Publication of a Report on the Effect of Imports of Vanadium on the National Security: An Investigation Conducted Under Section 232 of the Trade Expansion Act of 1962, as Amended, 64748-64789 [2021-24957]

Download as PDF 64748 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices Table of Contents DEPARTMENT OF COMMERCE Bureau of Industry and Security RIN 0694–XC079 Publication of a Report on the Effect of Imports of Vanadium on the National Security: An Investigation Conducted Under Section 232 of the Trade Expansion Act of 1962, as Amended Bureau of Industry and Security, Commerce. ACTION: Publication of a report. AGENCY: The Bureau of Industry and Security (BIS) in this notice is publishing a report that summarizes the findings of an investigation conducted by the U.S. Department of Commerce (the ‘‘Department’’) pursuant to Section 232 of the Trade Expansion Act of 1962, as amended (‘‘Section 232’’), into the effect of imports of vanadium on the national security of the United States. This report was completed on February 22, 2021 and posted on the BIS website in July 2021. BIS has not published the appendices to the report in this notification of report findings, but they are available online at the BIS website, along with the rest of the report (see the ADDRESSES section). DATES: The report was completed on February 22, 2021. The report was posted on the BIS website in July 2021. ADDRESSES: The full report, including the appendices to the report, are available online at https:// www.bis.doc.gov/index.php/documents/ section-232-investigations/2793vanadium-section-232-report-publicwith-appendices/file. FOR FURTHER INFORMATION CONTACT: Kevin Coyne, Industrial Studies Division, Bureau of Industry and Security, U.S. Department of Commerce, (202) 482–5481, Vanadium232@ bis.doc.gov. Unless otherwise protected by law, any information received from the public during the course of this investigation may be made publicly available. For more information about the Section 232 program, including the regulations and the text of previous investigations, please see www.bis.doc.gov/232. SUMMARY: khammond on DSKJM1Z7X2PROD with NOTICES5 The Effect of Imports of Vanadium on the National Security An Investigation Conducted Under Section 232 of the Trade Expansion Act of 1962, as Amended U.S. Department of Commerce Bureau of Industry and Security Office of Technology Evaluation February 22, 2021 VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 I. Executive Summary A. Findings 1. Vanadium Is Essential to U.S. National Security 2. Imports of Vanadium Have Mixed Effects on the Economic Welfare of the U.S. Vanadium Industry 3. Displacement of Domestically-Produced Vanadium by Imports Affects Our Internal Economy, But Is Mitigated by Ongoing Actions 4. Increased Global Capacity and Production of Vanadium Will Further Impact the Long-Term Viability of U.S. Vanadium Production 5. Unilaterally Increasing Domestic Prices of Vanadium Would Harm Critical U.S. Industries B. Conclusion C. Recommendations II. Legal Framework A. Section 232 Requirements B. Discussion III. Investigative Process A. Initiation of Investigation B. Public Comments C. Information Gathering and Data Collection Activities D. Interagency Consultation IV. Product Scope of Investigation V. Background on U.S. Vanadium Industry A. Vanadium Production B. Vanadium Uses VI. Global Vanadium Industry Conditions A. Overview B. Prior Trade Investigations C. U.S. Duties on Vanadium Imports VII. Findings A. Vanadium Is Essential to U.S. National Security 1. Vanadium Is Considered a Critical Mineral 2. Vanadium Is Required for National Defense Systems 3. Vanadium Is Required for Critical Infrastructure 4. Vanadium Has Significant Effects on Other Critical Industries B. Imports of Vanadium Have Mixed Effects on the Economic Welfare of the U.S. Vanadium Industry 1. The U.S. Is Presently Reliant on Imports of Vanadium 2. U.S. Reliance on Imports of Vanadium Is Not Increasing 3. Prices 4. Employment 5. Financial Outlook 6. Exploration 7. Capital Expenditures 8. Environmental Factors C. Displacement of Domestically-Produced Vanadium by Imports Affects Our Internal Economy, but Is Mitigated by Ongoing Actions 1. U.S. Production of Vanadium Is Well Below Domestic Demand 2. Domestic Production Is Highly Concentrated and Limits Capacity Available for a National Emergency 3. Domestic Vanadium Production Currently Requires Significant Imports of Vanadium Feedstock, Limiting Capacity Available for a National Emergency PO 00000 Frm 00002 Fmt 4701 Sfmt 4703 4. Trade Actions Have Been Successful in Mitigating Artificially Low-Priced Imports of Vanadium 5. Critical Minerals Agreements Will Help Ensure Reliable Supplies of Vanadium D. Increased Global Capacity and Production of Vanadium Will Further Impact the Long-Term Viability of U.S. Vanadium Production 1. China Possesses an Outsized Role in the Global Price of Vanadium 2. Expansion of Low-Cost Production in Several Countries Will Place Downward Pressure on Global Vanadium Prices 3. Downward Price Pressure May Be Mitigated by Increased Demand for Steel, Titanium, and Energy Storage 4. Significant Price Swings Impair the Ability of Domestic Producers To Plan and Carry Out Capital Expenditures E. Unilaterally Increasing Domestic Prices of Vanadium Would Harm Critical U.S. Industries 1. Domestic Vanadium Prices Significantly Exceeding World Prices Would Disadvantage the U.S. Steel Industry 2. Domestic Vanadium Prices Significantly Exceeding World Prices Would Harm the U.S. Titanium Industry, to the Benefit of Russian and Chinese Titanium Producers VIII. Conclusion A. Determination B. Recommendations APPENDICES Appendix A: Section 232 Investigation Notification Letter to Secretary of Defense Mark Esper, May 21, 2020 Appendix B: Federal Register Notice—Notice of Requests for Public Comments on Section 232 National Security Investigation of Imports of Vanadium, June 3, 2020 Appendix C: Federal Register Notice— Reopening of Comment Period for Section 232 National Security Investigation of Imports of Vanadium, September 25, 2020 Appendix D: Summary of Public Comments Appendix E: Survey for Data Collection Prepared by Bureau of Industry and Security https://www.bis.doc.gov I. Executive Summary This report summarizes the findings of an investigation conducted by the U.S. Department of Commerce (the ‘‘Department’’) pursuant to Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862 (‘‘Section 232’’)), into the effect of imports of vanadium 1 on the national security of the United States. Vanadium is used primarily as a strengthening agent in steel products, particularly for products in the construction industry and in tool steel. A smaller but essential use is in titanium aerospace alloys; military and 1 See Figure 1 in Section IV, ‘‘Product Scope of the Investigation,’’ for the vanadium products addressed by this report. E:\FR\FM\18NON5.SGM 18NON5 khammond on DSKJM1Z7X2PROD with NOTICES5 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices commercial aircraft are dependent on vanadium-containing titanium products. Vanadium also has significant chemical uses, including as a catalyst in the production of sulfuric acid—itself an important industrial material used in a wide range of production—and in large scale energy storage. There are three general methods of vanadium production: Primary (mining), co-production (from mined ore in concert with steelmaking), and secondary production or recycling (from residues and waste materials). Production generally results in vanadium pentoxide, which can be used in titanium and non-metallurgical uses or further converted, generally to ferrovanadium for incorporation into steel. There is currently one primary producer of vanadium in the United States (uranium miner Energy Fuels Resources). There are two active secondary producers (the companies that submitted the Section 232 application, AMG Vanadium and U.S. Vanadium), plus a third secondary producer currently modernizing an idle facility (Gladieux Metals Recycling). The primary producer only produced vanadium during one of the last five years and supplied less than 4% of U.S. demand. Globally, primary and co-production of vanadium is concentrated in four countries: China, Russia, South Africa, and Brazil, with China accounting for over half of global production. Since 1995, the United States has found that imports of ferrovanadium from all major primary producers except Brazil have been sold at less than fair value, resulting in antidumping duties. These duties remain in effect for China and South Africa but have since been revoked for Russia. Although the United States is reliant on imports of vanadium pentoxide, ferrovanadium, or vanadium-bearing waste products to meet domestic demand, this import reliance will be mitigated by a major expansion being carried out by AMG Vanadium doubling their ferrovanadium production capacity, and the soon-expected completion of Gladieux’s renovation, which will reintroduce significant domestic vanadium pentoxide production. In addition, two mining projects are in the exploratory or permitting phase, potentially adding domestic production capacity as soon as 2023. The biggest challenge the industry faces is low and volatile vanadium prices. Prices are currently below the levels required for cost effective primary production in the United States, and VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 make it difficult for secondary producers to source feedstock and operate profitably. Adding to producers’ woes are the major demand declines due to COVID–19, with demand for vanadium in titanium products hit especially hard as a result of decreased consumption by the aerospace industry. Given vanadium’s almost-exclusive use in concert with steel and titanium, and, as steel and titanium are both considered critical to national security—with their domestic production threatened by imports, as reported in recent Section 232 reports— the Department finds that unilaterally imposing import tariffs or quotas in order to raise the domestic price of vanadium would largely impact domestic steel and titanium industries and would therefore have significant negative effects on the economic and national security of the United States. Cost increases for only domestic steel and titanium producers would put these critical industries, already threatened by low-cost imports, at a further disadvantage relative to foreign producers. In conducting this investigation, the Secretary of Commerce (the ‘‘Secretary’’) noted the Department’s prior investigations under Section 232. This report incorporates the statutory analysis from the Department’s 2018 reports on the imports of steel and aluminum 2 with respect to applying the terms ‘‘national defense’’ and ‘‘national security’’ in a manner that is consistent with the statute and legislative intent.3 As required by the statute, the Secretary considered all factors set forth in Section 232(d). In particular, the Secretary examined the effect of imports on national security requirements, specifically: i. Domestic production needed for projected national defense requirements; ii. the capacity of domestic industries to meet such requirements; iii. existing and anticipated availabilities of the human resources, products, raw materials, and other 2 U.S. Department of Commerce. Bureau of Industry and Security. The Effect of Imports of Steel on the National Security (Washington, DC: 2018) (‘‘Steel Report’’) and U.S. Department of Commerce. Bureau of Industry and Security. The Effect of Imports of Aluminum on the National Security (Washington, DC: 2018) (‘‘Aluminum Report’’). https://www.bis.doc.gov/index.php/documents/ steel/2224-the-effect-of-imports-of-steel-on-thenational-security-with-redactions-20180111/file https://www.bis.doc.gov/index.php/documents/ aluminum/2223-the-effect-of-imports-of-aluminumon-the-national-security-with-redactions-20180117/ file. 3 Steel Report at 13–14; Aluminum Report at 12– 13. PO 00000 Frm 00003 Fmt 4701 Sfmt 4703 64749 supplies and services essential to the national defense; iv. the requirements of growth of such industries and such supplies and services including the investment, exploration, and development necessary to assure such growth; and v. the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries; and the capacity of the United States to meet national security requirements. In preparing this report, the Secretary also recognized the close relation of the economic welfare of the United States to its national security. Factors that can compromise the nation’s economic welfare include, but are not limited to, the impact of ‘‘foreign competition on the economic welfare of individual domestic industries; and any substantial unemployment, decrease in revenues of government, loss of skills, or any other serious effects resulting from the displacement of any domestic products by excessive imports.’’ See 19 U.S.C. 1862(d). In particular, this report assesses whether vanadium is being imported ‘‘in such quantities’’ and ‘‘under such circumstances’’ as to ‘‘threaten to impair the national security.’’ 4 A. Findings In conducting the investigation, the Secretary found: 1. Vanadium Is Essential to U.S. National Security (a) Vanadium is a critical mineral. The Department of Interior included vanadium on the 2018 List of Critical Minerals required by Executive Order 13817, issued December 20, 2017.5 Pursuant to the Executive Order, the list established vanadium as essential to the national security of the United States and found that the absence of a vanadium supply would have significant consequences for the U.S. economy and national security. (b) Vanadium is required for national defense systems because of its use in steel and titanium alloys. Vanadium is irreplaceable in key titanium aerospace applications, and many military airframes contain significant amounts of vanadium. (c) Vanadium is required for critical infrastructure. A key feature in the highstrength, low-alloy (HSLA) steel products used in the construction industry, as well as in tool steel and 4 19 U.S.C. 1862(b)(3)(A). 5 https://www.usgs.gov/news/interior-releases- 2018-s-final-list-35-minerals-deemed-critical-usnational-security-and. E:\FR\FM\18NON5.SGM 18NON5 64750 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices high-speed steels, vanadium steel alloys are used throughout U.S. critical infrastructure. In addition, nearly all vanadium-bearing titanium products are used in the critical transportation or defense sectors. (d) The vanadium industry has significant effects on other industries critical to U.S. national security. As stated above, vanadium has essential uses in steel and titanium products, and vanadium resources in the United States are often co-located with uranium resources. The Department has recently found that imports in all three of these industries threaten to impair U.S. national security. khammond on DSKJM1Z7X2PROD with NOTICES5 2. Imports of Vanadium Have Mixed Effects on the Economic Welfare of the U.S. Vanadium Industry (a) The United States is presently reliant on imports of vanadium. The only primary vanadium producer in the United States has only produced during one of the last five years, due to low vanadium prices. Domestic secondary producers of vanadium import significant quantities of their feedstock, [TEXT REDACTED]. (b) U.S. reliance on imports of vanadium is not increasing. Although the country is reliant on imports of vanadium to meet civilian demand, major U.S. producers of ferrovanadium and vanadium pentoxide are in the process of expanding or restarting operations. Given the successful completion of these initiatives, U.S. capacity for ferrovanadium production from vanadium-bearing waste is projected to more than double in 2021, and U.S. capacity for vanadium pentoxide production from vanadiumbearing waste is projected to increase significantly with the re-opening of a secondary production facility. In addition, several domestic mining companies have idle production capacity or are exploring the development of vanadium mines. If domestic vanadium prices rise, or in the event of a national emergency, these companies may increase production and capacity, including through new mines. (c) Given continuing low domestic prices, the U.S. vanadium industry may face significant financial challenges. [TEXT REDACTED] However, it is difficult to accurately characterize the financial health of the industry due to recent facility turnover, significant ongoing investments, and recent lack of operational activities. (d) Significant resources exist in the United States for primary production. At least three companies have mines that have produced vanadium in the VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 past, and two additional projects are under development. (e) Secondary production of vanadium is environmentally beneficial. The vanadium-bearing waste products used in secondary production are classified by the Environmental Protection Agency (EPA) as hazardous waste. However, secondary production reclaims critical minerals and can divert significant amounts of material from landfills, instead using them in products critical to national defense. 3. Displacement of DomesticallyProduced Vanadium by Imports Affects Our Internal Economy, But Is Mitigated by Ongoing Actions (a) U.S. production of vanadium is well below domestic demand. Primary and secondary producers produced an annual average of 3.4 million kilograms of vanadium content from 2016 to 2019, while domestic imports of key vanadium products approached 8 million kilograms. (b) Domestic production is highly concentrated and limits the capacity available for a national emergency. Just three domestic companies carried out vanadium production in 2019. Additional capacity in the future is not guaranteed, based on low vanadium prices. (c) Domestic vanadium production currently requires significant imports of vanadium feedstock, limiting vanadium production capacity available for a national emergency. Only one vanadium producer in recent years has used entirely U.S. origin material, producing the equivalent of 1.4% of total domestic demand since 2016. Secondary producers all use significant levels of foreign feedstock; the United States is unable to satisfy all domestic demand with U.S. sourced material. (d) Recent trade actions have successfully mitigated artificially lowpriced imports of ferrovanadium. Of the four countries with significant primary production of vanadium, three have been subject to the imposition of antidumping duties on ferrovanadium based on petitions from domestic ferrovanadium producers. In all cases, imports of ferrovanadium from the subject countries fell to close to zero following the imposition of the duties. (e) Critical minerals agreements with other countries will help ensure reliable supplies of vanadium. The United States government (USG) released in June 2019 A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals, which includes a goal of enhanced international trade and PO 00000 Frm 00004 Fmt 4701 Sfmt 4703 cooperation related to critical minerals.6 The United States has subsequently entered into official critical minerals collaborations with Canada and Australia, both of which have significant vanadium resources. 4. Increased Global Capacity and Production of Vanadium Will Further Impact the Long-Term Viability of U.S. Vanadium Production (a) China, which accounts for an estimated 50 to 60% of global vanadium production and consumption, possesses an outsized role in determining the global price of vanadium. This concentration of supply and demand means that policy changes in China have significant effects on the global vanadium market, including major price changes in the near past. (b) Expansion of low-cost production in countries other than China will place downward pressure on global vanadium prices. Mines in development or exploration in Kazakhstan, Canada, and Australia have the ability to nearly double current global mine production, should they all enter production. (c) Downward price pressure may be mitigated by increased demand for steel, titanium, and energy storage. Although currently significantly affected by COVID–19, higher demand in the steel and titanium industries would put upward pressure on vanadium prices. Additionally, annual growth projections for the use of vanadium-based batteries range from 13 to 42% through 2027, which could produce significant additional demand. (d) Significant price swings impair the ability of domestic producers to plan and carry out capital expenditures. With vanadium projects taking years to complete and major price swings a common occurrence, companies may be challenged to find financing throughout the course of the development of new vanadium capabilities, or may find their projects not viable once completed. 5. Unilaterally Increasing Domestic Prices of Vanadium Would Harm Critical U.S. Industries (a) Domestic vanadium prices significantly exceeding world prices would disadvantage the U.S. steel industry. The Department’s 2018 Section 232 investigation on steel imports found that the steel industry was threatened by imports and in need of assistance to remain viable. As the predominant user of vanadium, the domestic steel industry would face new 6 https://www.commerce.gov/data-and-reports/ reports/2019/06/federal-strategy-ensure-secure-andreliable-supplies-critical-minerals. E:\FR\FM\18NON5.SGM 18NON5 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices threats from foreign steel producers if its input costs were significantly higher than those in other countries. (b) Domestic vanadium prices significantly exceeding world prices would also harm the U.S. titanium industry, to the benefit of Russian and Chinese producers. The titanium industry is dependent on vanadium because vanadium accounts for between 12 and 14% of the cost of a standard titanium alloy. The U.S. titanium industry is facing significant financial challenges from declines in demand (related to COVID–19), and may not be able to bear additional costs that international competitors do not. khammond on DSKJM1Z7X2PROD with NOTICES5 B. Conclusion Based on these findings, the Secretary concludes that the present quantities and circumstances of vanadium imports do not threaten to impair the national security as defined in Section 232. Although vanadium is critical to national security and the United States is currently dependent on imported sources of vanadium, [TEXT REDACTED] several significant factors, including the health of the U.S. industry, availability of idle domestic resources, existing USG actions, and the importance of vanadium to competitive steel and titanium industries, indicate that imports of vanadium do not currently threaten to impair national security. The United States is currently reliant on imports to satisfy demand for vanadium products and is not producing significant amounts of vanadium from U.S.-origin material, but these circumstances are not expected to deteriorate. Two domestic secondary producers are in the process of expanding and/or upgrading their facilities, which will add significantly to the U.S. ability to produce ferrovanadium and vanadium pentoxide from vanadium-bearing waste materials. Furthermore, in addition to the one existing domestic primary producer, several other companies are in the process of exploring vanadium mining ventures and will be in a position to produce within several years if vanadium prices rise sufficiently. Even if primary production is not feasible at current vanadium prices, the availability of these resources allows for production potential in the event of national emergency. An increase in the production of domestic primary vanadium, expansion of secondary production, and the addition of domestic feedstock for secondary production should mitigate the current levels of reliance on imports. