29th Jun 2020 15:42
(Alliance News) - Ferro-Alloy Resources Ltd on Monday said its earnings fell in 2019 due to declining vanadium prices.
The miner's revenue fell 56% in 2019 to USD1.8 million from USD4.2 million. The Kazakhstan-focused firm swung to a pretax loss of USD3.3 million from a USD3.0 million profit.
"As widely reported, the price of vanadium pentoxide fell from extreme and exceptional highs of around USD30 a pound at the end of 2018 to just over USD5 a pound at the end of 2019. This fall has produced an arithmetically inevitable squeeze on margins as raw-materials are purchased on the basis of much higher prices than the subsequent sales, and long delivery schedules mean that realised prices are even lower than those prevailing at the time of shipment," Chief Executive Nick Bridgen said.
"However, these effects of the downturn should even out in the long run as prices go up and down. Prices have stabilised somewhat during 2020 to date, and currently sit a little lower than our long-term forecast price of around USD7.50 a pound."
Production climbed 22% to 152,456 tonnes in 2019, amid a rise in capacity, Ferro-Alloy reported.
"Covid-19 is likely to affect both world production and supply in the short term, with no clear price-direction. Longer term, the implementation of higher standards for construction steel throughout the world and increasing use of other alloys using vanadium are likely to increase demand for vanadium from its traditional markets," the company added.
Shares in the company were 3.0% higher at 8.50 pence each in London on Monday afternoon.
By Eric Cunha; [email protected]
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