interested in servicing the North American market, Atlantic managing director and chairman Michael Minosora told AMM.

"Our focus has traditionally been on the North American market because of a combination of factors, including higher prices paid for ferrovanadium," he said. "What’s happened over the last few years is the margin between and European and Asian markets, and the U.S. market has closed significantly, which causes us to rethink our preferences for where we’re placing our product."

Minosora said the company is looking to break the tradition of fixed contracts that cover just six months or one year in favor of agreements that cover multiple years.

"Ultimately, we’re working to have longer-term arrangements with our end-users rather than continue to behave like many existing ferrovanadium producers, which are subject to one-year contracts. I don’t think that’s sustainable in the long run," he said.

"Having pricing based on one-year contracts, or spot pricing on a monthly basis, is not a sound business model for us. We’re making a substantial investment in a specialty metal product, and for us to continue to invest in the business and for us to get the mutual long-term benefits, we need more certainty.

"From an end-user point of view, they need more certainty in having product readily available at a reasonable price. We have spoken to a number of end-users on this basis, but it is tough going, because we’re trying to influence the market dynamic and people don’t change easily. It’s something we’ll work on and continue to encourage end-users to go down that path," he said.

Minosora said the company’s focus for 2014 is to be a reliable supplier of vanadium products, with traditional supply regions such as South Africa and China likely to yield curtailments in supply.

"With South Africa, it’s a function of what’s happening in that country. They’re going through a period of change, which brings with it a higher cost environment in terms of labor and electricity, and that has to catch up at some stage," he said.

"With China, we’re seeing aggressive closures by the central government of high-cost steel producers, who sometimes produce vanadium slag as a by-product. My own view is that as those mills close, then the supply for vanadium as a by-product will be curtailed. That in turn will reduce the supply, and if the laws of supply and demand behave rationally, we should see an increase in vanadium prices."

Minosora recently told AMM sister publication Metal Bulletin that Windimurra is expected to hit a monthly production rate of 500 tonnes in 2014.

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