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 However, the projected rise in capacity does not necessarily mean that the domestic vanadium industry is healthy. Vanadium prices have a long history of volatility, with prices going through cycles of surging and plunging. The main users of vanadium—the steel and titanium industries—experienced major declines in demand in 2020 related to COVID–19, with the titanium industry particularly challenged by a large decrease in aerospace demand. If vanadium prices fail to rise, some of the capacity under exploration may not turn into production, and one or more secondary producers may face financial difficulty or challenges in sourcing vanadium-bearing feedstock. Further, the lack of a finding of a threat to national security does not indicate that a healthy domestic vanadium industry is not of vital importance to the United States. While the Secretary does not believe that imports of vanadium need to be adjusted at this time, there are several steps that can and should be taken to support the domestic vanadium industry and related sectors to ensure safe and reliable sources of vanadium in the event of a national emergency, thereby enhancing and protecting U.S. national security. C. Recommendations The Department has identified several actions that would help to ensure reliable domestic sources of vanadium and lessen the potential for imports to threaten national security. These actions are not intended to be exhaustive or exclusive; the Secretary recommends pursuing all proposed actions. Recommendation 1—Expansion of the National Defense Stockpile To Include High Purity Vanadium Pentoxide The USG should support domestic vanadium production and ensure a source of vanadium in the event of national emergency by re-adding vanadium pentoxide to the National Defense Stockpile. Vanadium pentoxide was part of the stockpile until 1997; the stockpile held 6,200 tons of contained vanadium 7 in 1965 and had a goal of 7,000 tons though it held just 651 tons prior to the decision to reduce the target level to zero in 1993, following the end of the cold war.8 Using high purity vanadium pentoxide—suitable for use 7 Vanadium is generally reported in terms of ‘‘contained vanadium’’, or the weight of only the vanadium portion of a vanadium compound. Vanadium represents 56% of the weight of vanadium pentoxide. 8 USGS Vanadium Mineral Commodity Summaries. https://www.usgs.gov/centers/nmic/ vanadium-statistics-and-information. PO 00000 Frm 00005 Fmt 4701 Sfmt 4703 64751 in titanium alloys or chemical uses as well as conversion into ferrovanadium for use in the steel industry—would ensure vanadium held in the stockpile could be used for any necessary product in the event of national security. National Defense Stockpile goals were initially set to ensure sufficient product to support one year’s demand for the entire country but were later narrowed to focus on defense-specific needs, primarily due to funding constraints. Given the importance of vanadium and other critical minerals to the economy, the economic and national security of the United States would be better served by pursuing stockpile goals that support national security beyond defensespecific requirements. The re-addition of vanadium to the stockpile would require authorization and funding from Congress. The Department recommends that the size of the proposed vanadium addition to the stockpile should be based on three benchmarks: Defense system requirements, broader national security requirements, and total domestic demand. As discussed above, defense system requirements may conservatively amount to 273 metric tons of vanadium content per year; this inventory level would be worth approximately $10.5 million based on average vanadium pentoxide prices since 2016.9 Critical infrastructure requirements add an estimated 4,527 tons per year, resulting in a minimum stockpile goal based on total national security requirements of 4,800 tons of contained vanadium, at a cost of $184.8 million. Finally, total domestic apparent consumption (including defense and critical infrastructure needs) averaged 8,590 tons of contained vanadium annually from 2016 to 2019. Establishing a stockpile goal at this level, sufficient to meet all domestic demand, would be valued at $330.6 million. Beyond the minimum stockpile level, the Secretary further recommends that the stockpile of vanadium pentoxide be authorized to expand in size during periods of unusually low prices (with purchases made from domestic producers), while remaining unchanged or shrinking during periods of higherthan-average prices. This policy would help mitigate the large historic price swings that have caused significant financial distress and impeded capital investment in the domestic vanadium industry while helping to regulate domestic prices. 9 Average price per pound vanadium pentoxide from 2016–2019 of $9.80, based on data from USGS: https://pubs.usgs.gov/periodicals/mcs2020/ mcs2020-vanadium.pdf. E:\FR\FM\18NON5.SGM 18NON5 64752 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES5 Implementing this policy would require legislative changes to the Strategic and Critical Materials Stockpiling Act (50 U.S.C. 98, et seq.) (Stockpiling Act). While the mitigation of critical mineral price swings and the purchase of critical minerals from domestic producers at a premium when prices are unusually low serves the interest of national defense, the Stockpiling Act requires that the stockpile ‘‘not be used for economic or budgetary purposes,’’ which may present a challenge in allowing the stockpile to exceed minimum defense needs based on prices. Allowing the stockpile to be used for economic purposes if such actions support the health and competitiveness of affected industries would help enhance U.S. national security. As an additional potential benefit, once the vanadium holdings in the National Defense Stockpile are established, they could—with the authorization of Congress and in cooperation with the Department of Energy—be used without cost to support another sector: Large scale energy storage. As noted above, a potential new use for vanadium is in vanadium redox flow batteries, which have the advantage of using vanadium in both parts of the electrolyte, eliminating the risk of cross-contamination and allowing for the vanadium to be reclaimed from the batteries at a low cost with minimal yield loss.10 With vanadium accounting for approximately 30% of the cost of a vanadium redox flow battery and initial battery cost reductions needed to enable larger scale use, the USG could reduce the costs of the stockpile and support the energy storage sector by leasing a portion of the stockpile to be managed by vanadium redox flow battery companies, on condition of the leased vanadium being immediately reclaimable in the event of a national emergency. Given restrictions on transfers to and from the stockpile, this use of material in the stockpile would require either a legislative change to the Stockpiling Act or the designation of the leased material as still being part of the stockpile despite being used for energy storage. Recommendation 2—Recycling Promotion The Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals (Federal Strategy) identifies an 10 Vanitec estimates cost of conversion from leachate to vanadium pentoxide at $1 per pound vanadium pentoxide with a 95% yield. https:// www.vanitec.org/vanadium/ESC-Meetings. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 available, on-demand supply of critical minerals as ‘‘essential to the economic prosperity and national defense of the United States.’’ 11 The Federal Strategy recommends the support of recycling and reprocessing of critical minerals, including vanadium. Given that nearly all vanadium production in the United States is performed through recycling, the USG should support the vanadium industry through USG-wide actions to promote the recycling of materials containing critical minerals. A 2002 EPA analysis, carried out in support of the May 8, 2002 final rule on the identification and listing of spent catalysts as hazardous waste, showed that in 1999, just 55% of spent catalyst was recycled, in large part because the cost of recycling was estimated to be three times that of landfill disposal.12 Bringing the recycling of vanadiumbearing wastes generated in the United States to or near 100% has the potential to greatly expand the availability of vanadium products of domestic origin. Such recycling will occur naturally with higher vanadium prices, as refiners typically receive a metals credit from vanadium producers based on vanadium sale price, but can also be encouraged through the consideration of recycling tax deductions or credits as well as EPA review of their regulatory authority governing disposal of hazardous waste. For example, additional information submitted by industry to the Department reported that the 2020 International Maritime Organization’s (IMO) regulation requiring the reduction of allowable levels of sulfur in maritime fuels from 3.5% to 0.5% has increased refinery catalyst use, which is expected to result in increased availability of spent catalyst used to produce vanadium.13 Similar regulations in the United States would support both the EPA mission to protect human health and the environment and domestic production of critical minerals. Recommendation 3—Continue USG Actions To Support Critical Minerals Many of the challenges domestic vanadium producers face are not unique to vanadium; with this investigation the Department has completed Section 232 investigations on four of the 35 critical minerals. While the specific challenges of each critical mineral are distinct, many industrial trends are similar and 11 https://www.commerce.gov/sites/default/files/ 2020-01/Critical_Minerals_Strategy_Final.pdf. 12 67 FR 30811 and https://archive.epa.gov/ epawaste/hazard/web/pdf/backdoc.pdf. 13 https://ig9we1q348z124x3t10meupcwpengine.netdna-ssl.com/wp-content/uploads/ AMG-Annual-Report-Web-FINAL.pdf. PO 00000 Frm 00006 Fmt 4701 Sfmt 4703 broad solutions may be more effective than individual targeting. There are several ongoing and proposed U.S. government actions that support the domestic supply of critical minerals. Continuing to pursue these actions will provide necessary support to the domestic vanadium industry as well as to the broader critical minerals sector. Among the key actions that will enable strong domestic critical minerals industries are Executive Order 13817 and the resulting Federal Strategy, Executive Order 13953 (Addressing the Threat to the Domestic Supply Chain From Reliance on Critical Minerals From Foreign Adversaries and Supporting the Domestic Mining and Processing Industries), proposals from the USG Nuclear Fuel Working Group, work being carried out by the Titanium Sponge Working Group, and legislative action to support domestic production of critical minerals. Since the list of suitable substitutions for vanadium in steel and certain chemical processes includes other minerals on the critical minerals list (including manganese, niobium, titanium, tungsten, and platinum), actions to support production of critical minerals as a whole would also help to address domestic vanadium supply challenges. The Federal Strategy, developed pursuant to Executive Order 13817, was announced in June 2019, with six calls to action containing 24 goals and 61 recommended actions that federal agencies should pursue to improve the availability of critical minerals and their downstream supply chains in the United States to help reduce the country’s vulnerability to supply chain disruptions. Many of the identified goals of the Federal Strategy are consistent with the findings and recommendations of this investigation, including: (a) Support for downstream materials production capacity; (b) enhancing the National Defense Stockpile’s ability to meet military as well as civilian requirements; (c) securing access to critical minerals through trade and investment with allies; (d) identifying methods to encourage secondary use of critical minerals; and (e) streamlining permit processes for critical mineral projects. The President issued Executive Order 13953, ‘‘Addressing the Threat to the Domestic Supply Chain From Reliance on Critical Minerals From Foreign Adversaries and Supporting the Domestic Mining and Processing Industries,’’ (E.O. 13953), in September 2020. The Order identifies the need to ensure a consistent supply of critical E:\FR\FM\18NON5.SGM 18NON5 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices minerals and declares a national emergency to reduce the threat posed by the country’s undue reliance on critical minerals from foreign adversaries. Many of the actions taken pursuant to E.O. 13953 will support the domestic vanadium industry, particularly vanadium mining. In addition to Executive actions, there have recently been several legislative proposals that would provide support for vanadium and other critical minerals. Examples include H.R. 8143 (also known as the Reclaiming American Rare Earths (RARE) Act) and S. 3694 (the Onshoring Rare Earths (ORE) Act of 2020). Both bills as written restrict the definition of critical minerals to a subset of those identified by the Department of Interior in response to E.O. 13817, and need to be expanded to include vanadium and other critical minerals, but otherwise have features of significant value to the domestic vanadium industry. In addition to allowing a tax deduction for investments in property used for mining, reclaiming, or recycling critical materials, these bills would support the function of critical minerals in the broader economy by providing grants or allowing tax deductions for critical minerals extracted in the United States. In addition to expanding the bills to include vanadium (as noted above), in order to provide the most value to the country, the Department recommends that any legislation should ensure that extraction incentives include recycling and reclamation. Finally, the Department’s Section 232 investigations into imports of Uranium and Titanium sponge resulted in the creation of USG working groups tasked with developing recommendations additional to those made in each report. Given the significant intersections between the vanadium industry and the uranium and titanium industries, the implementation of the working groups’ recommendations will support the vanadium industry as well. II. Legal Framework khammond on DSKJM1Z7X2PROD with NOTICES5 A. Section 232 Requirements Section 232 of the Trade Expansion Act of 1962, as amended, provides the Secretary with the authority to conduct investigations to determine the effect on the national security of the United States of imports of any article. It authorizes the Secretary to conduct an investigation if requested by the head of any department or agency, upon application of an interested party, or upon his own motion. See 19 U.S.C. 1862(b)(1)(A). VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 Section 232 directs the Secretary to submit to the President a report with recommendations for ‘‘action or inaction under this section’’ and requires the Secretary to advise the President if any article ‘‘is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.’’ See 19 U.S.C. 1862(b)(3)(A). Section 232(d) directs the Secretary and the President to, in light of the requirements of national security and without excluding other relevant factors, give consideration to the domestic production needed for projected national defense requirements and the capacity of the United States to meet national security requirements. See 19 U.S.C. 1862(d). Section 232(d) also directs the Secretary and the President to ‘‘recognize the close relation of the economic welfare of the Nation to our national security, and . . . take into consideration the impact of foreign competition on the economic welfare of individual domestic industries’’ by examining whether any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports, or other factors, results in a ‘‘weakening of our internal economy’’ that may impair the national security.14 See 19 U.S.C. 1862(d). Once an investigation has been initiated, Section 232 mandates that the Secretary provide notice to the Secretary of Defense that such an investigation has been initiated. Section 232 also requires the Secretary to do the following: (1) ‘‘Consult with the Secretary of Defense regarding the methodological and policy questions raised in [the] investigation;’’ (2) ‘‘Seek information and advice from, and consult with, appropriate officers of the United States;’’ and (3) ‘‘If it is appropriate and after reasonable notice, hold public hearings or otherwise afford interested parties an opportunity to present information and advice relevant to such investigation.’’ 15 See 19 U.S.C. 1862(b)(2)(A)(i)–(iii). 14 An investigation under Section 232 looks at excessive imports for their threat to the national security, rather than looking at unfair trade practices as in an antidumping investigation. 15 Department regulations (i) set forth additional authority and specific procedures for such input from interested parties, see 15 CFR 705.7 and 705.8, and (ii) provide that the Secretary may vary or dispense with those procedures ‘‘in emergency situations, or when in the judgment of the Department, national security interests require it.’’ Id., 705.9. PO 00000 Frm 00007 Fmt 4701 Sfmt 4703 64753 As detailed in the report, all of the requirements set forth above have been satisfied. In conducting the investigation, Section 232 permits the Secretary to request that the Secretary of Defense provide an assessment of the defense requirements of the article that is the subject of the investigation. See 19 U.S.C. 1862(b)(2)(B). Upon completion of a Section 232 investigation, the Secretary is required to submit a report to the President no later than 270 days after the date on which the investigation was initiated. See 19 U.S.C. 1862(b)(3)(A). The report must: (1) Set forth ‘‘the findings of such investigation with respect to the effect of the importation of such article in such quantities or under such circumstances upon the national security;’’ (2) Set forth, ‘‘based on such findings, the recommendations of the Secretary for action or inaction under this section;’’ and (3) ‘‘If the Secretary finds that such article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security . . . so advise the President.’’ See 19 U.S.C. 1862(b)(3)(A). All unclassified and non-proprietary portions of the report submitted by the Secretary to the President must be published. Within 90 days after receiving a report in which the Secretary finds that an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security, the President shall: (1) ‘‘Determine whether the President concurs with the finding of the Secretary’’; and (2) ‘‘If the President concurs, determine the nature and duration of the action that, in the judgment of the President, must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security’’ (see 19 U.S.C. 1862(c)(1)(A)). B. Discussion While Section 232 does not specifically define ‘‘national security,’’ both Section 232, and the implementing regulations at 15 CFR part 705, contain non-exclusive lists of factors that the Secretary must consider in evaluating the effect of imports on the national security. Congress in Section 232 explicitly determined that ‘‘national security’’ includes, but is not limited to, ‘‘national defense’’ requirements. See 19 U.S.C. 1862(d)). In a 2001 report, the Department determined that ‘‘national defense’’ includes both the defense of the United States directly, and the ‘‘ability to E:\FR\FM\18NON5.SGM 18NON5 64754 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES5 project military capabilities globally.’’ 16 The Department also concluded in 2001 that, ‘‘in addition to the satisfaction of national defense requirements, the term ‘‘national security’’ can be interpreted more broadly to include the general security and welfare of certain industries, beyond those necessary to satisfy national defense requirements, which are critical to the minimum operations of the economy and government.’’ The Department called these ‘‘critical industries.’’ 17 While this report uses these reasonable interpretations of ‘‘national defense’’ and ‘‘national security,’’ it uses the more recent 16 critical infrastructure sectors identified in Presidential Policy Directive 21 18 instead of the 28 industry sectors identified in the 2001 Report.19 Section 232 directs the Secretary to determine whether imports of any article are being made ‘‘in such quantities’’ or ‘‘under such circumstances’’ that those imports ‘‘threaten to impair the national security.’’ See 19 U.S.C. 1862(b)(3)(A). The statutory construction makes clear that either the quantities or the circumstances, standing alone, may be sufficient to support an affirmative finding. The two may also be considered together, particularly when the circumstances act to prolong or magnify the impact of the quantities being imported. The statute does not define a threshold for when ‘‘such quantities’’ of imports are sufficient to threaten to impair the national security, nor does it define the ‘‘circumstances’’ that might qualify. Similarly, the statute does not require a finding that the quantities or circumstances are impairing the national security. Instead, the threshold question under Section 232 is whether the quantities or circumstances ‘‘threaten to impair the national security.’’ See 19 U.S.C. 1862(b)(3)(A). This makes evident that Congress expected an affirmative finding under Section 232 before an actual impairment of the national security.20 16 Department of Commerce, Bureau of Export Administration; The Effects of Imports of Iron Ore and Semi-Finished Steel on the National Security; Oct. 2001 (‘‘2001 Iron and Steel Report’’) at 5. 17 Id. 18 Presidential Policy Directive 21; Critical Infrastructure Security and Resilience; February 12, 2013 (‘‘PPD–21’’). 19 See Op. Cit. at 16. 20 The 2001 Iron and Steel Report used the phrase ‘‘fundamentally threaten to impair’’ when discussing how imports may threaten to impair national security. See 2001 Iron and Steel Report at 7 and 37. Because the term ‘‘fundamentally’’ is not included in the statutory text and could be perceived as establishing a higher threshold, the VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 Section 232(d) contains a list of factors for the Secretary to consider in determining if imports ‘‘threaten to impair the national security’’ 21 of the United States, and this list is mirrored in the implementing regulations. See 19 U.S.C. 1862(d) and 15 CFR 705.4. Congress was careful to note twice in Section 232(d) that the list provided, while mandatory, is not exclusive.22 Congress’ illustrative list is focused on the ability of the United States to maintain the domestic capacity to provide the articles in question as needed to maintain the national security of the United States.23 Congress broke the list of factors into two equal parts using two separate sentences. The first sentence focuses directly on ‘‘national defense’’ requirements, thus making clear that ‘‘national defense’’ is a subset of the broader term ‘‘national security.’’ The second sentence focuses on the broader economy and expressly directs that the Secretary and the President ‘‘shall recognize the close relation of the economic welfare of the Nation to our national security.’’ 24 See 19 U.S.C. 1862(d). In addition to ‘‘national defense’’ requirements, two of the factors listed in Secretary expressly does not use the qualifier in this report. The statutory threshold in Section 232(b)(3)(A) is unambiguously ‘‘threaten to impair’’ and the Secretary adopts that threshold without qualification. 19 U.S.C. 1862(b)(3)(A). 21 19 U.S.C. 1862(b)(3)(A). 22 See 19 U.S.C. 1862(d) (‘‘the Secretary and the President shall, in light of the requirements of national security and without excluding other relevant factors . . .’’ and ‘‘serious effects resulting from the displacement of any domestic products by excessive imports shall be considered, without excluding other factors . . .’’). 23 This reading is supported by Congressional findings in other statutes. See, e.g., 15 U.S.C. 271(a)(1)(‘‘The future well-being of the United States economy depends on a strong manufacturing base . . .’’) and 50 U.S.C. 4502(a)(‘‘Congress finds that—(1) the security of the United States is dependent on the ability of the domestic industrial base to supply materials and services . . . (2)(C) to provide for the protection and restoration of domestic critical infrastructure operations under emergency conditions . . . (3) . . . the national defense preparedness effort of the United States government requires—(C) the development of domestic productive capacity to meet—(ii) unique technological requirements . . . (7) much of the industrial capacity that is relied upon by the United States Government for military production and other national defense purposes is deeply and directly influenced by—(A) the overall competitiveness of the industrial economy of the United States; and (B) the ability of industries in the United States, in general, to produce internationally competitive products and operate profitably while maintaining adequate research and development to preserve competitiveness with respect to military and civilian production; and (8) the inability of industries in the United States, especially smaller subcontractors and suppliers, to provide vital parts and components and other materials would impair the ability to sustain the Armed Forces of the United States in combat for longer than a short period.’’). 24 Accord 50 U.S.C. 4502(a). PO 00000 Frm 00008 Fmt 4701 Sfmt 4703 the second sentence of Section 232(d) are particularly relevant in this investigation. Both are directed at how ‘‘such quantities’’ of imports threaten to impair national security See 19 U.S.C. 1862(b)(3)(A). In administering Section 232, the Secretary and the President are required to ‘‘take into consideration the impact of foreign competition on the economic welfare of individual domestic industries’’ and any ‘‘serious effects resulting from the displacement of any domestic products by excessive imports’’ in ‘‘determining whether such weakening of our internal economy may impair the national security.’’ See 19 U.S.C. 1862(d). After careful examination of the facts in this investigation, the Secretary has determined that the present quantities and circumstance of vanadium imports do not threaten to impair the national security, as defined in Section 232. Although vanadium is critical to national security and the United States is currently dependent on imported sources of vanadium, several significant factors, including the health of the U.S. industry, availability of idle domestic resources, existing USG actions, and the importance of vanadium to competitive domestic steel and titanium industries, indicate that imports of vanadium do not threaten to impair national security. III. Investigative Process A. Initiation of Investigation On November 19, 2019, AMG Vanadium LLC and U.S. Vanadium LLC (hereafter ‘‘Applicants’’) petitioned the Secretary to conduct an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, to determine the effect of imports of vanadium on the national security. Upon receipt of the petition, the Department carefully reviewed the material facts outlined in the petition and held initial discussions internally as well as with the Department of Defense. Legal counsel at the Department also carefully reviewed the petition to ensure it met the requirements of the Section 232 statute and the implementing regulations. Subsequently, on May 28, 2020, the Department accepted the petition and initiated the investigation. Pursuant to Section 232(b)(1)(b), the Department notified the U.S. Department of Defense of its intent to conduct an investigation in a May 21, 2020 letter from Secretary Ross to then Secretary of Defense, Mark Esper (see Appendix A). B. Public Comments On June 3, 2020, the Department published a Federal Register Notice (see E:\FR\FM\18NON5.SGM 18NON5 khammond on DSKJM1Z7X2PROD with NOTICES5 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices Appendix B—Federal Register, Vol. 85, No. 107, 34179) announcing the initiation of an investigation to determine the effect of imports of vanadium on the national security. The notice also announced the opening of the public comment period. In the notice, the Department invited interested parties to submit written comments, opinions, data, information, or advice relevant to the criteria listed in Section 705.4 of the National Security Industrial Base Regulations (15 CFR 705.4) as they affect the requirements of national security, including the following: (a) Quantity of the articles subject to the investigation and other circumstances related to the importation of such articles; (b) Domestic production capacity needed for these articles to meet projected national defense requirements; (c) The capacity of domestic industries to meet projected national defense requirements; (d) Existing and anticipated availability of human resources, products, raw materials, production equipment, facilities, and other supplies and services essential to the national defense; (e) Growth requirements of domestic industries needed to meet national defense requirements and the supplies and services including the investment, exploration and development necessary to assure such growth; (f) The impact of foreign competition on the economic welfare of any domestic industry essential to our national security; (g) The displacement of any domestic products causing substantial unemployment, decrease in the revenues of government, loss of investment or specialized skills and productive capacity, or other serious effects; (h) Relevant factors that are causing or will cause a weakening of our national economy; and (i) Any other relevant factors The initial public comment period ended on July 20, 2020, and was followed by a public comment rebuttal period, which ended on August 17, 2020. Following requests from the general public, the Department published a copy of the Applicants’ petition on September 25, 2020 and opened an additional public comment period, which ended October 9, 2020. The Department received 32 responsive submissions during the initial public comment period, which were posted on Regulations.gov for public review and rebuttal filing. The VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 Department received 47 rebuttal filings from 11 commenters, which were posted on Regulations.gov for public review. During the additional comment period, the Department received and posted seven comments on Regulations.gov. Parties who submitted comments included representatives of the domestic vanadium production industry, representatives of the domestic uranium industry, representatives of the foreign vanadium production industry, consumers of vanadium products from the steel, titanium, and energy storage industries, as well as representatives of foreign governments, and other concerned organizations. The Department carefully reviewed all of the public comments and factored them into the investigative process. The public comments of key stakeholders are summarized in Appendix C, which also includes a link to the docket number (BIS–2020–0002) under which all public comments can be viewed in full on Regulations.gov. C. Information Gathering and Data Collection Activities Due to the limited number of firms engaged in the U.S. vanadium industry, it was determined that a public hearing was not necessary to conduct a comprehensive investigation. In lieu of holding a public hearing on this investigation, the Department issued a separate mandatory survey (see Appendix E) to participants in the vanadium production and distribution industry, collecting both qualitative and quantitative information. The survey was sent to 34 companies with the ability to develop, produce, or distribute vanadium products for use in the United States. Eight of these companies did not have locations in the United States, and were invited to participate in the survey on a voluntary basis. The surveys provided a method for respondents to disclose confidential and non-public information. These surveys, to which response was mandatory for domestic respondents, were conducted using statutory authority pursuant to Section 705 of the Defense Production Act of 1950, as amended (50 U.S.C. 4555) (DPA), and collected detailed information concerning factors such as imports/exports, production, capacity utilization, employment, operating status, global competition, and financial information. The resulting data provided the Department with detailed industry information that was otherwise not publicly available and was needed to effectively conduct analysis for this investigation. PO 00000 Frm 00009 Fmt 4701 Sfmt 4703 64755 The Department deems the information furnished in the survey responses confidential and will not publish or disclose it except in accordance with Section 705 of the DPA, which prohibits the publication or disclosure of this information unless the President determines that the withholding of such information is contrary to the interest of the national defense. Therefore, the information submitted to the Department in response to the survey will not be shared with any non-government entity other than in aggregate form. D. Interagency Consultation The Department consulted with the Department of Defense’s Office of Industrial Policy and the Defense Logistics Agency, regarding methodological and policy questions that arose during the investigation. The Department also consulted with other U.S. Government agencies with expertise and information regarding the vanadium industry including the Department of Energy, the Department of State, the Office of the United States Trade Representative, the Department of Homeland Security, the Environmental Protection Agency, and the Department of Interior’s U.S. Geological Survey. IV. Product Scope of Investigation The scope of this investigation defined vanadium products at the Harmonized Tariff Schedule of the United States (HTS) 10-digit level. The nine product categories and related HTS codes covered by this report are shown below in Figure 1. FIGURE 1—VANADIUM PRODUCT SCOPE OF THE INVESTIGATION Heading/subheading/product Vanadium Oxides ................. Ferrovanadium ...................... Vanadium Carbides .............. Vanadates ............................. Vanadium Ore and Concentrates ........................... Ash and Residues Containing Vanadium .............. Vanadium Sulfate ................. Vanadium Hydrides, Nitrides, Azides, Silicides, and Borides .............................. Vanadium, Unwrought and Wrought ............................. 10 Digit HTS code 2825.30.0010 2825.30.0050 7202.92.0000 2849.90.5000 2841.90.1000 2615.90.6090 2620.40.0030 2620.99.1000 2833.29.3000 2850.00.2000 8112.92.7000 8112.99.2000 Source: United States International Trade Commission and U.S. Department of Commerce, Bureau of Industry and Security. E:\FR\FM\18NON5.SGM 18NON5 64756 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES5 In order to ensure that the full vanadium production process was covered, these HTS codes include vanadium products as well as vanadium-containing precursors. Vanadium is most commonly traded as vanadium oxides (typically vanadium pentoxide (V2O5)) and ferrovanadium (FeV), with usage in steelmaking accounting for the vast majority of consumption. Detailed information was collected in the Department’s survey responses from U.S. vanadium producers regarding vanadium-containing products. Data throughout this report is presented, to the extent possible, in kilograms or metric tons of contained vanadium. For example, vanadium pentoxide is 56% vanadium by weight, while vanadium content in ferrovanadium varies from 35% to 80% (though is typically consistent for a given producer). Prices of vanadium pentoxide, in keeping with industry conventions, are quoted in U.S. Dollars per pound of vanadium pentoxide (not vanadium content). This report also considers the state of industries that depend on vanadium, in particular the U.S. titanium and steel industries, both of which manufacture materials that the U.S. government has recognized as critical to national VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 security. As the Department is aware that the principal customers of vanadium are steel producers, understanding potential ramifications on the U.S. steel industry was necessary to ensure a complete analysis of the effect of vanadium imports on the national security. Vanadium is also a key element in the production of titanium alloy products that are critical to national security, with titanium sponge the subject of a recent Section 232 investigation and the focus of an ongoing working group. The Secretary’s recommendations consider the interdependence of the U.S. vanadium industry and these crucial U.S. industries. V. Background on U.S. Vanadium Industry A. Vanadium Production Vanadium is produced through three general methods: primary production (mining), co-production (from mined ore in concert with steelmaking), and secondary production (from residues and waste materials). Nearly all vanadium in the United States is generated through secondary production, with some vanadium mining occurring together with uranium mining in sandstone-hosted deposits. PO 00000 Frm 00010 Fmt 4701 Sfmt 4703 Currently there is one primary producer of vanadium in the United States: Energy Fuels Resources (USA), Inc. (Energy Fuels). Although Energy Fuels’ vanadium production activities are dependent on vanadium market prices, the company also may produce vanadium as a by-product of uranium mining, depending on uranium market prices. The United States had no primary production of vanadium from 2014 to 2018; Energy Fuels restarted production in 2019 following a surge in vanadium prices.25 The company produced approximately 1.8 million pounds of vanadium pentoxide in 2019—equivalent to approximately 460,000 kilograms of contained vanadium—prior to ceasing production ‘‘due to weak vanadium market conditions.’’ 26 Energy Fuels’ production accounted for under 1% of estimated worldwide primary- and co-production in 2019, with the remainder produced in four countries: China, Russia, South Africa, and Brazil (see Figure 2). 25 United States Geological Survey Mineral Commodity Summaries—Vanadium, https:// www.usgs.gov/centers/nmic/vanadium-statisticsand-information. 26 Energy Fuels, Inc. 2019 SEC Form 10–K, https://www.energyfuels.com/financials. E:\FR\FM\18NON5.SGM 18NON5 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices 64757 FIGURE 2—ESTIMATED WORLDWIDE MINE PRODUCTION OF VANADIUM [metric tons] Country 2015 2016 2017 2018 2019 China .................................................................................... Russia .................................................................................. South Africa ......................................................................... Brazil .................................................................................... United States ....................................................................... 42,000 16,000 12,000 6,000 0 45,000 16,000 10,000 8,000 0 40,000 18,000 7,960 5,210 0 40,000 18,000 7,700 5,500 0 40,000 18,000 8,000 7,000 460 Total .............................................................................. 76,000 79,000 71,200 71,200 73,000 Source: United States Geological Survey Mineral Commodity Summaries—Vanadium, https://www.usgs.gov/centers/nmic/vanadium-statisticsand-information, and Energy Fuels 2019 SEC 10–K filing. Energy Fuels sold approximately 50,000 of the 460,000 kilograms of contained vanadium it produced in 2019, with the remainder kept in inventory.27 The company reports that its U.S. mines contain 6.6 million kilograms of measured vanadium content, with another 3.6 million kilograms indicated or inferred.28 Energy Fuels also operates the only U.S. facility that can process both vanadium ore and conventional uranium, the White Mesa Mill. Two Canada-based companies are in the process of exploring the development of mines located in the United States. In May 2020, First Vanadium Corporation announced the results of its Preliminary Economic Assessment (PEA) for an open pit mine near Carlin, Nevada, and forecast 16 years of vanadium production capabilities totaling 180 million pounds of vanadium pentoxide, equivalent to 46 million kilograms of vanadium content.29 The second company, Silver Elephant Mining, owns Nevada Vanadium LLC, which is in the process of developing the Gibellini vanadium project near Eureka, Nevada. The Gibellini project is in the permitting process, with the Bureau of Land Management expected to reach a Fuels, Inc. 2019 Annual Presentation, https://www.energyfuels.com/presentation. 28 Ibid. 29 ‘‘First Vanadium Announces Positive Preliminary Economic Assessment for the Carlin Vanadium Project in Nevada’’, https:// www.firstvanadium.com/index.php/news/2020/ 548-irstanadiumnnouncesositiver eliminaryconomicsse20200511. khammond on DSKJM1Z7X2PROD with NOTICES5 27 Energy VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 decision by August 2021.30 The company plans to begin production in late 2023, producing 130 million pounds of vanadium pentoxide (33 million kilograms of vanadium content) over 14 years.31 Other domestic vanadium resources exist, including Western Uranium & Vanadium’s Sunday Mine Complex in Colorado and Anfield Resources’ Velvet-Wood Mine in Utah, both of which have previously produced vanadium and have the potential to provide primary sources of vanadium, should market conditions support such production. In 2017, the United States Geological Survey (USGS) listed a total of 18 vanadium deposits in the United States, though data was not available on the extent of the deposits for most.32 The identification of most of these deposits is drawn from assessments carried out in 1968 and 1975 by the American Institute of Mining, Metallurgical, and Petroleum Engineers and the U.S. Geological Survey.33 30 Bureau of Land Management Accepting Comments for Gibellini Mine, August 17, 2020. Available at https://www.blm.gov/press-release/ bureau-land-management-accepting-commentsgibellini-mine. 31 Silver Elephant Mining Corporate Presentation: Gibellini Vanadium, https:// www.silverelephantmining.com/projects/gibellinivanadium/. 32 Vanadium: Chapter U of Critical Mineral Resources of the United States—Economic and Environmental Geology Prospects for Future Supply (2017). https://pubs.usgs.gov/pp/1802/u/ pp1802u.pdf. 33 Fischer, R.P., 1968, The uranium and vanadium deposits of the Colorado Plateau region, in Ridge, J.D., ed., Ore deposits of the United States, 1933–1967: New York, N.Y., American Institute of Mining, Metallurgical, and Petroleum Engineers; Fischer, R.P., 1975, Geology and resources of basemetal vanadate deposits: U.S. Geological Survey PO 00000 Frm 00011 Fmt 4701 Sfmt 4703 Worldwide, most vanadium is produced via co-production with steelmaking, with vanadium-bearing iron ore used in steel furnaces that produce a vanadium slag that is further converted into vanadium pentoxide and ferrovanadium. Co-production accounted for 71% of global vanadium production in 2019.34 The concentrations of vanadium-bearing iron ore in China, Russia, and South Africa have made co-production more economically feasible in these countries than in others. The main method of vanadium production in the United States is secondary production, using fossil fuel spent catalysts, residues, and ashes as feedstock. Fossil fuels can produce vanadium-bearing waste both through the use of vanadium catalysts used in the refining process and in the vanadium-rich residues generated from the burning of fuels high in vanadium content. After recovery, the spent catalysts and residues can be processed into vanadium pentoxide and ferrovanadium (see Figure 3). Secondary production of vanadium accounted for an estimated 11% of worldwide vanadium production in 2019, with the United States accounting for roughly one-third of the worldwide total (4% of total global production).35 BILLING CODE 3510–33–P Professional Paper 926–A, https://pubs.er.usgs.gov/ publication/pp926A and Fischer, R.P., 1975, Vanadium resources in titaniferous magnetite deposits: U.S. Geological Survey Professional Paper 926–B, https://pubs.er.usgs.gov/publication/pp926B. 34 Bushveld Minerals, About Vanadium, https:// www.bushveldminerals.com/about-vanadium/. 35 Ibid. E:\FR\FM\18NON5.SGM 18NON5 64758 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices Figure 3: Vanadium Processing Routes Vanadiun1 Processing Routes •· Three Vanadium processing rout.es o Primary.• Co Product, and Se,conda:ry I Mh1eral P['()Ciildil'll I f1V Cltmnicals I I '.Fi Master AUo,111 '.Ii.Muter .AUO)r$ I .FeeV OU Refi11.ins Sperit Cal:ailyst OH Power Plant Burning Ti Mut/1$' Ruidue~ Alh:iylli .Proclt1tor V:10,, V:Cl,· I I Cl1cmiad11 Fe'V I I I Source: Petition for Relief Under Section 232, available at https://www.regulations.gov, docket BIS-2020-0002, Document, BIS-2020-0002-0083 VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4703 E:\FR\FM\18NON5.SGM 18NON5 EN18NO21.082</GPH> khammond on DSKJM1Z7X2PROD with NOTICES5 BILLING CODE 3510–33–C Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES5 Both Applicants are secondary producers of vanadium, using vanadium-bearing waste feedstock to produce vanadium products: AMG Vanadium operates a facility in Cambridge, Ohio that produces ferrovanadium, and U.S. Vanadium operates a facility in Hot Springs, Arkansas that produces vanadium pentoxide. In addition to the Applicants there is one other domestic secondary vanadium producer: Gladieux Metals Recycling in Freeport, Texas and one converter: Evergreen Metallurgical (doing business as Bear Metallurgical Company) in Butler, Pennsylvania. AMG Vanadium’s Ohio facility, which was originally built by the Vanadium Corporation of America, dates to 1952. Updates to the facility in 1970, following a merger with the Foote Mineral Corporation, led to the use of vanadium bearing slag as the facility’s raw material input. A further overhaul after the acquisition of the facility by Advanced Metallurgical Group NV in 2007 resulted in AMG Vanadium’s current use of spent catalyst as feedstock.36 AMG Vanadium is the country’s largest producer of ferrovanadium, with average annual production from 2016 to 2019 of [TEXT REDACTED].37 As stated above, the company uses vanadiumbearing spent catalyst as feedstock; [TEXT REDACTED].38 The completion of a new facility in Zanesville, Ohio (approximately 25 miles from its existing Cambridge facility) will allow AMG Vanadium to more than double its ferrovanadium production capacity to 5.5 million kilograms per year.39 The new facility is expected to be completed in 2021, at a cost of just over $200 million, and will support approximately 100 new jobs.40 The company has indicated that its expansion makes sense despite low 36 AMG Vanadium: Our History, at https://amgv.com/timeline_amg_v/. 37 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. 38 Ibid. 39 AMG Vanadium to Duplicate Ohio Recycling Facility. https://www.spglobal.com/ marketintelligence/en/news-insights/trending/ 2zqx3jqhyx72gfgkcowuzq2. 40 AMG Vanadium Constructing a Second Ohio Plant, Investing More Than $200 Million. https:// www.jobsohio.com/news/posts/amg-vanadiumconstructing-a-second-ohio-plant-investing-morethan-200-million/. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 vanadium prices, based on the fees it receives from refiners to process spent catalyst, which they expect to exceed their operating costs in 2021.41 [TEXT REDACTED] 42 In October 2019, U.S. Vanadium LLC (U.S. Vanadium) purchased the vanadium production facility located in Hot Springs, Arkansas, from EVRAZ Stratcor (Stratcor), which had owned the facility since 2006. Vanadium production in Hot Springs dates from mining and milling operations established in 1966 by Union Carbide Corporation, which sold the mill to Stratcor in 1986 and closed the mine in 1989.43 U.S. Vanadium was the only company to produce vanadium pentoxide in the United States in 2020, following Energy Fuels’ cessation of production and the ongoing idling of Gladieux Metals Recycling. [TEXT REDACTED] 44 Gladieux Metals Recycling (Gladieux) is the owner of an idle vanadium production facility in Freeport, Texas, which it purchased out of bankruptcy from Gulf Chemical and Metallurgical Corporation (Gulf) in 2017.45 Gulf, which was majority-owned by the French company Eramet, had entered into bankruptcy and idled the vanadium processing facility as a result of low vanadium and molybdenum prices as well as the costs arising from environmental challenges. These costs included 11 felony pollution charges and a resulting $2.75 million fine in 2010, a $7.5 million fine in 2013, and over $50 million in capital expenditures related to environmental matters.46 41 AMG Annual General Meeting Minutes (May 1, 2019), as provided in public comments by Bushveld Minerals Limited, available at https:// www.regulations.gov/document?D=BIS-2020-00020013. 42 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. 43 Vanadium Mining, Encyclopedia of Arkansas. https://encyclopediaofarkansas.net/entries/ vanadium-mining-5915/. 44 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. 45 Callahan, Erinn. ‘‘Recycling company buys Gulf Chemical.’’ The Facts, May 16, 2017. https:// thefacts.com/news/article_fe738e6b-8b64-54fbafd0-c66cbe35f63e.html. 46 Gulf Chemical & Metallurgical Corporation Chapter 11 Bankruptcy Filing, as provided in public comments by Bushveld Minerals Limited, available at https://www.regulations.gov/document?D=BIS2020-0002-0013. PO 00000 Frm 00013 Fmt 4701 Sfmt 4703 64759 While the facility has been idle since 2017, Gladieux has been overhauling operations and has invested more than [TEXT REDACTED] to increase the plant’s efficiency and make it more environmentally sound.47 Gladieux expects to restart operations [TEXT REDACTED].48 [TEXT REDACTED]. Gladieux will use spent catalyst as its feedstock; [TEXT REDACTED].49 Bear Metallurgical (Bear) owns a facility in Butler, Pennsylvania, which [TEXT REDACTED], but converts vanadium pentoxide to ferrovanadium, primarily on a fee basis for customers.50 Bear reported that [TEXT REDACTED] 51 Bear produced [TEXT REDACTED].52 Prior to declaring bankruptcy in 2016, Bear was a wholly-owned subsidiary of Gulf Chemical and Metallurgical (Gulf). The company reported entering into bankruptcy because low vanadium and molybdenum prices limited their toll conversion volumes, with their reliance on Gulf being a significant factor; as noted above Gulf itself also declared bankruptcy in 2016, and subsequently idled vanadium pentoxide production.53 Bear was purchased in 2016 by Yilmaden Holding, a subsidiary of the Turkey-based Yildirim Group.54 [TEXT REDACTED]. [TEXT REDACTED] 55 47 Gladieux Metals Recycling. Comment in response to Notice of Request for Public Comments on Section 232 National Security Investigation of Imports of Vanadium, July 20, 2020. https:// www.regulations.gov/document?D=BIS-2020-00020033. 