10% of Supply of This Metal Might Vanish

We were recently discussing the plight of South African mining. And another graphic illustration of this problem just materialized.

Late last week, South African steelmaker Evraz Highveld said it may be forced to shut down. The company cited labor unrest as well as general weakness in the steel industry as reasons for its difficulties. These factors, Evraz said, "cast significant doubt about the ability of the company to continue as a going concern."

The loss of this producer would be big news for the steel market. But even bigger news in another space: vanadium.

That's because Evraz is one of the world's largest vanadium producers. In the form of vanadium slag from its steel operations.

In 2012, Evraz produced over 6,200 tonnes of contained vanadium. Representing 10% of global production for that year.

The company looked to be on pace to increase that output slightly in 2013. But if the firm folds, the entirety of this supply could be lost.

This would obviously be a market-moving development. And all the more so if other South African producers face similar issues. All told, South African suppliers accounted for 35% of the world's vanadium production in 2012.

We'll see if Evraz does indeed fold. As I've said before, if you're in the metals markets, this is a space you need to be watching.

Here's to the fallen,

Dave Forest