Energizer Plans More Talks in China on Vanadium Mine

Energizer Resources Inc., the Canadian mineral-exploration company, will hold a second round of talks with a Chinese company about becoming a strategic partner in a vanadium project in Madagascar.

Energizer expects to announce “in coming weeks” that its Green Giant project in the south of the Indian Ocean island has estimated resources of as much as 60 million metric tons of vanadium pentoxide, Brent Nykoliation, vice president of business development at the Toronto-based company, said in a phone interview on Oct. 26.

The company said this year the deposit had estimated resources of about 26 million tons of the metal, which is used to harden steel and to make batteries.

Madagascar’s oil and mineral wealth has attracted international investors including Rio Tinto Plc, the world’s third-biggest mining company, which owns a $1 billion ilmenite project in the southeast of the country. Canada’s Sherritt International Corp. is developing a deposit 80 kilometers (50 miles) east of Antananarivo, the capital, that is set to produce 60,000 metric tons of “high-grade” nickel annually for at least 27 years, according to the company’s website.

Last year, the government suspended issuing mining permits amid a political crisis that began when President Andry Rajoelina ousted his predecessor, Marc Ravalomanana, with the help of the army. Energizer’s discussions with the Malagasy government over a mining permit are continuing, Nykoliation said.

Energizer shares rose 3 cents, or 9.7 percent, to C$0.34 at 9:47 a.m. in Toronto. The price of pentoxide containing 98 percent vanadium has risen 9.5 percent so far this year to $6.95 per pound, according to Metal Bulletin.

Output in 2014

The Green Giant mine is expected to begin output in 2014, Nykoliation said. Global production of vanadium pentoxide is currently 107,000 tons and if the resource estimate is confirmed, Energizer would have 13 percent of the world’s current supply, he said. That would enable the company to compete with suppliers including Evraz Highveld Steel and Vanadium Ltd. in South Africa.

Green Giant is “one of the largest vanadium deposits in the world and it is 100 percent owned,” Nykoliation said.

Energizer’s strategy is to “find a strategic joint-venture partner in the battery industry and the steel industry as our project is unique in being able to supply both,” Nykoliation said. The company has already held a first round of talks with a potential partner in China, Nykoliation said.

“China and Japan have been mandated by their governments to increase the strength of steel in their buildings,” said Nykoliation. “China and India are consuming steel like you wouldn’t believe.”

South Africa is the world’s biggest vanadium producer.

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