48 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. 49 Ibid. 50 Often referred to as a tolling arrangement, with Bear as the ‘‘toller’’ and their customers, who provide material to be converted, as ‘‘tollees.’’ 51 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. 52 Ibid. 53 Gulf Chemical & Metallurgical Corporation Chapter 11 Bankruptcy Filing, as provided in public comments by Bushveld Minerals Limited, available at https://www.regulations.gov/document?D=BIS2020-0002-0013. 54 Mughal, Sarah. ‘‘Report: Yildirim Unit Wins Tender for Bear Metallurgical Assets.’’ September 11, 2016. S&P Global Market Intelligence. https:// www.spglobal.com/marketintelligence/en/newsinsights/trending/tetcr1ex6irl2ixbbkkqtw2. 55 USGS Vanadium Mineral Commodity Summary, 2020. https://pubs.usgs.gov/periodicals/ mcs2020/mcs2020-vanadium.pdf. E:\FR\FM\18NON5.SGM 18NON5 64760 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices [TEXT [TEXT [TEXT [TEXT [TEXT [TEXT [TEXT REDACTED] REDACTED]. REDACTED]. REDACTED]. REDACTED]. REDACTED]. REDACTED]. [TEXT [TEXT [TEXT [TEXT [TEXT [TEXT [TEXT REDACTED] REDACTED]. REDACTED]. REDACTED]. REDACTED]. REDACTED]. REDACTED]. [TEXT [TEXT [TEXT [TEXT [TEXT [TEXT [TEXT REDACTED] REDACTED]. REDACTED]. REDACTED]. REDACTED]. REDACTED]. REDACTED]. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4725 E:\FR\FM\18NON5.SGM 18NON5 EN18NO21.083</GPH> khammond on DSKJM1Z7X2PROD with NOTICES5 [TEXT REDACTED] Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices B. Vanadium Uses The vast majority of vanadium is used in steelmaking. Estimates for both U.S. and worldwide usage put the steel industry at 90 to 93% of total vanadium usage.56 The inclusion of small amounts of vanadium—typically well under 1% of the total volume—into steel adds ‘‘strength, toughness, and wear resistance,’’ as well as oxidation prevention.57 The resulting highstrength, low-alloy (HSLA) steel products are common in the construction industry, particularly in earthquake-resistant rebar, as well as in buildings, bridges, and cranes. HSLA steel products are also used in the automotive sector, in shipbuilding, and in various defense-related uses such as armor plating.58 Additionally, use of vanadium is common in tool steel, with chromium-vanadium steel commonly used in hand tools with vanadium concentrations of 0.15 to 0.2%.59 Vanadium is also used at significantly higher concentrations in high speed steel used in cutting and drilling tools, as well as aerospace applications such as gas engine turbines, at concentrations that can exceed 5% vanadium. Substitution for vanadium is possible in most steel products. Molybdenum produces similar mechanical properties in tool steels and is substituted on the basis of price and the existence of preestablished supply chains.60 In HSLA steels, niobium is a standard substitute for vanadium, though ‘‘significant technical adjustments to the steel production process’’ are required.61 Many Chinese steel mills, for instance, khammond on DSKJM1Z7X2PROD with NOTICES5 56 Vanadium: Chapter U of Critical Mineral Resources of the United States—Economic and Environmental Geology Prospects for Future Supply (2017). https://pubs.usgs.gov/pp/1802/u/ pp1802u.pdf. 57 Ibid. 58 Ibid. 59 Which is better for hand tools? ChromiumMolybdenum or Chromium-Vanadium Steel. https://www.tekton.com/crmo-or-crv-steel. 60 Ibid. 61 Vanadium: Chapter U of Critical Mineral Resources of the United States—Economic and Environmental Geology Prospects for Future Supply (2017). https://pubs.usgs.gov/pp/1802/u/ pp1802u.pdf. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 carried out this substitution in 2018 in response to a surge in vanadium prices.62 Nonetheless, vanadium is generally preferred in applications such as rebar, though Roskill—a major metal and chemical industry research and consultancy group—notes that ‘‘once mills are accustomed to niobium and have made the technical changes, they are unlikely to fully switch back.’’ 63 Compared to its use in steel alloys, the aggregate use of vanadium in titanium alloys accounts for a much smaller percentage—approximately 3 to 5% of total vanadium demand—but it is ‘‘irreplaceable in aerospace applications.’’ 64 Most titanium products contain vanadium; the vanadium is typically incorporated into the titanium melt process as a master alloy that is 65% vanadium and 35% aluminum, producing a variety of titanium mill products. The most common is Ti-6Al4V, a product that is 4% vanadium by weight and between 12 and 14% by cost.65 Other titanium alloys contain up to 15% vanadium by weight. Most titanium products are used in the aerospace and military sectors, which account for approximately twothirds of titanium mill product demand.66 Titanium accounts for approximately 14% of the Boeing 787 airframe, for instance, and up to 39% of the weight of F–22 fighter jet.67 Other 62 Press Release: Roskill: Niobium industry looking for a future beyond steel. https:// www.globenewswire.com/news-release/2020/02/10/ 1982500/0/en/Roskill-Niobium-industry-lookingfor-a-future-beyond-steel.html. 63 Vanadium Outlook to 2029, 18th Edition, Publicly available summary, https://roskill.com/ market-report/vanadium/. 64 Vanadium: Chapter U of Critical Mineral Resources of the United States—Economic and Environmental Geology Prospects for Future Supply (2017). https://pubs.usgs.gov/pp/1802/u/ pp1802u.pdf. 65 Titanium Metals Corporation Public Comment on Section 232 National Security Investigation of Imports of Vanadium. Available at https:// www.regulations.gov/document?D=BIS-2020-00020019. 66 Olin, Chris. Titanium Market Update: Highlighting Global Trends in 2017. Longbow Research. 67 Boeing 787: From the Ground Up. https:// www.boeing.com/commercial/aeromagazine/ articles/qtr_4_06/article_04_2.html and U.S. PO 00000 Frm 00015 Fmt 4701 Sfmt 4703 64761 national security titanium applications include ship components, military ground vehicles, and armor. Industrial use of titanium accounts for approximately 25% of demand; vanadium is used in the chemical industry, power plants, and desalination plants, but these sectors are more likely to use unalloyed ‘‘commercially pure’’ titanium. The primary remaining vanadium uses, accounting for 2 to 4% of total vanadium demand, are categorized as chemical or non-metallurgical use. One key non-metallurgical use is in catalysts, with vanadium-based products being the most common catalysts used for selective catalytic reduction to reduce the production of nitrogen oxides in industrial power plants.68 Vanadium is used as a catalyst in the production of sulfuric acid, itself an important industrial material used in the production of fertilizer, pulp and paper, titanium dioxide, cellulosic fibers and plastics, explosives, electronic chips, batteries, and pharmaceuticals.69 Consumption of sulfuric acid is ‘‘regarded as one of the best indexes of a nation’s industrial development.’’ 70 A significant national security use of vanadium within the chemical industry is in longwave-infrared (LWIR) imaging, used for night vision and targeting systems. Vanadium oxide is the most frequently used material in the bolometers supporting LWIR imaging.71 Department of Commerce. Bureau of Industry and Security. The Effect of Imports of Titanium Sponge on the National Security. 68 Types of Catalysts for SCR Operations, https:// sviindustrial.com/2020/04/08/types-of-catalysts-forscr-operations/. 69 PubChem Sulfuric acid compound summary, NIH National Library of Medicine, National Center for Biotechnology Information. https:// pubchem.ncbi.nlm.nih.gov/compound/Sulfuricacid#section=Uses. 70 National Mineral Information Center, Sulfur Statistics and information. https://www.usgs.gov/ centers/nmic/sulfur-statistics-and-information. 71 Andrew Voshell, Nibir Dhar, Mukti M. Rana, ‘‘Materials for microbolometers: vanadium oxide or silicon derivatives,’’ Proc. SPIE 10209, Image Sensing Technologies: Materials, Devices, Systems, and Applications IV, 102090M (28 April 2017); doi: 10.1117/12.2263999. E:\FR\FM\18NON5.SGM 18NON5 64762 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices An additional chemical use of vanadium is in large scale batteries. This accounts for a very small percentage of current usage—estimated well under 1% of total demand—but is an area in which some researchers have seen potential for significant expansion. Vanadium redox flow batteries (VRBs) were first patented in 1986, and VRB technology was advanced by Pacific Northwest National Laboratory in 2011, significantly shrinking the size of the batteries and increasing temperature tolerance.72 These batteries have attributes that make them valuable for use in energy grids such as longer life cycles, lack electrolyte crosscontamination, and the ability to remain idle without losing capacity.73 The khammond on DSKJM1Z7X2PROD with NOTICES5 72 Yang, Z Gary. It’s Big and Long-Lived, and It Won’t Catch Fire: The Vanadium Redox-Flow Battery. IEEE Spectrum, October 26, 2017. https:// spectrum.ieee.org/green-tech/fuel-cells/its-big-andlonglived-and-it-wont-catch-fire-the-vanadiumredoxflow-battery. 73 Vanadium Redox Flow Batteries: Improving the performance and reducing the cost of vanadium redox flow batteries for large-scale energy storage. October 2013. U.S. Department of Energy Electricity Delivery & Energy Reliability, Energy Storage VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 vanadium accounts for approximately 30% of the cost of a vanadium redox flow battery, requiring between 3 and 6 kilograms of vanadium per kilowatthour of energy storage.74 Estimates of the potential market growth of the vanadium redox flow battery vary wildly, from minimal amounts to estimates exceeding 40% compound annual growth.75 To date, use of vanadium redox flow batteries has not shown sharp growth, in part due to cost. As the Department of Energy noted as part of its 2020 Energy Storage Grand Challenge Draft Roadmap, ‘‘future capital cost reductions will require replacing vanadium with lower cost raw materials to approach the $100/kWh targets required for wider-scale deployment of energy storage.’’ 76 Program. Available at https://www.energy.gov/sites/ prod/files/VRB.pdf. 74 Energy Storage & Vanadium Redox Flow Batteries 101, November 13, 2018. https:// www.bushveldminerals.com/wp-content/uploads/ 2018/11/Energy-Storage-Vanadium-Redox-FlowBatteries-101.pdf. 75 Ibid. 76 Department of Energy, ‘‘Energy Storage Grand Challenge Draft Roadmap’’, available at https:// PO 00000 Frm 00016 Fmt 4701 Sfmt 4703 VI. Global Vanadium Industry Conditions A. Overview Primary and co-production of vanadium is largely undertaken in four countries: China, Russia, South Africa, and Brazil (see Figure 5). In addition to these countries, the United States Geological Survey (USGS) lists known reserves in the United States and Australia. Worldwide resources significantly exceed known reserves, which are considered ‘‘a working inventory of mining companies’ supplies of an economically extractable mineral commodity;’’ global reserves are estimated at 22 million metric tons, with world vanadium resources estimated to exceed 63 million metric tons.77 BILLING CODE 3510–33–P www.energy.gov/energy-storage-grand-challenge/ energy-storage-grand-challenge. 77 United States Geological Survey Mineral Commodity Summaries—Vanadium, https:// www.usgs.gov/centers/nmic/vanadium-statisticsand-information. E:\FR\FM\18NON5.SGM 18NON5 64763 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices 80 ~ 70 V, "C C: re ~ 60 0 ..c: !:::. ] 50 C: ~ 'l:: 40 ...,(I) C: 0 u 30 E ::::, "C re ; 20 > 10 0 2011 2012 II China 2013 Russia 2014 2015 2016 2017 II South Africa 2018 2019 (Est.) Other Countries Source: U.S. Geological Survey khammond on DSKJM1Z7X2PROD with NOTICES5 Countries other than the United States that are in the process of developing significant reserves include Canada and Kazakhstan. Australia already maintains notable vanadium reserves, which it is seeking to expand, but does not have any recorded mine production. The Government of Australia reports nine vanadium production projects underway, with five of these at advanced stages of exploration, and some vanadium production possible in VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 2021.78 One mine—the Windimurra mine—completed a feasibility study in April 2020 and expects to produce 4,250 tons of vanadium content annually.79 The Windimurra mine has successfully produced vanadium in the past, operating from 1999 to 2003 with an annual production capacity of 3,000 78 Submission from the Australian Government to the United States Department of Commerce, Section 232 National Security Investigation into Imports of Vanadium, submitted to https:// www.regulations.gov, docket BIS–2020–0002 July 20, 2020. 79 Ibid. PO 00000 Frm 00017 Fmt 4701 Sfmt 4703 tons contained vanadium.80 Four other Australian projects are in the process of permitting, design, or pilot studies with a total potential annual production of 22,000 tons of contained vanadium.81 80 United States Geological Survey, Vanadium Minerals Yearbook reports. Available at https:// www.usgs.gov/centers/nmic/vanadium-statisticsand-information. 81 Submission from the Australian Government to the United States Department of Commerce, Section 232 National Security Investigation into Imports of Vanadium, submitted to https:// www.regulations.gov, docket BIS–2020–0002 July 20, 2020. E:\FR\FM\18NON5.SGM 18NON5 EN18NO21.084</GPH> BILLING CODE 3510–33–C 64764 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices Several mining projects for vanadiumbearing iron ore in Canada are in exploratory phases. Two are in the Lac Dore´ area of Que´bec, with partial funding provided by the government of Que´bec. One of the two, operated by BlackRock Metals, plans to begin operations in 2021, with cast iron and ferrovanadium as the main products.82 This project is expected to yield 5,200 tons of ferrovanadium annually with 80% vanadium content, to be processed at a nearby facility.83 The second company, VanadiumCorp Resources, is in the exploration phase, with drill testing programs completed in 2019 and a mineral resource estimate completed in October 2020.84 The estimate showed 8 million metric tons of measured magnetite concentrate at 1.2% vanadium pentoxide content, equal to 56,000 tons of contained vanadium, with an additional 324,000 tons indicated and 155,000 tons inferred.85 A third Canadian company, Vanadium One Iron Corporation, released the results of its PEA in February 2020 for its Mont Sorcier property in Que´bec, anticipating the ability to produce five million tons of ore per year with a 0.6% vanadium pentoxide content.86 FIGURE 6—ESTIMATED NEW MINE PRODUCTION POTENTIAL OF SELECT VANADIUM PROJECTS IN CANADA AND AUSTRALIA [In metric tons contained vanadium] Estimated reserves Estimated annual production Country Project Status Australia .................... Australia .................... Australia .................... Atlantic Vanadium: Windimurra Mine ....... Multicom: Saint Elmo Mine ....................... Australian Vanadium Ltd: Australian Vanadium Project. TNG Limited: Mount Peake Mine ............. Technology Metals Australia: Gabanintha Mine. In Development ......................................... Finalizing Environmental Approvals ......... Feasibility Study ........................................ 131,936 112,000 97,152 4,256 5,600 5,715 Engineering Design .................................. Feasibility Study Completed 2019 ............ 124,320 114,688 3,360 7,168 ................................................................... Authorized ................................................. Mineral Resource Estimate Complete ...... 580,096 176,439 379,273 26,099 4,152 10,306 Canada ...................... Total .......................................................... BlackRock Metals: Chibougamou Mine .... VanadiumCorp Resources: Lac Dore´ Project. VanadiumOne: Mont Sorcier Project ........ Preliminary Economic Analysis Complete 117,600 16,800 Canada ...................... Total .......................................................... ................................................................... 673,312 31,258 Australia .................... Australia .................... Australia .................... Canada ...................... Canada ...................... khammond on DSKJM1Z7X2PROD with NOTICES5 Sources: Submission from the Australian Government to the United States Department of Commerce, Section 232 National Security Investigation into Imports of Vanadium, submitted to https://www.regulations.gov, docket BIS–2020–0002 July 20, 2020. BlackRock Mining Project Summary. Available at https://comexqc.ca/en/fiches-de-projet/projet-dexploitation-dun-gisement-fer-vanadiummetaux-blackrock-inc/. VanadiumCorp Reports Lac Dore´ Mineral Resource Estimate. October 29, 2020. Available at https://www.vanadiumcorp.com/releases/ vanadiumcorp-reports-the-lac-dore-mineral-resource-estimate-mre-2/. VanadiumOne Iron Corp. Preliminary Economic Analysis Results, February 2020. Available at https://www.vanadiumone.com/pea-results/. In Kazakhstan, the Ferro-Alloy Resources Group, based in Guernsey and listed on the London and Astana International Stock Exchanges, owns Firma Balusa, LLP, which holds the rights to the Balasausqandiq vanadium deposit in the southern part of the country. The site currently has minimal vanadium production, but has rapid expansion plans, forecasting in 2019 reaching production levels of 4,000 tons contained vanadium in 2020 and 13,000 tons in 2023.87 The projected 2023 production would make Kazakhstan the world’s third leading producer of mined vanadium based on current totals. The company’s production levels appear significantly behind its initial plans, attributed primarily to the COVID–19 pandemic; through August of 2020 the company indicated it had produced 168 tons of vanadium pentoxide (94 tons contained vanadium) from secondary concentrate, and indicated the development of the Balasausqandiq deposit was ongoing.88 The company says it ‘‘plans to become the world’s lowest cost primary producer.’’ 89 Beyond the estimated 73,000 tons of mine-produced vanadium reported worldwide in 2019, secondary production added as much as 30,000 tons to worldwide totals, with most of the additional production in the U.S., Germany, Austria, Japan, and Taiwan.90 Significant producers outside of the U.S. include Treibacher in Austria, AMG Technologies in Germany, Shinko Chemical, Taiyo Koko, and Metal Technology in Japan, and Hong Jing Environment, Plum Movax, and Full Yield Industry of Taiwan. Interest in secondary production has risen in recent years as tightened environmental controls on fuels has increased interest in processing spent catalyst and fossil fuel residues. In addition to their U.S. expansion, AMG is exploring the 82 ‘‘Me ´ taux BlackRock a un client pour son titane’’, Radio-Canada, May 8, 2019, https:// ici.radio-canada.ca/nouvelle/1168744/ferrov anadium-usine-saguenay-client-minechibougamau. 83 ‘‘BlackRock Project: Iron Ore Exploitation at lac Dore´’’, https://iaac-aeic.gc.ca/050/documents/ p62105/90319E.pdf. 84 VanadiumCorp Lac Dore ´ Vanadium Project, https://www.vanadiumcorp.com/projects/lac-dorevanadium-project/. 85 VanadiumCorp Reports Lac Dore Mineral Resource Estimate (MRE). October 29, 2020. https:// www.vanadiumcorp.com/releases/vanadiumcorpreports-the-lac-dore-mineral-resource-estimate-mre2/. 86 Vanadium One Iron Corporation PEA Results, February 2020, https://www.vanadiumone.com/ pea-results/. 87 Ferro-Alloy Resources Ltd Corporate Presentation, March 2019. https://ferro-alloy.com/ en/news/FAR%20-%20Corporate%20 Presentation%20-%20%20update %20March%202019.pdf. 88 Ferro-Alloy Resources Unaudited interim financial results for the six months to 30 June 2020. https://www.ferro-alloy.com/en/investors/financials/ . 89 Ferro-Alloy Resources Corporate Profile. https:// www.ferro-alloy.com/en/company/corporateprofile/. 90 Based on USGS estimates and Perles, Terry. Vanadium Market Fundamentals: China’s 2019 4th International Vanadium Forum Chengdu, Sichuan, China. April 13, 2019. Submitted as public comment by Treibacher Industrie, July 20, 2020. Available at https://www.regulations.gov/ document?D=BIS-2020-0002-0026. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4703 E:\FR\FM\18NON5.SGM 18NON5 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices construction of facilities in Saudi Arabia 64765 and China to process catalysts from those regions.91 BILLING CODE 3510–33–P Figure 7: Vanadium Pentoxide Production Gl,obal Annua,1 Vanadium Production by Country l:W,000 100,000 80\;000 i 60,000 40,00<), ,ffl,000 -~ -(hlM •J11pi111n _11,nl -'111:1,1$$1111 •SoldhAMea •Nort.11 ""11i!rltl'l •t.11r~ Billi\llret,Mm •r111w1t1 -V',.KIS Pl1«1 •!lndllll •,.\i,l!l>ttillli\11 1 Sol.l\!QII: TTP Sql,l,lfN, IM. Source: Vanadium Market Analysis, Teny Perles, TTP Squared, April 3, 2020. ht ://www.ferro-allo .com/en/vanadium/TTP%20S uared%20market%20summ BILLING CODE 3510–33–C While China accounts for an estimated 50 to 60% of global vanadium production, exports of vanadium from China constitute only approximately 15% of worldwide vanadium exports, because most Chinese production is consumed domestically in the steel industry. Primary producers South Africa and Brazil, as well as European Union countries, which represent a much larger share of global vanadium exports than production. The European Union alone accounts for over onequarter of global exports of contained vanadium (see Figure 8). khammond on DSKJM1Z7X2PROD with NOTICES5 Country Estimated 2019 share of world production (%) Estimated 2019 share of world exports (%) 55 18 9 8 7 4 2 1 <1 15 15 27 13 13 4 1 1 7 China ........................................................................................................................................ Russia ...................................................................................................................................... European Union Countries * .................................................................................................... South Africa ............................................................................................................................. Brazil ........................................................................................................................................ United States ........................................................................................................................... Japan ....................................................................................................................................... India ......................................................................................................................................... South Korea ............................................................................................................................. 91 AMG 2019 Annual Report. Available at https:// ig9we1q348z124x3t10meupc-wpengine.netdnassl.com/wp-content/uploads/AMG-Annual-ReportWeb-FINAL.pdf and Shell & AMG Recycling B.V. Sign Agreement with Shandong Yulong VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 Petrochemical Co., Ltd to Assess Building a Spent Residue Upgrading Catalyst Recycling Facility. Available at https://www.globenewswire.com/newsrelease/2020/10/26/2114333/0/en/Shell-AMGRecycling-B-V-Sign-Agreement-with-Shandong- PO 00000 Frm 00019 Fmt 4701 Sfmt 4703 Yulong-Petrochemical-Co-Ltd-to-Assess-Building-aSpent-Residue-Upgrading-Catalyst-RecyclingFacility.html. E:\FR\FM\18NON5.SGM 18NON5 EN18NO21.085</GPH> FIGURE 8—ESTIMATED 2019 SHARE OF PRODUCTION AND EXPORTS OF VANADIUM CONTENT IN VANADIUM PENTOXIDE AND FERROVANADIUM 64766 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices FIGURE 8—ESTIMATED 2019 SHARE OF PRODUCTION AND EXPORTS OF VANADIUM CONTENT IN VANADIUM PENTOXIDE AND FERROVANADIUM—Continued Country Estimated 2019 share of world production (%) Estimated 2019 share of world exports (%) <1 <1 <1 2 1 2 Taiwan ..................................................................................................................................... Thailand ................................................................................................................................... Canada .................................................................................................................................... Sources: U.S. Geological Survey, TTP Squared, Bureau of Industry and Security, IHS Markit Global Trade Atlas. * Includes exports within the European Union. Vanadium production generally results first in vanadium pentoxide, which may be exported or further processed into ferrovanadium for use in steel. A large portion of the difference between world production and export share for E.U. countries results from their import of vanadium oxides— principally from Russia—for conversion into ferrovanadium, which was then exported (see Figure 9). In fact, nearly all Russian exports of vanadium oxide went to the Czech Republic, home to EVRAZ Nikom, one of the E.U.’s main producers of ferrovanadium. FIGURE 9—TOP WORLD TRADE PAIRINGS 2016–2019: VANADIUM OXIDES (HTS 2825.30) [In tons vanadium oxide] 2016 2017 2018 Share of country’s exports (%) 2019 Share of world exports (%) Exporter Importer Russia ................... South Africa .......... China ..................... Brazil ..................... Brazil ..................... South Korea .......... South Africa .......... Brazil ..................... China ..................... Netherlands ........... Brazil ..................... China ..................... China ..................... Brazil ..................... China ..................... South Africa .......... Taiwan ................... Thailand ................ Brazil ..................... South Africa .......... Czech Republic .... Netherlands .......... South Korea ......... Netherlands .......... South Korea ......... Japan .................... United States ........ United States ........ Netherlands .......... Austria .................. Canada ................. Japan .................... United States ........ Japan .................... Canada ................. Japan .................... United States ........ India ...................... India ...................... India ...................... 6,656 3,415 3,140 1,740 3,640 1,181 1,676 660 2,376 2 980 926 930 680 120 267 533 60 260 0 8,656 3,225 4,620 4,343 1,460 2,357 1,744 1,377 1,860 46 940 720 565 440 420 244 510 320 660 0 8,676 3,871 3,186 4,039 660 1,840 1,603 2,442 1,199 3,100 1,320 917 639 440 599 391 57 520 200 486 9,683 3,711 2,750 3,380 2,320 2,051 1,521 1,993 615 1,773 1,340 722 69 440 510 560 126 240 0 480 99 56 47 37 22 73 26 18 21 75 13 11 8 6 6 6 38 55 3 4 23 10 9 9 5 5 4 4 4 3 3 2 1 1 1 1 1 1 1 1 All Countries .......... All Countries ......... 33,293 37,220 39,074 38,719 ........................ ........................ Source: IHS Markit Global Trade Atlas. Czech ferrovanadium, in turn, was exported principally to the United States, Japan, Netherlands, and Germany (see Figure 10). Other major exporters of ferrovanadium include the Netherlands (the principal importer of South African vanadium oxide), South Korea (the principal importer of Chinese vanadium oxides), and China which, despite exporting a relatively small percentage of their production still accounts for a major portion of global exports due to the sheer size of their production. FIGURE 10—TOP WORLD TRADE PAIRINGS 2016–2019: FERROVANADIUM (HTS 7202.92) khammond on DSKJM1Z7X2PROD with NOTICES5 [In tons ferrovanadium] Exporter Importer Netherlands ........... South Africa .......... China ..................... South Korea .......... China ..................... China ..................... Germany ............... Netherlands .......... Netherlands .......... Netherlands .......... Japan .................... South Korea ......... VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 2016 2017 1,902 2,112 2,380 1,364 1,467 975 PO 00000 Frm 00020 2018 1,832 1,662 1,540 1,714 1,323 995 Fmt 4701 Sfmt 4703 Share of country’s exports (%) 2019 3,758 1,563 1,549 1,543 1,635 1,667 E:\FR\FM\18NON5.SGM 1,913 1,579 930 1,333 1,370 1,661 18NON5 Share of world exports (%) 28 59 28 53 25 23 7 5 5 4 4 4 64767 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices FIGURE 10—TOP WORLD TRADE PAIRINGS 2016–2019: FERROVANADIUM (HTS 7202.92)—Continued [In tons ferrovanadium] 2016 2017 2018 Share of country’s exports (%) 2019 Share of world exports (%) Exporter Importer Czech Republic ..... Netherlands ........... Czech Republic ..... Netherlands ........... China ..................... Canada .................. United States ........ Czech Republic ..... Czech Republic ..... Netherlands ........... South Africa .......... South Korea .......... Russia ................... United States ........ United States ........ United States ........ Japan .................... Italy ....................... Taiwan .................. United States ........ Canada ................. Netherlands .......... Germany ............... Spain .................... Japan .................... Japan .................... Netherlands .......... Mexico .................. 1,016 1,398 1,025 718 1,109 142 474 870 1,162 784 312 596 404 304 940 186 740 895 595 767 295 457 1,009 654 404 258 700 266 1,045 2,091 1,020 1,039 787 869 1,403 270 361 484 605 459 360 642 1,691 893 806 523 644 1,266 843 1,184 247 175 640 601 420 315 18 13 14 9 14 91 59 11 11 6 17 17 32 30 3 3 3 2 2 2 2 2 2 2 1 1 1 1 All Countries .......... All Countries ......... 33,477 30,849 39,300 32,367 ........................ ........................ Source: IHS Markit Global Trade Atlas. khammond on DSKJM1Z7X2PROD with NOTICES5 In recent years, the global vanadium market has been subject to severe price fluctuations. Three times since 2004 the benchmark vanadium pentoxide price has more than doubled in under a year, after which a precipitous drop to more typical price levels occurs (see Figure 11). These rapid price changes have led to a history of investment and expansion during price spikes and plant idlings and bankruptcies in market VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 economies during and following price drops. Starting new primary production has been especially challenging, as new mining ventures can take many years to progress through exploration and permitting to production. The Windimurra mine in Australia, for instance, is in the midst of its fourth reopening attempt since 1999, having operated from 2000 to 2003, invested in reopening from 2005 to 2009 that PO 00000 Frm 00021 Fmt 4701 Sfmt 4703 ultimately failed to materialize, reopening with new ownership from 2012 to 2014, and currently under development by a new owner.92 92 McKinnon, Stuart. Vanadium Price Boom Offers Hope of WIndimurra Revival. The West Australian, April 2, 2018. Available at https:// thewest.com.au/business/mining/vanadium-priceboom-offers-hope-of-windimurra-revival-ngb88792684z. E:\FR\FM\18NON5.SGM 18NON5 64768 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices Figure 11: Vanadium Pentoxide Prices Met:al 8itlletio \1205 Morithiv Midpoint Average ?rice Ja11, 2004 ~ May 2020 1n-m1tl'l>:t1 to Nov, ,2017 "'''''"' ,, ,,,, ""'"" '''"' ~ 'll/2'05 Melirl $1U,1 --~--$6,Q,,,,,,, tflill,h :$M . 6.! <MIY 2005) low $2:.tS (~. 21ll:IS} $1:1\iiow: ~llif-~111, f f l ' ~1 1111:,,, ••11111N11!lld • lhlli>::/l'\N'ww.~.~ll'l,/t$(Hill11dl•llll!! Compared to primary production facilities, secondary production facilities can have less extended lead times, but still take years to complete. The establishment of AMG Vanadium’s new facility in Ohio was announced in October 2018, broke ground in August 2019, and is expected to be completed in 2021.93 The Gladieux facility in Freeport, Texas was purchased in 2017 and is not yet operational. \l\lii Vi1111tH r t ~ ~ • ~ Jllll'lill ·• ~ 1\\1:~lll!lt 1.1, a:li.l. B. Prior Trade Investigations The U.S. government has previously taken action against artificially lowpriced vanadium product imports. Several antidumping investigations conducted by the Department of Commerce and the USITC affirm that sources of imported ferrovanadium from nearly all countries that mine vanadium ore have engaged in dumping that injures U.S. producers. Among the significant miners of vanadium ore, only Brazil has not been subject to an antidumping finding. AMG Vanadium (or its predecessor) has been a petitioner for all ferrovanadium antidumping cases, joined by Bear, Gulf, and Stratcor (or its predecessor) for the petitions on China, South Africa, and Korea. Figure 12 lists USITC investigations into vanadium imports since 1995: FIGURE 12—U.S. INTERNATIONAL TRADE COMMISSION VANADIUM CASES SINCE 1995 Investigation and Nitrided Vanadium from Russia .................................................................................... and Nitrided Vanadium from Russia (First Review) ............................................................ from China and South Africa ............................................................................................... and Nitrided Vanadium from Russia (Second Review) ....................................................... from China and South Africa (First Review) ........................................................................ from China and South Africa (Second Review) .................................................................. and Nitrided Vanadium from Russia (Third Review) ........................................................... from Korea ........................................................................................................................... from China and South Africa (Third Review) ...................................................................... Finding July 30, 1995 ................. May 15, 2001 ................. January 28, 2003 ........... September 28, 2006 ...... November 24, 2008 ....... January 28, 2015 ........... August 22, 2012 ............ March 17, 2017 .............. August 7, 2020 .............. Affirmative. Affirmative. Affirmative. Affirmative. Affirmative. Affirmative. Negative. Affirmative. Affirmative. Source: United States International Trade Commission. Russia ferrovanadium and nitrided vanadium from Russia were sold in the United States at less than fair value, and the In July 1995, the Department of Commerce found that imports of USITC found that the dumped imports were materially injuring the U.S. industry. In the course of the 93 AMG Vanadium Muskingum County Facility website. https://amg-v.com/muskingumfacility/. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4703 E:\FR\FM\18NON5.SGM 18NON5 EN18NO21.086</GPH> khammond on DSKJM1Z7X2PROD with NOTICES5 Ferrovanadium Ferrovanadium Ferrovanadium Ferrovanadium Ferrovanadium Ferrovanadium Ferrovanadium Ferrovanadium Ferrovanadium Date Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices investigation, USITC determined that ferrovanadium and nitrided vanadium, despite having somewhat disparate end uses, constituted a single like product based on the significant vanadium content and generally interchangeable use in steel alloys.94 This affirmative finding was renewed following the Department of Commerce’s and USITC’s first five-year review of the antidumping duty order in May 2001, as well as the second fiveyear review in September 2006. At the third set of five-year reviews completed in August 2012, the USITC noted there had been no subject imports since 1996, and that in the case of nitrided vanadium there had been no U.S. production since 1992.95 However, while there were no imports of ferrovanadium from Russia during the time period, there were imports of Russian vanadium pentoxide, which were then converted to ferrovanadium in the U.S., as well as imports of ferrovanadium from Russian-owned EVRAZ Nikom in the Czech Republic, made from Russian-sourced vanadium pentoxide.96 The USITC’s third review found, contrary to the prior reviews, that imports of ferrovanadium from Russia would not be likely to significantly increase if the antidumping order was revoked. The decision noted that Russian capacity and production had declined from prior significant excesses, with less focus on exporting ferrovanadium.97 The report also noted the increased tendency to supply the U.S. market with vanadium pentoxide, rather than the subject product ferrovanadium. On this basis, the antidumping order against Russian ferrovanadium was revoked in October 2011. China and South Africa In January 2003 the Department of Commerce determined that imports of ferrovanadium from China and South Africa were sold in the United States at less than fair value and the USITC found that the dumped imports were materially injuring the U.S. industry. In the first sunset reviews (completed November 2008), second sunset reviews (completed January 2015), and third sunset reviews (completed August 2020), the Department of Commerce and the USITC determined that revocation of the existing antidumping duty orders on ferrovanadium from China and South Africa would likely lead to continuation or recurrence of dumping and material injury to an industry in the United States within a reasonably foreseeable time.98 Following the imposition of the antidumping order in 2002, imports of ferrovanadium from China fell from an average of 497,000 kilograms of contained vanadium per year from 1999 to 2001 to ‘‘zero or close to zero in every year since 2002.’’ 99 USITC cited China’s status as the world’s largest producer of ferrovanadium and its continued increases in capacity as reasons for an affirmative injury finding. Imports of ferrovanadium from South Africa showed similar declines following the initial antidumping order. From an average of 758,000 kilograms of vanadium content per year from 1999 to 64769 2001, by 2003 imports had fallen to account for no more than 0.1% of U.S. market share.100 As was the case with Russian providers, since the imposition of antidumping duties South African vanadium has continued to enter the United States in other forms not subject to antidumping duties, such as vanadium pentoxide and nitrided vanadium. Korea In March 2017 the Department of Commerce determined that imports of ferrovanadium from Korea were sold in the United States at less than fair value and the USITC found that the dumped imports were materially injuring the U.S. industry. Unlike Russia, China, and South Africa, Korea is not a significant source of vanadium production. Rather, the USITC noted that Korean ferrovanadium was produced primarily from vanadium pentoxide originally sourced from China.101 The USITC found that ferrovanadium from Korea was sold in the United States in ‘‘increasing and significant volume . . . at declining prices.’’ 102 C. U.S. Duties on Vanadium Imports As of November 2020, all vanadium products in the scope of this investigation, with the exception of vanadium ore and concentrates (Harmonized Tariff Schedule of the United States (HTSUS) 2615.90.6090) and ash and residues containing vanadium (HTSUS 2620.40.0030 and 2620.99.1000) are subject to duties between 2 and 5.5% (see Figure 13). FIGURE 13—DUTIES ON VANADIUM PRODUCTS 10 Digit HTS code Heading/subheading/product Vanadium Oxides .................................................................................................................................................... Ferrovanadium ......................................................................................................................................................... Vanadium Carbides ................................................................................................................................................. Vanadates ................................................................................................................................................................ Vanadium Ore and Concentrates ............................................................................................................................ Ash and Residues Containing Vanadium ................................................................................................................ khammond on DSKJM1Z7X2PROD with NOTICES5 Vanadium Sulfate .................................................................................................................................................... Vanadium Hydrides, Nitrides, Azides, Silicides, and Borides ................................................................................. 94 U.S. International Trade Commission. Ferrovanadium and Nitrided Vanadium from Russia. Investigation No. 731–TA–702, Final. https://www.usitc.gov/publications/701_731/ pub2904.pdf. 95 U.S. International Trade Commission. Ferrovanadium and Nitrided Vanadium from Russia. Investigation No. 731–TA–702 (Third Review). https://www.usitc.gov/publications/701_ 731/pub4345.pdf. 96 Ibid. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 97 Ibid. 98 Ferrovanadium from the People’s Republic of China and the Republic of South Africa: Continuation of Antidumping Duty Orders, 73 FR 77609, December 19, 2008; Ferrovanadium From the People’s Republic of China and the Republic of South Africa: Continuation of Antidumping Duty Orders, 80 FR 8607, February 18, 2015; Ferrovanadium From the Republic of South Africa and the People’s Republic of China: Continuation of Antidumping Duty Orders, 85 FR 51408, August 20, 2020. PO 00000 Frm 00023 Fmt 4701 Sfmt 4703 2825.30.0010 2825.30.0050 7202.92.0000 2849.90.5000 2841.90.1000 2615.90.6090 2620.40.0030 2620.99.1000 2833.29.3000 2850.00.2000 Duty (percent) 5.5 5.5 * 4.2 3.7 5.5 Free Free Free 5.5 5.5 99 U.S. International Trade Commission. Ferrovanadium and Nitrided Vanadium from China and South Africa. Investigation Nos. 731–TA–986– 987 (Third Review). https://www.usitc.gov/ publications/701_731/pub5099.pdf. 100 Ibid. 101 U.S. International Trade Commission. Ferrovanadium and Nitrided Vanadium from Korea. Investigation Nos. 731–TA–1315. https:// www.usitc.gov/publications/701_731/pub4683.pdf. 102 Ibid. E:\FR\FM\18NON5.SGM 18NON5 64770 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices FIGURE 13—DUTIES ON VANADIUM PRODUCTS—Continued 10 Digit HTS code Heading/subheading/product Vanadium, Unwrought and Wrought ....................................................................................................................... 8112.92.7000 8112.99.2000 Duty (percent) 2 2 Source: United States International Trade Commission and U.S. Department of Commerce, Bureau of Industry and Security, as of December 7, 2020. * Ferrovanadium products from China, South Africa, and Korea are subject to additional antidumping duties. Antidumping duties on ferrovanadium add significantly to the rates for ferrovanadium from China, South Africa, and Korea (see Figure 14). FIGURE 14—ANTIDUMPING DUTIES ON FERROVANADIUM Dumping rate (percent) Country Exporter/producer China ...................... Pangang Group International Economic & Trading Corporation .................................................................... China-Wide ...................................................................................................................................................... Highveld Steel and Vanadium Corporation, Ltd ............................................................................................. Xstrata South Africa (Proprietary) Limited ...................................................................................................... All Others ........................................................................................................................................................ Korvan Ind. Co., Ltd ........................................................................................................................................ Fortune Metallurgical Group Co., Ltd .............................................................................................................. Woojin Ind. Co., Ltd ........................................................................................................................................ All Others ........................................................................................................................................................ South Africa ........... Korea ..................... 12.97 66.71 116.00 116.00 116.00 3.22 54.69 54.69 3.22 Source: Federal Register; 68 FR 4168, 68 FR 4169, 82 FR 14874. khammond on DSKJM1Z7X2PROD with NOTICES5 In addition to the above general and antidumping duties, China has been subject to Section 301 duties on all subject vanadium products except HTSUS 2620.40.0030 (ash and residue containing mainly aluminum and vanadium-bearing materials) of 10% starting September 21, 2018 and 25% starting August 20, 2019. Prior to the imposition of Section 301 duties, VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 vanadium oxides was the only category of vanadium product with significant imports from China. Imports of vanadium via vanadium oxides fell from a monthly average of 31,500 kilograms in the year prior to the initial announcement of Section 301 tariffs to 7,200 kilograms per month in year following the imposition of tariffs. Between the initial announcement of PO 00000 Frm 00024 Fmt 4701 Sfmt 4703 Section 301 duties in April 2018 and the imposition of duties on vanadium products in September 2018, imports of vanadium oxides from China rose to 96,000 kilograms of contained vanadium per month, perhaps due to companies increasing inventories in anticipation of duties (see Figure 15). BILLING CODE 3510–33–P E:\FR\FM\18NON5.SGM 18NON5 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices 64771 Figure 15: Imports of Vanadium Oxides and Hydroxides from China (in kilograms of contained vanadium) Vanadium Oxides and Hydroxides 160,000 E 140,000 :::, '"C ro C: 120,000 ro > '"C (I) 100,000 C: ro 1: 0 u 80,000 '+- 60,000 0 V, E ...ro 40,000 tlO 0 ':2 20,000 0 Source: ITC Dataweb, HTS 2825.30 VII. Findings A. Vanadium Is Essential to U.S. National Security khammond on DSKJM1Z7X2PROD with NOTICES5 1. Vanadium Is Considered a Critical Mineral Vanadium is one of the 35 minerals included by the Department of Interior (DOI) on the Critical Minerals List. This list, which President Trump directed DOI to define in E.O. 13817, includes minerals which meet the following criteria: (i) A non-fuel mineral or mineral material essential to the economic and national security of the United States, (ii) the supply chain of which is vulnerable to disruption, and (iii) that serves an essential function in the manufacturing of a product, the absence of which would have significant consequences for our economy or our national security.103 103 White House, ‘‘Presidential Executive Order on a Federal Strategy to Ensure Secure and Reliable Supplies of Critical Materials’’, (December 20, 2017), https://trumpwhitehouse.archives.gov/ presidential-actions/presidential-executive-orderfederal-strategy-ensure-secure-reliable-suppliescritical-minerals/. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 In its report, Critical mineral resources of the United States— Economic and environmental geology and prospects for future supply, USGS observed that vanadium is used in steel alloys which are in turn used in critical sectors including bridges, pipelines, ships, rail cars, truck bodies, and military vehicles, and is ‘‘irreplaceable for its role in aerospace applications’’ via titanium alloys.104 For this reason among others, and based on input from other U.S. government agencies, USGS included vanadium on the critical minerals list. As discussed in Section V of this report, in addition to its use in alloys, vanadium is a vital component in the production of vanadium redox flow batteries (VRBs), chemical catalysts, ceramics, electronics, and other vanadium chemicals. VRBs are a potential area of large scale energy storage, a fast-growing sector that will 104 Kelley, K.D., Scott, C.T., Polyak, D.E., and Kimball, B.E., 2017, Vanadium, chap. U of Schulz, K.J., DeYoung, J.H., Jr., Seal, R.R., II, and Bradley, DC, eds., Critical mineral resources of the United States—Economic and environmental geology and prospects for future supply: U.S. Geological Survey Professional Paper 1802, p. U1–U36, https:// doi.org/10.3133/pp1802U. PO 00000 Frm 00025 Fmt 4701 Sfmt 4703 help support the growth and reliability of the power grid. As noted above, sulfuric acid’s wide array of manufacturing uses means its production is highly correlated with industrial development. Though a small percentage of overall vanadium demand, these catalyst uses are essential for multiple critical infrastructure and commercial sectors. USGS cited continued need for steel products as a driver of vanadium demand, specifically noting expansion of Chinese demand, increased vanadium content in steel rebar in China and Japan, growing steel production in India, and expansion of energy uses of vanadium. As a result, USGS predicts that new sources of vanadium and more efficient extraction from existing sources will be required to supplement the current limited supply. Further, as vanadium is required for the manufacture of titanium products and is a significant alloying agent in high strength steel, limited vanadium production capacity could create a supply bottleneck. Such a bottleneck is E:\FR\FM\18NON5.SGM 18NON5 EN18NO21.087</GPH> BILLING CODE 3510–33–C 64772 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices one of the ‘‘vulnerabilities’’ identified in E.O. 13817.105 khammond on DSKJM1Z7X2PROD with NOTICES5 2. Vanadium Is Required for National Defense Systems Vanadium, as a result of its use in steel and titanium alloys, is a critical input to many defense systems. The 2017 and 2019 Department of Commerce Section 232 reports on the effects of steel and of titanium sponge on national security found that those metals were required for national defense. Therefore, because vanadium is frequently used in these metals and there is no suitable substitute for vanadium in many of these products, vanadium is also required to meet national defense needs. DLA has identified [TEXT REDACTED] defense systems that require the use of vanadium, including but not limited to the [TEXT REDACTED]. The average titanium content for military airframes that entered service after 2000 is 30%, implying vanadium content of roughly 1% by weight.106 For example, each F– 22A Raptor aircraft contains at least six separate titanium alloys, some containing as much as 15% vanadium by weight, with a finished aircraft containing approximately 9,000 pounds of titanium.107 Building each aircraft requires significantly more material: About 50 metric tons of titanium, which in turn requires approximately 2 metric tons of vanadium content based on a standard Ti–6Al–4V alloy.108 The F–35 Lightning II requires an estimated 15 tons of titanium per plane to build.109 Overall, defense uses account for an estimated 10% of titanium demand, equivalent to approximately 43 tons of vanadium content per year.110 The Department’s 2018 Steel Report aligns with this finding. The report found that the Department of Defense 105 White House, ‘‘Presidential Executive Order on a Federal Strategy to Ensure Secure and Reliable Supplies of Critical Materials’’. 