Vanadium is a 21st century miracle metal. As society strives to make products stronger, lighter, safer and more fuel efficient, there will be ever increasing demand for the metal and the need for gradual increases in sustainable, cost-effective vanadium production,, Precious Metals of Australia managing director Roderick Smith told the Metal Bulletin"s Ferro-Alloys Conference in Prague recently.

PMA is currently in the process of redeveloping the Windimurra vanadium mine in Western Australia, and is targeting initial production in late 2007-early 2008, building up to an annual output of 6200 tonnes of ferrovanadium (some 8% of world demand).

Mr Smith forecast intensifying use of vanadium. Reviewing demand trends, he says the metal's principal use was as a strengthening additive to carbon steel and high-strength steels, but the use of titanium-vanadium alloys for aircraft components, air frames and gas turbines represented a growing market.

Although new applications continue to be found for vanadium's useful chemical and physical properties, steel will remain the key end-use market, but aerospace alloys will be the fastest growing sector, Roderick Smith says.

Historically, Asian steelmakers have added less vanadium to their product than the world average. This will change as the maturing of the Chinese and other emerging steel markets will result in increased intensity of use, and the forecast growth of vanadium consumption is therefore higher than that for steel alone.

China is driving the growth in demand for steel, and in the first half of 2006 its production of specialty steels containing vanadium grew by 22.5%, far outpacing the growth in total crude steel production. Macquarie Bank has forecast that total world steel production will grow at an annual rate of 5.8% to 2010, with China increasing its share to 40% by then. Increasing intensity of use, coupled with increasing steel production, will see vanadium consumption in steel production grow by at least 7% per year, said Mr Smith.

The growing use of titanium-vanadium alloys in the aerospace industry is part of the drive to produce aircraft that are lighter, longer range and more fuel-efficient. Each generation of new aircraft uses increasing amounts of titanium-vanadium alloy: Boeing's new 787 Dreamliner and the Airbus 380 each contain more than 100 tonnes of the alloy, more than double that in a Boeing 747.

Summarising the supply side of the vanadium equation, Roderick Smith noted that existing primary producers (extracting vanadium directly from titan-magnetite ore) have limited scope for further growth. Co-producers (producing vanadium-containing slag as co-product of making iron) are high-cost and suffer from titanium contamination. They have not participated in the boom in crude steel production. The third producing group comprises the recyclers who extract vanadium from waste material such as fly ash, oil residues and spent catalysts. Higher vanadium prices and more stringent environmental regulations, preventing land-fill disposal of spent catalysts and other waste products, mean that most potential feedstock material for recycling are already being utilised, thus limiting expansion prospects. A fourth component of supply is substitution by niobium during times of very high vanadium prices. In this case, ferroniobium replaces ferrovanadium in steel making (though only 60% as effective) or a greater quantity of (weaker) non-vanadium steel may be used.

Speaking about the Windimurra project, Roderick Smith says its premature closure in 2004 was due to low vanadium prices, flaws in the original design and differences between the joint owners (PMA and Xstrata). These difficulties have now been resolved through a total re-engineering of the project, based on experience of the earlier operation, and the negotiation of a comprehensive marketing agreement with Hong-Kong-based Noble Group.

"This underwrites operating costs for the life of mine, ensuring that any temporary pullbacks in the vanadium price will not cause short-term cashflow problems. Noble is an ideal partner," Roderick Smith says.

"It is not a competitor (unlike Xstrata) and is absolutely committed to the success of the Windimurra mine."

Roderick Smith says the Windimurra is a unique project. The outcropping orebody is 350 metres thick and no mining of barren waste rock is required. It is oxidised to a depth of 40 metres, rendering the ore soft and cheap to mine, crush and grind, and it extends over a strike length of 26km, only 15% of which has been drilled. The major process reagents - a sodium flux and ammonium sulphate - are available at low cost as waste products of the local Western Australia alumina and nickel industries. The project's 126m long rotary kiln will be fired by natural gas rather than coal and this confers advantages in kiln availability, operating cost and product purity and enables PMA to employ waste heat recovery that reduces total gas consumption by 30%

PMA engineers have identified numerous process improvements from the original project (which treated more than 7 million tonnes of ore) ranging from numerous de-bottlenecking measures to process improvements costing millions of dollars to implement. Production will be increased from the previous 12 million pounds/year to 20 million pounds/year vanadium pentoxide (V2O5) equivalent and the final product will be ferrovanadium, much higher value than the V2O5 produced previously.

"Windimurra will be the most advanced vanadium project in the world, "Roderick Smith says.

"It hosts a significant and unique, world-class vanadium deposit and will support, at sustainable cost, a processing operation that will produce the high-quality vanadium products needed for the long-term."

Since the Windimurra mine last operated in 2003, shortages of vanadium have been met through growth in high-cost co-production, substitution and many small environmentally unsustainable, high-cost producers in China.

"Future needs cannot be met in this way," Roderick Smith says.

"While a number of potential sources for increased production exist, only increased primary production from a new or expanded mine is feasible in terms of the scale and timing required. Of the potential new mines, Windimurra is the only one already under construction. The world needs Windimurra," he says.