Vanadium Resources (VR8) has entered a memorandum of understanding (MOU) with China’s Panjin Hexiang New Materials Technology for the sale of vanadium from its operations in South Africa.

VR8 will supply vanadium from its Steelpoortdrift and Tweefontein vanadium operations.

The agreement outlines the supply of 4,000tpa of V2O5 flake, which is around 37% of VR8’s planned annual V2O5 flake production capacity of 11,000tpa for the initial Phase 1 operation.

The non-binding MOU is valid for an initial five years, with another five-year extension option.

VR8 noted that the MOU sets the stage for further negotiations concerning price, product quality and other offtake parameters.

Established in 2018, Panjin Hexiang New Materials Technology specialises in the production and sale of vanadium-nitrogen alloys, non-ferrous metals and chemical products.

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With an annual production capacity of 3,200t, the company has become one of China’s largest manufacturers of vanadium-nitrogen alloy, which is used as an additive in the production of micro-alloyed steel, substituting for ferro-vanadium.

VR8 CEO John Ciganek said: “Through this strategic MOU, VR8 has provided additional evidence in support of our progress in the project debt and equity markets. VR8 is attracted to Hexiang’s processes to take vanadium pentoxide and produce vanadium-nitrogen alloys for use in the steel industry, which forms the majority of the vanadium market.

“VR8 retains production capacity to explore offtakes in other locations or into the vanadium redox flow battery (“VRFB”) market. Hexiang recognises the strategic value of the Steelpoortdrift and Tweefontein Vanadium Project based on its size, low capex, lowest quartile opex, location, access to infrastructure and advanced stage of development.”