106 U.S. Department of Commerce. Bureau of Industry and Security. The Effect of Imports of Titanium Sponge on the National Security (Washington, DC: 2019) (‘‘Titanium Report’’) and based on use of standard Ti–6Al–4V alloy. 107 Cotton, James D. et al. Titanium Alloys on the F–22 Fighter Airframe. Advanced Materials & Processes, May 2002. https:// www.asminternational.org/documents/10192/ 1756963/amp16005p025.pdf/c0972040-8169-49988699-f051fab52d9b/AMP16005P025. 108 Seong, Somi et al. Titanium: Industrial Base, Price Trends, and Technology Initiatives, 2009. https://www.rand.org/content/dam/rand/pubs/ monographs/2009/RAND_MG789.pdf. 109 Ibid. 110 Based on average annual 2016–2019 USGS vanadium apparent consumption of 8,590 tons, titanium uses accounting for 5% of vanadium consumption, and defense use accounting for 10% of titanium demand. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 has ‘‘a large and ongoing need for a range of steel products that are used in fabricating weapons and related systems for the nation’s defense.’’ Among the defense steel uses cited were aircraft carriers, submarines, and tanks, as well as the high-strength steel alloys used on aircraft and discussed above. The Steel Report indicated that Department of Defense’s steel requirements amount to 3% of annual overall U.S. steel production, equivalent to approximately 230 metric tons of vanadium content per year.111 In addition to direct incorporation of vanadium into defense systems, the production of these systems relies on vanadium-containing infrastructure, as tool steels and high speed steels often have a significantly higher vanadium content than other steel. 3. Vanadium Is Required for Critical Infrastructure As with national defense systems, vanadium is a key component of much of the steel and titanium used in U.S. critical infrastructure. Vanadium is a key feature in high-strength, low-alloy (HSLA) steel products used in the construction industry, including earthquake-resistant rebar, bridges, and construction cranes. Hand tools and high-speed steel tools for cutting and boring commonly contain vanadium as a strengthening agent. The commercial aerospace industry also relies on vanadium through its use of titanium alloys, and the chemical production industry uses vanadium directly for production of sulfuric acid. The Department’s 2018 Steel Report determined that 54 million metric tons of steel per year were consumed in critical industries, accounting for half of all domestic steel consumption.112 Steel had uses in all of the United States’ 16 critical infrastructure sectors, with the transportation, energy, and water treatment sectors specifically noted as vulnerable to disruption. A conservative estimate of the use of vanadium in critical infrastructure via steel products amounts to 3,865 tons of vanadium demand annually.113 111 Based on average annual 2016–2019 USGS vanadium apparent consumption of 8,590 tons, steel uses accounting for 90% of vanadium consumption, and defense use accounting for 3% of steel demand. 112 Based on the 16 designated critical infrastructure sectors identified pursuant to Presidential Policy Directive 21 (PPD–21). https:// www.cisa.gov/critical-infrastructure-sectors. 113 Based on average annual 2016–2019 USGS vanadium apparent consumption of 8,590 tons, steel uses accounting for 90% of vanadium consumption, and critical infrastructure use accounting for 50% of steel demand. Use is likely higher, as critical infrastructure sectors are more likely to use HSLA and full alloy steels. PO 00000 Frm 00026 Fmt 4701 Sfmt 4703 In the titanium industry, nearly all vanadium-bearing titanium products have end-uses in critical infrastructure and defense sectors. Beyond the 10% of titanium consumed via military uses, an estimated 55% of consumption is in commercial aerospace products—part of the transportation critical infrastructure sector—with nearly all remaining consumption in industrial or medical uses. Use of vanadium in critical infrastructure via titanium products thus amounts to between 236 tons and 365 tons per year.114 Nearly all non-metallurgical uses of vanadium are also related to critical infrastructure. The energy sector is a primary destination; vanadium is used as a catalyst in industrial power plants and as the electrolyte in vanadium redox flow batteries. The other significant non-metallurgical use is in the chemical production sector, where vanadium is used as a catalyst in the production of sulfuric acid and maleic anhydride. With non-metallurgical use accounting for an estimated 5% of vanadium demand, direct vanadium use in critical infrastructure amounts to approximately 430 tons per year.115 With indirect use in all 16 critical infrastructure sectors, direct use in the energy and chemical production sectors, and an ‘‘irreplaceable’’ status in titanium alloys used in the transportation sector, vanadium has a key role in U.S. critical infrastructure. Overall annual critical infrastructure use of vanadium amounts conservatively to 4,542 tons. 4. Vanadium Has Significant Effects on Other Critical Industries As discussed above, vanadium has essential uses in steel and titanium production, and vanadium resources in the United States are often co-located with uranium. Titanium and uranium have been identified as critical minerals by the Department of Interior, with steel, titanium sponge, and uranium all the subjects of recent Section 232 investigations. The impact of the vanadium industry on other critical industries is significant, underscoring vanadium’s status as a critical commodity. Following the Section 232 investigation into the effect of imports 114 Based on average annual 2016–2019 USGS vanadium apparent consumption of 8,590 tons, titanium uses accounting for 5% of vanadium consumption, and critical infrastructure use accounting for between 55% and 85% of titanium demand; commercial aerospace estimated at 55% of titanium demand, but up to 85% of vanadiumalloyed titanium demand, with industrial and medical titanium commonly unalloyed. 115 Based on average annual 2016–2019 USGS vanadium apparent consumption of 8,590 t. E:\FR\FM\18NON5.SGM 18NON5 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES5 of steel products on national security, on March 8, 2018, the President issued a proclamation concurring with the Secretary of Commerce’s finding that imports of steel articles threatened to impair U.S. national security, and imposing a 25% tariff on imports. The goal of the tariff was to help ensure the economic viability of the domestic steel industry, which was threatened by lowcost imports. The basis for the President’s actions, and the Secretary’s findings, was the critical role of the steel industry in national security. As discussed above, the steel industry accounts for approximately 90% of the U.S. demand for vanadium.116 Compared to the estimated $92 billion worth of raw steel produced in the United States in 2019, vanadium costs constituted only a small expense for the overall industry. However, certain industry sectors incurred far higher cost exposure to vanadium. In an industry threatened by low-cost imports, even minor cost changes can have significant effects on domestic producers. Domestic producers challenged by low-cost imports for more than one essential ‘‘ingredient’’ for their product (e.g., steel and vanadium) face even more daunting odds. Aside from steel, the primary use of vanadium is for use in titanium alloys. In March 2019, following a petition from Titanium Metals Corporation (TIMET), the Department of Commerce initiated a Section 232 investigation into the effect of imports of titanium sponge on U.S. national security. The Secretary’s report found that imports of titanium sponge and scrap depressed U.S. prices and constituted a threat to national security, but did not recommend adjustment of imports, favoring other measures. The President issued a proclamation on February 27, 2020 concurring with the Secretary’s finding.117 In preparing its report, the Department found that an area of particular concern for the U.S. titanium industry is the advance of Russian and Chinese producers in aerospace-quality titanium product capabilities. The President’s February 2020 proclamation also directed the formation of a working group to ensure U.S. access to titanium sponge. Since its 116 Equivalent to 7,731 tons contained vanadium, valued at $297 million based on U.S. Geological Survey Vanadium Mineral Commodity Summary, apparent consumption and average vanadium pentoxide prices. 117 Memorandum on the Effect of Titanium Sponge Imports on the National Security. Available at https://trumpwhitehouse.archives.gov/ presidential-actions/memorandum-effect-titaniumsponge-imports-national-security/. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 formation, the Titanium Sponge Working Group (TSWG) has explored measures that may help to ensure access to titanium sponge for U.S. national defense and critical infrastructure purposes. The TWSG, co-led by the Departments of Commerce and Defense, is considering a series of recommendations to move toward this goal. [TEXT REDACTED]. Accounting for approximately 5% of domestic vanadium demand, the U.S. titanium industry consumes an estimated 430 tons of contained vanadium annually, valued at $17 million.118 As noted in above, in a standard Ti-6Al-4V alloy, vanadium makes up 4% of the weight and between 12 and 14% of the product cost, making the titanium industry relatively exposed to vanadium cost changes. In the United States, primary vanadium production is currently performed only in conjunction with uranium mining. The only company to produce mined vanadium in the United States in recent years, Energy Fuels, was one of the applicants in the Section 232 investigation into the effect of imports of uranium on national security. The Section 232 report on uranium was completed and sent to the President in April 2019. In his report, the Secretary found that uranium was being imported in such quantities and under such circumstances as to threaten to impair national security. The President’s responsive proclamation, issued in July 2019, expressed concern about domestic uranium supplies and directed the establishment of a Nuclear Fuel Working Group (NFWG) to carry out a ‘‘comprehensive review of the entire domestic nuclear supply chain.’’ 119 In April 2020, the Secretary of Energy announced the NFWG’s findings and recommendations in a Strategy to Restore American Nuclear Energy Leadership. The Strategy recommended ‘‘taking immediate and bold action to strengthen the uranium mining and conversion industries.’’ 120 The report 118 Based on U.S. Geological Survey Vanadium Mineral Commodity Summary, apparent consumption and average vanadium pentoxide prices. 119 Memorandum on the Effect of Uranium Imports on the National Security and Establishment of the United States Nuclear Fuel Working Group. https://trumpwhitehouse.archives.gov/presidentialactions/memorandum-effect-uranium-importsnational-security-establishment-united-statesnuclear-fuel-working-group/. 120 Department of Energy, Secretary Brouillette Announces The Nuclear Fuel Working Group’s Strategy To Restore American Nuclear Energy Leadership. April 23, 2020. https:// www.energy.gov/articles/secretary-brouillette- PO 00000 Frm 00027 Fmt 4701 Sfmt 4703 64773 also cited the inclusion in the President’s Fiscal Year 2021 Budget Request of $150 million for a domestic uranium reserve. The Fiscal Year 2021 Budget passed by Congress included $75 million for establishment of a uranium reserve. As demonstrated by the comments submitted by several companies with uranium mining resources in response to the Notice of Request for Public Comments on Section 232 National Security Investigation of Imports of Vanadium, industry sees a clear connection in the critical nature of vanadium and uranium. For example, Energy Fuels submitted a comment supporting a recommendation for Section 232 relief for vanadium, in part on the basis that there was ‘‘significant uncertainty’’ about a successful outcome for implementation of the NFWG’s recommendations.121 Energy Fuels also wrote that vanadium relief ‘‘together with a reasonable uranium price’’ would enable the company to mine both uranium and vanadium in the future. Another uranium mining company, Nuvemco, LLC, submitted a comment that included their submission to the NFWG, based on the adjacency of the two mining sectors in the United States. B. Imports of Vanadium Have Mixed Effects on the Economic Welfare of the U.S. Vanadium Industry 1. The U.S. is Presently Reliant on Imports of Vanadium Though the scope of this investigation covers 12 discrete 10-digit HTS codes, the bulk of the vanadium imported into the United States consists of just two products: vanadium pentoxide and ferrovanadium. The third most frequently imported vanadium product is carbides, a product sector heavily dominated by South Africa exports of vanadium carbide nitride, which is used as an alternative to ferrovanadium in steel production. The remaining vanadium products imported into the United States that are covered under the scope of this investigation either constitute niche application areas or are used as inputs or feedstock in order to produce vanadium products. announces-nuclear-fuel-working-groups-strategyrestore-american. 121 Energy Fuels Resources (USA) Inc. Comment in response to Notice of Request for Public Comments on Section 232 National Security Investigation of Imports of Vanadium, July 20, 2020. https://www.regulations.gov/document?D=BIS2020-0002-0016. E:\FR\FM\18NON5.SGM 18NON5 64774 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices FIGURE 16—U.S. IMPORTS OF VANADIUM PRODUCTS, 2017–2020 [in millions of USD] HTSUS Description 7202.92.0000 ......... 2825.30.0010 ......... 2849.90.5000 ......... 2833.29.3000 ......... Ferrovanadium ............................................................................ Vanadium pentoxide (anhydride) ................................................ Carbides, whether or not chemically defined, nesoi * (excluding of boron, of chromium, or of tungsten). Ash & residues (except from the manufacture of iron or steel), containing mainly vanadium. Vanadium and articles thereof, wrought, waste and scrap, powders, nesoi. Ash and residues (other than from the manufacture of iron or steel), containing mainly aluminum, vanadium-bearing materials. Vanadates, (vanadium content) .................................................. Vanadium ores and concentrates ............................................... Vanadium oxides and hydroxides, except vanadium pentoxide, nesoi. Vanadium and articles thereof, unwrought, powders, except waste and scrap. Hydrides, nitrides, azides, silicides and borides, whether or not chemically defined, of vanadium. Vanadium sulfate ......................................................................... Total ................ ...................................................................................................... 2620.99.1000 ......... 8112.99.2000 ......... 2620.40.0030 ......... 2841.90.1000 ......... 2615.90.6090 ......... 2825.30.0050 ......... 8112.92.7000 ......... 2850.00.2000 ......... 2017 2018 2019 2020 (projected) $94.60 60.32 49.38 $232.65 168.95 90.84 $167.90 109.92 98.89 $56.65 36.90 27.57 14.51 63.90 54.48 0.48 10.75 17.22 17.64 6.08 .................... .................... 4.29 9.99 6.24 0.28 3.68 17.46 8.45 5.45 3.26 9.49 6.84 2.04 0.54 3.02 2.60 2.21 4.10 0.07 1.08 0.92 0.85 0.65 0.05 0.12 0.62 0.27 243.49 608.17 478.28 144.26 khammond on DSKJM1Z7X2PROD with NOTICES5 Source: ITC Dataweb, 2020 data through November. *nesoi indicates ‘‘not elsewhere specified or indicated.’’ Any measurement of the United States’ reliance on imports of vanadium must take into account the wide array of vanadium products and end uses. U.S. vanadium import reliance varies depending on the type of vanadium product. Additionally, because some vanadium products are used to produce other vanadium products, import reliance calculations must consider domestic capabilities for both the vanadium end products and their vanadium-bearing feedstocks. Domestic production capabilities exist for ferrovanadium (50% and 80%), vanadium oxides and hydroxides (including regular grade and high purity vanadium pentoxide), vanadates, vanadium ore and concentrates, vanadium master alloys, and vanadium sulfates. The United States does not currently have domestic capability for vanadium carbides (HTS 2849.90.5000) or vanadium hydrides, sulfides, nitrides, azides, silicides, and borides (HTS 2850.00.2000), [TEXT REDACTED].122 The United States has very limited capacity to produce vanadium ore and concentrates, with recent production intermittent and linked to uranium production. The following import analysis focuses primarily on ferrovanadium and vanadium pentoxide, recent import trends for these products and their feedstocks, and the United States’ reliance on imports to satisfy domestic demand. 122 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. 123 Data from U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. U.S. ferrovanadium producers produced and sold enough material to satisfy an average of [TEXT REDACTED] of apparent domestic consumption between 2016 and 2019. The U.S. exported an VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 Ferrovanadium Ferrovanadium imports to the United States have fluctuated significantly in PO 00000 Frm 00028 Fmt 4701 Sfmt 4703 the past decade, generally tracking higher prices with lower imports, with sources increasingly concentrated in Europe and Canada (see Figure 17). In 2019, the last year for which full data is available, the United States imported roughly 2.3 million kilograms of contained vanadium of ferrovanadium, from Canada (43%), Austria (25%), Russia (6%) and others (26%). These imports accounted for approximately [TEXT REDACTED] of total U.S. demand for ferrovanadium in 2019, with the remaining demand filled by the domestic ferrovanadium producer AMG Vanadium and converter Bear Metallurgical. Import reliance fluctuated between [TEXT REDACTED] from 2016 to 2019, averaging roughly [TEXT REDACTED] over the period.123 BILLING CODE 3510–33–P average of 373,154 kilograms of contained vanadium in ferrovanadium each year, resulting in domestic production filling approximately [TEXT REDACTED] of domestic demand. E:\FR\FM\18NON5.SGM 18NON5 64775 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices Figure 17: Imports of Ferrovanadium, 2010 - 2020 (projected) 2019 Import Value: $167.9 million 6,000,000 $35 E :::, 5,000,000 $30 "C re C: $25 ~ 4,000,000 no ~ ---- "C $20 -"' Q) C: .19 3,000,000 > $15 :::, C: 0 u <( E 2,000,000 $10 re ,_ CLO .2 1,000,000 $5 ::;2 $- 0 llllllllllllill Austria - Canada South Korea illll!II Russia All Others "" 00 AUV ($/kg) Source: ITC Dataweb khammond on DSKJM1Z7X2PROD with NOTICES5 While the United States’ two domestic producers of ferrovanadium have produced and sold enough material to satisfy [TEXT REDACTED] of U.S. demand from 2016 to 2019, the companies’ operations require sourcing vanadium-bearing feedstock in order to produce ferrovanadium. These U.S. producers convert either vanadiumbearing waste products (ash, residues, and spent catalysts) or vanadium pentoxide in order to produce VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 ferrovanadium. Therefore, in order to fully capture the U.S.’s level of reliance on imports for ferrovanadium, U.S. ferrovanadium producers’ reliance on imported feedstock must be taken into account. Ash, Residues, and Spent Refinery Catalyst Feedstock for Ferrovanadium Production AMG Vanadium, one of the U.S.’s two current producers of ferrovanadium, PO 00000 Frm 00029 Fmt 4701 Sfmt 4703 produces ferrovanadium by recycling spent refinery catalysts. Between 2016 and 2019, the [TEXT REDACTED].124 In 2019, U.S. imports of vanadium-bearing waste product were almost exclusively sourced in Canada, with Mexico as the primary other source since 2010, [TEXT REDACTED]. (See Figure 18). 124 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. E:\FR\FM\18NON5.SGM 18NON5 EN18NO21.088</GPH> BILLING CODE 3510–33–C 64776 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices Figure 18: Imports of Vanadium-Bearing Waste, 2010 - 2020 (projected) 2019 Import Value: $54.5 million 9,000,000 $3.00 E 8,000,000 ::::, $2.50 "C re 7,000,000 C: re > $2.00 6,000,000 "C Jf ........ ~ 5,000,000 $1.50 '!!!: re § 4,000,000 E 3,000,000 re ~ 0 ~ > < :::, u $1.00 2,000,000 1,000,00: $0.50 ::■::::· IIIIIIIBIII Canada $0.00 lllllBIIIII Mexico IIIIMRI Kuwait lllllilllllll!I Venezuela lllllll All Others '""""""""·"AUV ($/kg) HTSUS Codes: 2620.40.0030 and 2620.99.1000 Source: ITC Dataweb Vanadium Pentoxide Feedstock for Ferrovanadium Production Another feedstock source used to produce ferrovanadium is vanadium pentoxide. Evergreen Metallurgical (dba Bear Metallurgical (Bear)) operates a Pennsylvania facility that converts customer-provided vanadium pentoxide into ferrovanadium with 80% vanadium content (FeV–80). Bear does not source its own vanadium pentoxide, but instead acts as a service provider by tollproducing vanadium pentoxide into FeV–80 for customers. Since the idling of the only U.S. facility that produces regular grade vanadium pentoxide (less than 99% purity), Bear has been heavily reliant on imported vanadium pentoxide feedstock from its 125 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. 126 Ibid. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 customers.127 That facility was owned by Bear’s parent (Gulf Chemical) prior to their bankruptcy and the idling and sale of the facility in 2017 to Gladieux. Therefore, although Bear’s conversion of vanadium pentoxide into ferrovanadium satisfied approximately [TEXT REDACTED] of total U.S. demand for ferrovanadium between 2016 and 2019, the company [TEXT REDACTED].128 In summary, while domesticallyproduced ferrovanadium was sufficient to meet approximately [TEXT REDACTED] of total domestic demand for ferrovanadium from 2016 to 2019, 127 Gladieux Metals Recycling (GMR) owns a Freeport, Texas facility that converted vanadiumbearing waste products (spent catalysts) into vanadates and vanadium pentoxide (including high purity vanadium pentoxide). The facility was in operation until 2017 when it was idled and sold to new ownership from previous owners Gulf Chemical & Metallurgical Corp. Gladieux has not produced and sold any material since 2017, but is in the process of upgrading the facility, and plans to restart [TEXT REDACTED] U.S. Vanadium operates a facility that produces high purity vanadium pentoxide, typically used in titanium or chemical uses rather than ferrovanadium production. 128 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. PO 00000 Frm 00030 Fmt 4701 Sfmt 4703 both domestic ferrovanadium producers [TEXT REDACTED]. The following section addresses U.S. import trends for vanadium oxides and hydroxides, including regular grade vanadium pentoxide, high purity vanadium pentoxide, and other vanadium oxides and hydroxides. These products are used in Bear’s ferrovanadium conversion activities as well as in the company’s production of vanadium products used for chemical and aerospace applications. Vanadium Oxides and Hydroxides Demand for vanadium oxides and hydroxides—driven by vanadium pentoxide—accounts for close to half of all vanadium demand in the United States. On average, imports of vanadium pentoxide account for over 90% of all oxide imports each year.129 Since 2010, overall vanadium oxide and hydroxide imports, including imports of vanadium pentoxide, have ranged between 2 million and 4.5 million kilograms of contained vanadium (imports in 2020 are projected to fall below two million, the lowest level since 2009) (see Figure 129 ITC E:\FR\FM\18NON5.SGM Dataweb. 