Marketing
The vanadium market is characterized by robust industry dynamics. A 2007 independent market study by CRU forecasts growth in the annual demand for vanadium of 7.8% due to increased steel consumption worldwide, the likely increased intensity of vanadium use in developing economies and predicted greater use of vanadium-titanium alloys in aerospace. To satisfy this demand would effectively require the construction of a new Windimurra size project every year over the next five years. Similar to the situation with many other commodities, there are insufficient new projects to fill this demand. Recently high cost small producers have entered the market to meet some of this demand. Importantly, due to its scale, established infrastructure and simple low cost mining, Windimurra will be a lowest quartile cost producer. CRU forecast that the vanadium markets’ supply/demand fundamentals will support historically high price levels over at least the next five years.Ferro-vanadium prices remained in the range of US$37-39 per kilogram of contained vanadium for most of the June 2007 quarter.
WVL has entered into a life of mine take or pay sales and marketing agreement for 100% of Windimurra’s production with Noble Group (SGX:NOBL). Noble has a 10% shareholding in the Windimurra mine, which serves to further align the parties interests. Under the terms of the agreement, Noble will purchase the vanadium production, develop sales to end user companies and co-ordinate the logistics for the delivery of the product to customers. Importantly, Noble will assume all credit risk for the sales to customers. The agreement also includes a floor price guarantee for the first seven years of the project of the greater of market price or the cost of production.
In February 2007, Noble entered a five year take or pay contract for a portion of production with a major consumer of vanadium and has commenced market development for the sales of the remainder of production.
Noble is headquartered in Hong Kong and operates in more than 40 countries via a network of more than 80 offices. The group serves more than 4,000 customers and has become a significant player in a number of key commodity markets around the world.
For more information, visit www.thisisnoble.com