Contents
Vanadium Project
Vanadium Project
On 25 September 2008, a wholly owned subsidiary of PetroAsian Energy Holdings Limited (“PetroAsian Energy”) acquired a 43% equity interest in a vanadium mining project in Guizhou, China for a total consideration of HK$63 million. The project has a mineral exploration license issued by the Lands Bureau of the Chinese government.
Vanadium is a mineral that has the symbol “V”. A soft and ductile silver-grey metal, vanadium is used mainly to produce alloys. It has good resistance to corrosion by alkalis, sulfuric and hydrochloric acid. Steel can be greatly strengthened by adding a small amount of vanadium during the steel processing stage. According to the 2007 data from the U.S. Geological Survey, China and Russia have the most reserves of vanadium in the world with each of them accounting for 5 million tons. South Africa, which ranks the third, has 3 million tons. Most of the world’s vanadium during 2007 were mined from these three countries with China accounting for 32% of the world’s total vanadium production.
PetroAsian Energy’s mine is located on a parcel of land of approximately 6.1 square kilometers in the Yuqing County, Xiaowujiang Vanadium Mining Region, Guizhou Province. There are highways in close proximity. In accordance with the relevant exploration report, the V2O5 ore resource of the mine amounts to 2,783,360 tons whereas the V2O5 metal resource amounts to 19,516 tons. The domestic price of V2O5 metal (including tax) as recently quoted from the website of ChinaCCM.com as at 31 October 2009 was approximately RMB 96,000 – 101,000 per ton.
In March 2009, the Chinese government has promulgated a new policy specifically for the iron and steel industry whereby a minimum utilization ratio of at least 60% has been stipulated for steel bars with a support resistance parameter of 400 MPa and/or above. As vanadium is an important additive for steel manufacturing, analysts have predicted that the market demand for vanadium will be on the rise and so as its merger and acquisition activities in 2010 will become increasingly active. The Australian Mining Department of Deloitte Corporate Finance has estimated that producers of vanadium as well as other metals (including gold and manganese) will become a popular target for mergers and acquisitions. All in all, it is expected that the prospects of the vanadium industry will be bright in the near future.