18NON5 EN18NO21.089</GPH> khammond on DSKJM1Z7X2PROD with NOTICES5 [TEXT REDACTED].125 [TEXT REDACTED]. However, the company’s initiative to double its production capacity (via the opening of a new facility) means that the company will soon have the ability to [TEXT REDACTED]. [TEXT REDACTED].126 64777 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices 19). Between 2010 and 2015, Russiansourced oxides and hydroxides were a major portion of U.S. imports, accounting for nearly 35% of imports, but were largely replaced by growing imports from Brazil and South Africa beginning in 2016. Figure 19: Imports of Vanadium Oxides and Hydroxides, 2010 - 2020 (projected) 2019 Import Value: $116.8 million 5,000,000 $40 E 4,500,000 $35 ::::, "C 4,000,000 re C: re 3,500,000 $30 > "C Q) .5 ....reC: 3,000,000 2,500,000 0 u 2,000,000 V, E 1,500,000 re $10 j 1,000,000 :.2 500,000 $5 0 $- 111111111111111 South Africa 111111ml Brazil 1111111111111 China lil11lllBIII Russia 11111111 All Others '''"'"'""'"*"''AUV ($/kg) HTSUS Codes: 2825.30.0010 and 2825.30.0050 Source: ITC Dataweb Russian ferrovanadium, which had been absent from the U.S. market from 1997, returned to U.S. markets in 2014 following the October 2011 revocation of the antidumping order. Imports of Russian vanadium oxides have been largely replaced by imports of Russian ferrovanadium, though not at levels approaching the 2010 to 2014 period. Vanadium oxides and hydroxides cover a range of vanadium products with different application areas. A nuanced measurement of the U.S.’s import reliance for this category of goods must take into account each type of product with the category, including regular grade vanadium pentoxide, high purity vanadium pentoxide, and other oxides and hydroxides. Vanadium Pentoxide Vanadium pentoxide can generally be divided into high purity (suitable for use in the chemical and titanium industries) and regular purity (more commonly converted to ferrovanadium VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 for use in the steel industry). No domestic producers are currently producing regular purity vanadium pentoxide, though Gladieux is planning to restart production [TEXT REDACTED]. With Gladieux’s facility idled since 2016, the U.S. has been close to 100% reliant on imports for regular grade vanadium pentoxide. U.S. Vanadium is the primary domestic producer of high purity vanadium pentoxide; Energy Fuels also provided small amounts in 2019. Much of the regular purity vanadium pentoxide in the United States is converted into FeV–80 at Bear’s Pennsylvania facility. With annual vanadium pentoxide imports from 2016 to 2019 averaging 3.8 million kilograms of vanadium content, and the company processing regular purity vanadium an annual average of [TEXT REDACTED] of vanadium content during this period, at least [TEXT REDACTED] of vanadium pentoxide imports were provided to PO 00000 Frm 00031 Fmt 4701 Sfmt 4703 Bear for conversion into ferrovanadium.130 U.S. import reliance on vanadium pentoxide has risen significantly, from 55% in 2016 to 87% in 2017 and to close to 100% in 2018, due in part to the sole domestic producer of regular purity vanadium pentoxide (the Gulf/Gladieux facility in Freeport, Texas) idling operations in order to modernize the facility. The other major producer of vanadium pentoxide—the Hot Springs, Arkansas facility operated by EVRAZ Stratcor until its sale to U.S. Vanadium in 2019, which produces high purity vanadium pentoxide—has reportedly had a history of feedstock supply difficulties leading to production difficulties, which were exacerbated in 2017 following sanctions prohibiting 130 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. E:\FR\FM\18NON5.SGM 18NON5 EN18NO21.090</GPH> khammond on DSKJM1Z7X2PROD with NOTICES5 BILLING CODE 3510–33–C 64778 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices imports from Venezuela.131 As a primary producer of vanadium, Energy Fuels is the only domestic entity entirely independent of foreign sources for generating vanadium pentoxide. Energy Fuels has moderate vanadium pentoxide production capacity, producing high purity vanadium pentoxide containing 460,000 kilograms of vanadium in 2019, of which only a small portion was sold (approximately 410,000 kilograms was unsold and remained in the company’s inventory). However, should vanadium prices rise, Energy Fuels has the capability to restart vanadium mining operations, with the capacity to produce [TEXT REDACTED].132 With Gladieux planning to resume operations and U.S. Vanadium increasing production levels of high purity vanadium pentoxide [TEXT REDACTED], direct U.S. import reliance for vanadium pentoxide will khammond on DSKJM1Z7X2PROD with NOTICES5 131 Bushveld Minerals Limited. Comment in response to Notice of Request for Public Comments on Section 232 National Security Investigation of Imports of Vanadium, July 20, 2020. https:// www.regulations.gov/document?D=BIS-2020-00020013. 132 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 likely decrease in the future. [TEXT REDACTED] 133 However, because U.S. secondary producers are reliant on imports of vanadium-bearing wastes for most of their feedstock, the United States will likely continue to be dependent on foreign sources of vanadium to meet domestic demand for vanadium pentoxide. Other Vanadium Products While ferrovanadium and vanadium oxide products are the most heavily traded vanadium products, the United States is also reliant on imports for other vanadium products including vanadates, vanadium carbides, vanadium sulfates, and vanadium hydrides, sulfides, nitrides, azides, silicides, and borides. Of these products, the United States has production capacity for only vanadium sulfate and vanadate production, and is completely import reliant for vanadium carbides and vanadium hydrides, sulfides, nitrides, azides, silicides, and borides.134 Of these products, vanadium carbides comprised the largest share of trade by a significant margin during the period of study. Imports of vanadium carbides averaged $67 million annually from 2016 to 2019, while the imports of vanadium sulfate, vanadates, and vanadium hydrides, sulfides, nitrides, azides, silicides, and borides combined averaged $9 million annually during the same time period.135 Imports of vanadium carbides, relatively stable since 2010, have come overwhelmingly from South Africa (see Figure 20). The most commonly imported carbide product is in the form of nitrided vanadium carbide sold as Nitrovan®. As noted in the USITC’s 2012 antidumping report for the third sunset review on imports of ferrovanadium and nitrided vanadium from Russia, the U.S. has not produced nitrided vanadium since 1992.136 BILLING CODE 3510–33–P 135 ITC Dataweb. International Trade Commission. Ferrovanadium and Nitrided Vanadium from Russia. Investigation No. 731–TA–702, (Third Review). https://www.usitc.gov/publications/701_ 731/pub4345.pdf. 136 U.S. 133 Ibid. 134 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. PO 00000 Frm 00032 Fmt 4701 Sfmt 4703 E:\FR\FM\18NON5.SGM 18NON5 64779 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices Figure 20: Imports of Vanadium Carbides, 2010 - 2020 (projected) Carbides 2,500,000 $60 $50 2,000,000 $40 V, 00 ...re ........ E 1,500,000 ~ $30 '!!!; tlO .2 :.2 1,000,000 $20 500,000 $10 $- 0 111111111111111 > < :::, South Africa BI\IIII Brazil llllllllllllil China llllllllllll Russia !l!llill All Others '"'""'''"'''"'"'"''AUV ($/kg) HTSUS Code: 2849.90.5000 Source: ITC Dataweb In summary, understanding the overall U.S. import reliance on vanadium must take into account the structure of the vanadium supply chain, including the original feedstock of the vanadium products. [TEXT REDACTED]. The United States has no producers of vanadium carbides, nor of vanadium hydrides, nitrides, azides, silicides, and borides. For the balance of vanadium products the United States is not directly import reliant, but to the extent that it is reliant on imports of vanadium feedstock and vanadium pentoxide, it is because these products depend on non-U.S. origin inputs. [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4703 E:\FR\FM\18NON5.SGM 18NON5 [TEXT REDACTED] EN18NO21.091</GPH> khammond on DSKJM1Z7X2PROD with NOTICES5 [TEXT REDACTED] 64780 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices [TEXT REDACTED]—Continued [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] [TEXT REDACTED] 2. U.S. Reliance on Imports of Vanadium Is Not Increasing Imports of contained vanadium to the United States have not increased since 2014 and have decreased moderately since that time (see Figure 22). Even before the 2020 plunge in imports (driven by COVID–19-related demand declines), overall contained vanadium imports in 2019 were 4% below the 2010–2019 average. Figure 22: Imports of Contained Vanadium, 2010 - 2020 (projected) 18,000,000 16,000,000 I~ Vanadium Hydrides, Nitrides, Azides, Silicides, and Borides E 14,000,000 .2 Ill! Vanadium Ore and "C re C: re 12,000,000 Concentrates > "C Ill Vanadium, Unwrought and Wrought 10,000,000 Q) .5 ....reC: 8,000,000 0 u l1!lil Van ad ates 1111 Vanadium Carbides V, E ...re 6,000,000 tlO 0 ~ 4,000,000 II Ferrovanadium 2,000,000 11111 Vanadium Oxides and Hydroxides 0 II Ash and Residues Containing Vanadium Source: ITC Dataweb Further, import reliance is not likely to increase. Major U.S. producers of ferrovanadium and vanadium pentoxide are in the process of expanding or restarting operations. U.S. capacity for ferrovanadium production from vanadium-bearing waste will more than double in 2021 with the opening of AMG Vanadium’s new facility; the production increase will exceed annual average imports of ferrovanadium. U.S. capacity for vanadium pentoxide VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 production from vanadium-bearing waste will also [TEXT REDACTED]. However, despite these upcoming significant increases in vanadium pentoxide and ferrovanadium production capacity, the United States will remain heavily reliant on foreign sources of vanadium, as significant quantities of the feedstock that U.S. producers use are sourced from outside the country. Mitigating factors on this PO 00000 Frm 00034 Fmt 4701 Sfmt 4703 reliance include that [TEXT REDACTED].137 In addition, several mining companies with locations in the United States have idle production capacity, significant inventory, and/or are exploring the development of vanadium mines. For example, Energy Fuels retains 410,000 kilograms of vanadium in inventory from 2019 production, and has 137 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. E:\FR\FM\18NON5.SGM 18NON5 EN18NO21.092</GPH> khammond on DSKJM1Z7X2PROD with NOTICES5 BILLING CODE 3510–33–C Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices indicated the ability to produce [TEXT REDACTED].138 The Gibellini project in Carlin, Nevada expects to receive permits in 2021 and begin production in 2023, with an annual production forecast of 2.4 million kilograms of vanadium content per year.139 Should both of these producers achieve their full capacity, their production would equal [TEXT REDACTED] of vanadium content per year, or [TEXT REDACTED] of annual domestic demand from 2016 to 2019. An increase in the availability of domestic primary vanadium, expansion of secondary production, and the addition of domestic feedstock for secondary production would mitigate current high reliance on imports. 3. Prices Vanadium prices have a long history of volatility, with resulting impacts on the availability of vanadium resources and the viability of vanadium producers, as well as patterns of investment. The benchmark vanadium pentoxide price has more than doubled in short spans three times since 2004, most notably rising from $7 per pound in September 2004 to nearly $35 per pound in May 2005 before falling to $10 per pound by June 2006. Such cycles may be more the standard than an anomaly in the vanadium industry. In 1977, the primary U.S. producer of vanadium oxide—Union Carbide—cut its production due to low prices and, in 1978, announced the 138 Ibid. khammond on DSKJM1Z7X2PROD with NOTICES5 139 Silver Elephant Mining Corporate Presentation: Gibellini Vanadium, https:// www.silverelephantmining.com/projects/gibellinivanadium/. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 idling of its Arkansas mine and mill.140 Less than a decade later, in 1985, the U.S. Bureau of Mines wrote that the domestic vanadium industry was in the midst of a ‘‘major restructuring . . . triggered by (1) the sharp decline in ferrovanadium consumption by U.S. steel producers during the 1982–83 recession, and (2) continuing depressed prices for co-product uranium oxide.’’ 141 Just four years later, they reported: The year 1988 proved to be a boom year for vanadium producers as tight supply and strong demand by the steel industry and other consumers pushed up the price of vanadium compounds. . . . By the end of 1989, vanadium’s fortunes had turned full circle as the market witnessed prices headed for levels lower than at any time since the early 1980s.142 Price-related closures and investments have continued. The Australian Windimurra mine, for instance, closed as the result of low prices in 2003 only to be purchased by a new company when prices spiked in 2005. After an investment of more than $100 million, prices fell and the mine was not reopened.143 In the United States, during the latest price spike, AMG Vanadium announced the 140 Bureau of Mines Minerals Yearbook, Vanadium 1977. 141 Bureau of Mines Minerals Yearbook, Vanadium 1985. 142 Bureau of Mines Minerals Yearbook, Vanadium 1989. 143 McKinnon, Stuart. Vanadium Price Boom Offers Hope of WIndimurra Revival. The West Australian, April 2, 2018. Available at https:// thewest.com.au/business/mining/vanadium-priceboom-offers-hope-of-windimurra-revival-ngb88792684z. PO 00000 Frm 00035 Fmt 4701 Sfmt 4703 64781 approval for construction of its new facility (in October 2018); 144 the owners of the Gibellini property completed its Preliminary Economic Assessment (PEA) (in May 2018); and First Vanadium carried out its maiden mineral resource classification (in February 2019). The introduction of new capacity is tied to vanadium prices, as extraction that is not viable at $6 per pound vanadium pentoxide can become profitable at $12 per pound. First Vanadium’s PEA assumes a vanadium pentoxide price of $10.65 per pound, well above current prices, and a cost of production of $5.17 per pound.145 Only [TEXT REDACTED] U.S. producers of vanadium pentoxide or vanadium ore indicate the ability to produce at current prices, though the number of producers rises [TEXT REDACTED] once prices increase to $10 per pound of vanadium pentoxide and [TEXT REDACTED] at $13 per pound.146 This is consistent with the world cost curve, which shows most currently viable production operates below a cost of $8 per pound (see Figure 23). BILLING CODE 3510–33–P 144 AMG ADVANCED METALLURGICAL GROUP N.V. COMPLETES FEASIBILITY STUDY TO EXPAND SPENT CATALYST PROCESSING CAPACITY. https://amg-v.com/oct-16-18-news/. 145 First Vanadium Announces Positive Preliminary Economic Assessment for the Carlin Vanadium Project in Nevada https:// www.firstvanadium.com/index.php/news/2020/ 548-irstanadiumnnouncesositive reliminaryconomicsse20200511). 146 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. E:\FR\FM\18NON5.SGM 18NON5 64782 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices Figure 23: Vanadium Pentoxide Production Costs $fB.OO $1llr,OO $14,00 ~ $1l,N $:lOJXI $:!MIO $&.00 $4.00 $2.00 U,000 00,!l«l I0,!!00 10(!,000 110,000 Pf~l.lftlffl'I OlpK!f'I' !MTV) ~~; TIil• ,;,,,,..,.,,,,! tftl:, Source: Teny Perles, Ferroalloynet.com Vanadium Forum, March 7, 2019. htt ://www.s artonres.ca/ -content/u loads/2019/03/Presentation-T -IO-Ex-China-Vanadium-Market. df 4. Employment Although never a major employer, aggregate employment in the U.S. vanadium industry has waxed and waned during the last decade. The sector currently employs more people than it has during that time period, however, this current increase has not been shared equally across industry participants. While some producers have added employees, others have not. Employment levels among vanadium producers were most notably affected by the 2017 idling and ongoing refurbishment of Gladieux’s Texas facility. The facility’s closure caused aggregate industry employment to drop sharply in 2017 but the numbers rebounded sharply in 2018 (see Figure 24). Figure 24: Aggregate lJ.S. Vanadium Production Employment 1200 1000 800 797 V, Q) Q) > 0 C. E LU 600 400 200 2016 2017 2018 2019 2020 EN18NO21.094</GPH> Year Source: U.S. Department of Commerce, Bureau of Industry and Security, Vanadium Survey Includes em lo ees and contractors VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4725 E:\FR\FM\18NON5.SGM 18NON5 EN18NO21.093</GPH> khammond on DSKJM1Z7X2PROD with NOTICES5 0 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices BILLING CODE 3510–33–C [TEXT REDACTED] Most U.S. producers of vanadium products indicate that the volatility of vanadium prices make it difficult to recruit and retain employees. [TEXT REDACTED] khammond on DSKJM1Z7X2PROD with NOTICES5 5. Financial Outlook The U.S. vanadium production industry is small and in the midst of significant restructuring, making the industry’s overall financial outlook difficult to characterize. However, it is clear that the industry has been significantly impacted by rapid changes in vanadium prices, particularly the collapse in price in 2019 from a high of approximately $30 per pound of vanadium pentoxide in November 2018 to less than $7 per pound by the end of 2019 and by the ongoing impacts of COVID–19 on the steel and titanium industries. [TEXT REDACTED] [TEXT REDACTED] 147 Given its acquisition of EVRAZ Stratcor’s Arkansas facility in October 2019, it is difficult to fully assess the financial health of U.S. Vanadium, as the facility’s business practices are in transition. [TEXT REDACTED] [TEXT REDACTED] The facility of the remaining U.S. secondary producer, Gladieux, remains idle as the company completes the extensive modernization started after Gladieux purchased the facility from Gulf Chemical in 2017. [TEXT REDACTED] [TEXT REDACTED] The only other company that has produced vanadium production since 2016 is Energy Fuels Resources, whose primary business line is uranium mining. [TEXT REDACTED] [TEXT REDACTED] 6. Exploration In addition to Energy Fuels’ primary production capacity, several other companies have properties that have mined vanadium in the past or are now under exploration. However, future profitable production at any of these properties is dependent upon an increase in the price of vanadium. Western Uranium & Vanadium [TEXT REDACTED].148 Nuvemco, LLC owns the Last Chance Mine in Colorado, which has been idle since 2009 but the company says can 147 AMG Annual General Meeting Minutes (May 1, 2019), as provided in public comments by Bushveld Minerals Limited, available at https:// www.regulations.gov/document?D=BIS-2020-00020013. 148 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 return to operations within 120 days.149 [TEXT REDACTED] Two additional projects are under development: First Vanadium Corporation’s Carlin Vanadium Project and Nevada Vanadium LLC’s (Nevada Vanadium) Gibellini Vanadium Project. The Gibellini project is in the permitting process, with BLM expected to reach a decision by August 2021.150 Nevada Vanadium plans to begin production in late 2023, producing vanadium pentoxide with 33 million kilograms of vanadium content over 14 years.151 [TEXT REDACTED] First Vanadium Corporation completed the PEA for its Carlin project in 2020, forecasting 16 years of vanadium production capabilities totaling 46 million kilograms of vanadium content.152 [TEXT REDACTED] 7. Capital Expenditures U.S. producers of vanadium have made significant capital expenditures in the last four years, with the construction of AMG Vanadium’s new Ohio facility and Gladieux’s overhaul of its Texas facility at the forefront. AMG Vanadium’s expansion will more than double its ferrovanadium production capacity, adding over 2.5 million kilograms per year of capacity and 100 new jobs at an estimated cost of $200 million.153 [TEXT REDACTED] Gladieux has invested more than [TEXT REDACTED] in the restart of its Texas facility, planning to open vanadium pentoxide production [TEXT REDACTED] with [TEXT REDACTED]. [TEXT REDACTED] Among potential primary producers, [TEXT REDACTED] 8. Environmental Factors Vanadium-bearing waste products— the primary source material for vanadium production in the United States—are classified by the EPA as 149 https://www.nuvemco.com/Projects.html. 150 Bureau of Land Management Accepting Comments for Gibellini Mine, August 17, 2020. Available at https://www.blm.gov/press-release/ bureau-land-management-accepting-commentsgibellini-mine. 151 Silver Elephant Mining Corporate Presentation: Gibellini Vanadium, https:// www.silverelephantmining.com/projects/gibellinivanadium/. 152 ‘‘First Vanadium Announces Positive Preliminary Economic Assessment for the Carlin Vanadium Project in Nevada’’, https:// www.firstvanadium.com/index.php/news/2020/ 548-irstanadiumnnounce sositivereliminaryconomicsse20200511. 153 AMG Vanadium Constructing a Second Ohio Plant, Investing More Than $200 Million. https:// www.jobsohio.com/news/posts/amg-vanadiumconstructing-a-second-ohio-plant-investing-morethan-200-million/. PO 00000 Frm 00037 Fmt 4701 Sfmt 4703 64783 hazardous wastes.154 The recycling of these materials and reclamation of critical minerals constitutes an important step in both protecting human health and promoting an assured supply of critical minerals. AMG Vanadium claims a ‘‘99% conversion rate for all raw material,’’ and has a policy not to send spent catalyst to landfill.155 However, the recycling and reclamation process is expensive and subject to fines if not implemented correctly or fully. For example, one of the causes of Gulf’s 2016 bankruptcy was the challenge and resulting costs of managing the pollutants from its Texas facility. The company spent more than $60 million on environmental protection-related expenditures and fines between 2010 and 2016. As noted above, since Gladieux purchased the facility in 2017, it has invested more than [TEXT REDACTED] in updating the facility to ‘‘best in class’’ standards. Most vanadium-bearing spent catalysts are covered by a rule published by the EPA on August 26, 1998.156 That rule identifies spent catalysts from hydrotreating and hydrorefining as hazardous wastes, does not comment on spent hydrocracking catalyst. In 2002, the EPA later issued a clarification of the scope of the hazardous waste listings; as part of that rulemaking process, the agency gathered industry data on quantities of spent catalyst generated and recycled in the United States.157 This data showed that the country generated 31,313 tons of spent catalyst classified as hazardous waste in 1999, with 55% of it recycled/ reclaimed. The EPA estimated the cost of reclamation at $725 per ton, while the cost of landfilling the catalyst was $240 per ton; low vanadium prices were cited as one potential reason for the difference in cost. Safe processing of refinery byproducts is essential for continued oil refining in the United States. With valuable minerals contained in these waste products and human health and environmental risks stemming from their improper disposal, encouraging safe full value extraction will support the long term economic health and competitiveness of the country. However, solutions to the recycling of refinery byproducts in the United States attractive to current producers, especially while vanadium prices 154 63 FR 56710. 155 https://amg-v.com/wp-content/uploads/2019/ 11/The_Gold_Standard_Risk_Mitigation_ Handbook_Nov_2019.pdf. 156 63 FR 42110. 157 https://archive.epa.gov/epawaste/hazard/web/ pdf/backdoc.pdf. E:\FR\FM\18NON5.SGM 18NON5 64784 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices remain below levels that allow for profitable production, are essential. C. Displacement of DomesticallyProduced Vanadium by Imports Affects Our Internal Economy, but Is Mitigated by Ongoing Actions khammond on DSKJM1Z7X2PROD with NOTICES5 1. U.S. Production of Vanadium Is Well Below Domestic Demand Between 2016 and 2019, the United States produced an annual average of 3.4 million kilograms of contained vanadium from primary or secondary production while importing 7.8 million kilograms of contained vanadium in the form of ferrovanadium, vanadium pentoxide, and carbides. Production capacity in 2020 remained insufficient to meet domestic demand, with nonconversion production capacity totaling [TEXT REDACTED] of contained vanadium. Domestic production capacity will greatly expand in the near future with AMG Vanadium’s expansion in Ohio planned to open in 2021 with capacity to produce ferrovanadium with [TEXT REDACTED] from spent catalyst, and Gladieux’s overhaul of their Texas facility expected to be completed [TEXT REDACTED].158 These additions will raise U.S. production capacity [TEXT REDACTED]. Additionally, should vanadium prices increase sufficiently, Nevada Vanadium’s Gibellini mine could begin production in 2023 with an estimated annual production level of 2.4 million kilograms of contained vanadium.159 2. Domestic Production Is Highly Concentrated and Limits Capacity Available for a National Emergency There were just three companies that carried out vanadium production in 2019—AMG Vanadium, US Vanadium, and Energy Fuels—with one additional company—Gladieux—idle for renovation. [TEXT REDACTED] Several companies have undertaken major investments in vanadium production capacity in anticipation of higher prices, but should prices not increase, one or more secondary producers may face challenges to continue production and additional mine capacity is unlikely to come on line. Producers of high purity vanadium pentoxide face particular challenges because the primary destination of their product is the titanium industry, which has been significantly impacted by the 158 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. 159 Silver Elephant Mining Corporate Presentation: Gibellini Vanadium, https:// www.silverelephantmining.com/projects/gibellinivanadium/. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 COVID–19-related drops in air travel and, accordingly, aerospace industry production. There is no clear marker for when domestic aerospace production will begin to recover. Additionally, other than the approximately 10% of industry demand from titanium and non-metallurgical uses, domestic producers of vanadium pentoxide are reliant on toll converter Bear to supply product to the steel industry. [TEXT REDACTED] Reactivation of idle capacity is not a quick process. [TEXT REDACTED] However, adding new capacity would take significantly longer than reactivating existing facilities. While AMG Vanadium’s new facility is projected to take about two years to complete, this is a relatively short time period that reflects the company’s experience and the fact that the facility under construction is similar to its existing facility. The exploration and construction of primary production facilities in the United States takes significantly longer than the secondary production facility construction illustrated by AMG Vanadium. A more typical timeline may be Nevada Vanadium’s Gibellini mine—the new project most likely to receive a permit— which carried out its PEA in 2018, is expected to receive permitting from BLM in 2021, and hopes to begin production in 2023, more than five years after its PEA. These limitations represent a threat to the continued availability of domestically produced vanadium pentoxide, as needed to support national defense and critical infrastructure needs. 3. Domestic Vanadium Production Currently Requires Significant Imports of Vanadium Feedstock, Limiting Capacity Available for a National Emergency Vanadium production in the United States is reliant on imports of vanadium feedstock to produce all vanadium products. The only vanadium producer in recent years to use entirely U.S. origin material is primary producer Energy Fuels, which has produced 460,000 kilograms of contained vanadium since 2016, accounting for 1.4% of U.S. apparent consumption. Secondary producers AMG Vanadium, U.S. Vanadium, and Gladieux have all historically used foreign sources of vanadium-bearing wastes to provide portions of their feedstock. [TEXT REDACTED] Current sourcing practices leave the United States unable to meet domestic demand with U.S.-sourced material; [TEXT REDACTED]. Although Energy PO 00000 Frm 00038 Fmt 4701 Sfmt 4703 Fuels’ 2019 production of high purity vanadium pentoxide with 460,000 kilograms of vanadium content [TEXT REDACTED] is likely sufficient to meet defense system requirements (which are estimated above at less than 300,000 kilograms of contained vanadium per year), other national security requirements cannot currently be met using only U.S.-origin vanadium. 4. Trade Actions Have Been Successful in Mitigating Artificially Low-Priced Imports of Vanadium Of the four countries with significant primary production of vanadium, three (Russia, China, and South Africa) have been subject to the imposition of antidumping duties on ferrovanadium by the Department and the USITC. Although not a primary producer, Korea has also been subject to antidumping duties. In all cases, after the duties were imposed, imports of ferrovanadium decreased significantly. These cases show the longstanding and repeated success of antidumping duties in countering imports of ferrovanadium products sold in the United States at less than fair value. 5. Critical Minerals Agreements Will Help Ensure Reliable Supplies of Vanadium In June 2019 the Department issued a report, A Federal Strategy to Ensure a Reliable Supply of Critical Minerals. This report ‘‘outlines a coordinated approach by the Federal Government in response to Executive Order 13817 to reduce the Nation’s vulnerability to disruptions in the supply of critical minerals.’’ The Federal Strategy includes six calls to action, covering 24 goals and 61 recommendations, to achieve the goals put forth in E.O. 13817. One of these calls to action is ‘‘Enhance International Trade and Cooperation Related to Critical Minerals,’’ and recommends working with allies to ensure access to critical minerals as well as ‘‘robust enforcement of U.S. trade laws and international agreements.’’ 160 To achieve this goal, the Federal Strategy proposes that the USG establish intergovernmental agreements with partner countries, focused on ensuring continued access to critical minerals. The Federal Strategy recommends that the USG continue to expand cooperation and collaboration with interested parties on critical minerals issues related to: (1) Resource identification and exploration; 160 https://www.commerce.gov/sites/default/files/ 2020-01/Critical_Minerals_Strategy_Final.pdf. E:\FR\FM\18NON5.SGM 18NON5 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices (2) processing and recycling; (3) mitigating supply risk and preventing supply chain disruptions; (4) research and development related to critical mineral materials and manufacturing and; (5) tracking and sharing information on foreign investment and acquisitions of mineral rights, property, and development. Among the achievements resulting from this call to action to date are: U.S.-Canada Joint Action Plan on Critical Minerals khammond on DSKJM1Z7X2PROD with NOTICES5 In January 2020, the United States and Canada announced the finalization of the U.S.-Canada Joint Action Plan on Critical Minerals Collaboration.161 The plan aims to facilitate development of secure supply chains for critical minerals that are key to strategic industries. This bilateral initiative addresses concerns about reliance on other countries for the supply of minerals critical to defense, aerospace, communications, and other strategic industries. As part of the joint action plan, Canada and the United States have identified areas for cooperation, including: (i) Securing critical mineral supply chains for strategic industries and defense; (ii) improving information sharing on mineral resources and potential; (iii) engaging with the private sector; (iv) collaborating in multilateral fora and with other countries; (v) undertaking research and development initiatives; (vi) engaging in supply chain modeling; and (vii) increasing support for the metals and mining industry. As a result of its strong political and economic ties to the United States, the shared border, its stable regulatory environment, and an abundance of mineral resources, collaboration with Canada provides the United States a path to expanded secure supplies of critical minerals, including vanadium. Although not a current producer of vanadium, Canada has several projects underway, including BlackRock Metals’ Chibougamou mine, which may begin production in 2021 with planned annual production of more than 4,000 tons of vanadium, close to half the U.S.’s average annual consumption from 2016 to 2019 of 8,590 tons. U.S.-Australia Critical Minerals Plan of Action In November 2019, the United States and Australia formalized a partnership to collaborate on research and increase 161 https://www.state.gov/united-states-andcanada-finalize-action-plan-on-critical-mineralscooperation/. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 critical minerals capacity.162 The activities under the Plan of Action include focusing on resource mapping and quantitative assessments, determining geological controls on critical minerals distribution, and improving understanding of supply and demand scenarios for shared critical minerals trade between the United States and Australia. As Australia is one of six countries in the world with USGS-recognized vanadium reserves, and has five exploration projects in advanced stages, this partnership holds significant promise to support U.S. access to reliable sources of vanadium. D. Increased Global Capacity and Production of Vanadium Will Further Impact the Long-Term Viability of U.S. Vanadium Production 1. China Possesses an Outsized Role in the Global Price of Vanadium China accounts for an estimated 50 to 60% of global vanadium production, with a similar level of demand. This concentration of production and consumption means that policy changes in China can have large effects on the global vanadium market. As Energy Fuels’ vice president Curtis Moore said in 2019, ‘‘the biggest driver of vanadium prices is economic and industrial policy in China, which is opaque to say the least.’’ 163 The spike in vanadium prices from 2017 into 2018 was largely attributed to a change in Chinese steel rebar standards to require the addition of more vanadium.164 Similarly, the precipitous fall in prices following the implementation of the standard on November 1, 2018 has been linked to ‘‘enforcement of the standards not being as stringent as previously expected,’’ as well as the substitution of niobium for vanadium due to price increases.165 Finally, Chinese vanadium pentoxide production in the first half of 2019 was 30% higher than in the first half of 2018, increasing supply more than 162 https://www.doi.gov/pressreleases/united- states-and-australia-formalize-partnership-criticalminerals. 163 Barrera, Priscili. Vanadium Outlook 2020: Is Vanadium Due for a Comeback? December 31, 2019. https://investingnews.com/daily/resource-investing/ battery-metals-investing/vanadium-investing/ vanadium-outlook. 164 Vanadium: Prices soar as new rebar regulations take effect. November 1, 2018. https:// roskill.com/news/vanadium-prices-soar-as-newrebar-regulations-take-effect/. 165 Radford, Charlotte and Lv, Amy. Focus: Why China’s implementation of new rebar policy is failing to support vanadium prices. December 20, 2018. https://www.metalbulletin.com/Article/ 3850389/FOCUS-Why-Chinas-implementation-ofnew-rebar-policy-is-failing-to-support-vanadiumprices.html. PO 00000 Frm 00039 Fmt 4701 Sfmt 4703 64785 anticipated and further driving prices down.166 China’s ability to influence vanadium markets through supply, demand, and policy changes has a significant impact on the ability of companies in the United States to plan investments and production decisions. 2. Expansion of Low-Cost Production in Several Countries Will Place Downward Pressure on Global Vanadium Prices In 2019, total production of primaryand co-produced (mine) vanadium was 73,000 metric tons. However, there are mines in development or exploration in Kazakhstan, Canada, and Australia which have the estimated capacity to add 12,408 tons of production in 2021, and 57,000 additional metric tons in future years, should all projects enter production.167 The owners of the Kazakh mine have claimed it can operate ‘‘at the world’s lowest cash cost of production.’’ By contrast, mine facilities in the United States are expected to have the capacity to produce 3,100 tons of vanadium in 2021, with an additional 2,900 tons per year in exploration.168 This amount would satisfy the majority of current domestic demand, but is not likely to be produced without higher vanadium prices. In addition to primary vanadium, AMG Vanadium plans to open its new Ohio facility in 2021, with the capacity to [TEXT REDACTED].169 The company is also exploring the construction of similar facilities in Saudi Arabia and China, and has noted that their recycling operations have little dependence on the cost of vanadium, with recycling fees driving profits.170 The ability to generate cash flow independent of vanadium costs could result in the introduction of new capacity even at low vanadium prices. Barring significant new demand for vanadium, the addition of new sources 166 Lv, Amy. Oversupply to persist for China V market. August 16, 2019. https://www.amm.com/ Article/3889693/Oversupply-to-persist-for-China-Vmarket.html. 167 Data from USGS, Government of Australia, BlackRock Metals, VanadiumCorp Resources, Vanadium One Iron Corporation, and Ferro-Alloy Resources Group. 168 Data from Energy Fuels Resources (USA), First Vanadium Corporation, and Silver Elephant Mining. 169 U.S. Department of Commerce, Bureau of Industry and Security, Section 232 Investigation into Imports of Vanadium Survey. 170 Bushveld Minerals Limited. Comment in response to Notice of Request for Public Comments on Section 232 National Security Investigation of Imports of Vanadium, July 20, 2020. https:// www.regulations.gov/document?D=BIS-2020-00020013. E:\FR\FM\18NON5.SGM 18NON5 64786 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices of supply will continue to impact vanadium prices. khammond on DSKJM1Z7X2PROD with NOTICES5 3. Downward Price Pressure May Be Mitigated by Increased Demand for Steel, Titanium, and Energy Storage With the steel industry consuming approximately 90% of vanadium demand, changes in vanadium consumption are largely tied to that industry. Global steel production in 2020 was affected by the COVID–19 pandemic, and had a forecasted decline of 2.4%.171 Steel production in the United States saw a much larger decrease of approximately 18% from 2019.172 The declines in steel production impact vanadium prices, which had not recovered since falling from a peak of nearly $34 per pound vanadium pentoxide in November 2018 to $6 per pound in December 2019.173 While steel demand, and accordingly vanadium demand, is projected to bounce back in 2021 to 4.1% growth, longer range forecasts estimate global steel demand growing at an annual rate of 1.4% through 2035.174 Increased vanadium use within the steel industry, such as that resulting from implementation of the 2018 regulation in China requiring the addition of vanadium to steel rebar and increased demand for high strength and tool steel, may provide additional growth in vanadium demand, with Vanitec (a global vanadium industry association) forecasting a 30% increase in vanadium demand by 2025.175 The titanium industry, with approximately 55% of demand coming from the aerospace sector, has been even more significantly affected by COVID– 19 than the steel industry. Global titanium sponge production was projected to decline [TEXT REDACTED] from 2019 to 2020, with titanium shipments falling [TEXT REDACTED].176 Prior to the pandemic, titanium alloy growth rates were forecasted in the 3 to 5% per year range, and expected to track closely with 171 Worldsteel Short Range Outlook October 2020. October 15, 2020. Available at https:// www.worldsteel.org/media-centre/press-releases/ 2020/worldsteel-Short-Range-Outlook-October2020.html. 172 Data as of December 16, 2020. https:// www.steel.org/industry-data/. 173 Vanadium pentoxide flake 98% purity, China price. Vanadiumprice.com. 174 Steel Demand Beyond 2030: Forecast Scenarios. Presented to OECD, Paris, September 28, 2017. Available at https://www.oecd.org/industry/ ind/Item_4b_Accenture_Timothy_van_ Audenaerde.pdf. 175 7th Vanitec Energy Storage Meeting, June 29, 2020. https://www.vanitec.org/vanadium/ESCMeetings. 176 Information presented to U.S. Government Titanium Sponge Working Group. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 aircraft demand.177 To the extent that the end of the pandemic spurs air travel to return to previous levels and growth rates, longer term titanium demand could provide support for vanadium prices. The energy storage sector is another potential area for growth in vanadium demand. While the demand for vanadium redox flow batteries have not yet seen massive growth, Growth estimates vary wildly, from Roskill’s 13% per annum growth to Bushveld Mineral’s ‘‘aggressive forecast’’ of 42% annual growth.178 The relatively conservative Roskill estimate would account for added demand by 2027 of 5,000 tons of vanadium, while Bushveld’s forecast would have vanadium redox flow battery demand increasing by 93,000 tons by 2027, exceeding 2017 total vanadium production. 4. Significant Price Swings Impair the Ability of Domestic Producers To Plan and Carry Out Capital Expenditures The historic volatility of vanadium prices make it difficult for producers to plan and follow through on investments in new capabilities. Although many industry projects take four or more years to complete, it is likely that vanadium market conditions and prices will change significantly between the beginning and the end of a project, impacting the project’s viability and access to financing. For example, when Gulf filed for bankruptcy in June 2016, vanadium pentoxide prices had recent lows of $3 per pound. At the time of Gladieux’s purchase of Gulf’s facility, prices had risen to close to $6 per pound. While Gladieux has been updating the facility, prices have spiked to $30 per pound in November 2018, but fell back to $6 a year later. [TEXT REDACTED] The most advanced primary vanadium exploration project underway in the United States has had a similar experience. Nevada Vanadium completed the PEA for the Gibellini project in June 2018, when vanadium pentoxide prices were $15 per pound. The PEA used a forecast price of $12.73, and reflects a 14-year breakeven price of 177 Fior Markets Titanium Alloys Markets, Published May 2019; Research and Markets Titanium Alloys And Ultrafine Titanium Dioxide Global Market Opportunities And Strategies To 2023, May 2019; Titanium USA 2018 Conference, October 7–10, 2018. 178 Bushveld Minerals, Energy Storage & Vanadium Redox Flow Batteries 101. November 13, 2018. https://www.bushveldminerals.com/wpcontent/uploads/2018/11/Energy-StorageVanadium-Redox-Flow-Batteries-101.pdf. PO 00000 Frm 00040 Fmt 4701 Sfmt 4703 $7.76 per pound.179 With current prices below the breakeven level and an estimated [TEXT REDACTED] required to construct and open the mine, completion of the project may be postponed or cancelled unless vanadium prices have risen before the expected BLM permit decision in August 2021. [TEXT REDACTED] Similar price challenges exist at other domestic mining projects, with limited investment expected absent a rise in vanadium prices. [TEXT REDACTED] In summary, while significant domestic resources of vanadium exist, the long project lead times and volatile vanadium prices often create challenges in obtaining the investments necessary to bring the projects to completion. E. Unilaterally Increasing Domestic Prices of Vanadium Would Harm Critical U.S. Industries 1. Domestic Vanadium Prices Significantly Exceeding World Prices Would Disadvantage the U.S. Steel Industry Imports of steel products are currently subject to adjustment based on the finding of a threat to national security in the Secretary’s 2018 Steel Report. That report found that the domestic steel industry was threatened by lowcost imports and recommended enhancing the industry’s viability through the imposition of tariffs. In imposing a 25% tariff on imports, the President also authorized the creation of an exclusions process, whereby companies could request an exclusion from the tariff. Since the start of the exclusions process in March 2018, more than 250,000 requests for exclusion from the steel tariff have been filed, reflecting significant interest in avoiding additional costs related to the domestic sale of steel products. With annual production in the U.S. worth $92 billion, the estimated $300 million in vanadium demand attributable to the steel industry represents less than 1% of total cost. However, in an industry with small profit margins and under threat from low-cost imports, additional costs for U.S. companies that foreign companies do not bear can be determinative on the company’s survival. While not all steel products contain vanadium, some parts of the steel industry require it. Analysis of exclusion request data showed that 24% of the requests for exclusion from the Section 232 steel tariff involved a product with at least some vanadium, 179 https://www.silverelef.com/files/Gibellini_ 2018_PEA_Technical_Report.pdf. E:\FR\FM\18NON5.SGM 18NON5 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES5 and 9% of requests required at least 1% vanadium. Vanadium accounts for a significant percentage of the cost of the steel products in which it is an ingredient, with the result that small changes in the price of vanadium can have a major effect on the overall steel product cost. The cost per ton of vanadium is some 20 to 30 times that of steel products, meaning a 50% rise in vanadium prices would result in a more than 1% increase in the cost of rebar with 0.1% vanadium by weight.180 For products such as high speed steel with significantly higher vanadium content, the impact can be significantly higher. In an industry such as the steel industry that is already threatened by low-cost imports, imposing additional costs could have a major impact. An increase in the domestic cost of vanadium, while beneficial in the short term to the domestic vanadium industry, would be harmful to the steel industry and encourage the import of steel products that contain vanadium, to the detriment of both the domestic steel and vanadium industries. 2. Domestic Vanadium Prices Significantly Exceeding World Prices Would Harm the U.S. Titanium Industry, to the Benefit of Russian and Chinese Titanium Producers Although the titanium industry uses far less vanadium than the steel industry, it is much more dependent on vanadium. For most steel uses of vanadium, substitution of niobium or molybdenum is possible, but vanadium is essential to most aerospace applications using titanium. The most common titanium alloy, Ti-6Al-4V, contains 4% vanadium by weight, but represents between 12 and 14% by cost. Further, nearly all vanadium-containing titanium products are used in the aerospace and military sectors, both essential to national security. Titanium, like vanadium and steel, is critical to national security, and was also subject to a Section 232 investigation, based on imports of titanium sponge. One significant concern for the titanium industry is the expansion of low-cost, vertically integrated Russian and Chinese titanium producers. One of the findings of the titanium sponge investigation was that increases in the Chinese and Russian premium quality sponge production threatens the viability of domestic U.S. titanium suppliers to the aerospace industry. The report found that Chinese 180 Average 2016–2019 vanadium pentoxide prices of $9.80 per pound, equivalent to $21,560 per ton. Rebar cost estimated at $1000 per ton. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 and Russian sponge producers, underwritten by government support, have or are moving toward creating vertically integrated titanium supply chains that undercut U.S. producers. Because it is able to provide the necessary quality of titanium at lower prices than U.S. producers, Russian titanium producer VSMPO-Avisma provides 35% of Boeing’s titanium products, and 50% of Airbus’s titanium products. The threat to U.S. titanium producers from low-cost imports has increased since the titanium sponge investigation ended, as a result of the impact that COVID–19 has had on global titanium demand. Titanium shipments fell [TEXT REDACTED] from 2019 to 2020. Further, demand [TEXT REDACTED]. As a result of these factors, the U.S. titanium industry is facing severe hardship, and any product cost increases in the United States will likely to further disadvantage the industry relative to Chinese and Russian suppliers. VIII. Conclusion A. Determination Based on the findings in this Report, the Secretary concludes that the present quantities and circumstance of vanadium imports do not threaten to impair the national security as defined in Section 232. Although vanadium is critical to national security and the United States is dependent on imported sources of vanadium, several significant factors, including the health of the U.S. industry, the availability of idle domestic resources, ongoing USG actions, and the importance of vanadium to maintaining competitive steel and titanium industries, indicate that imports of vanadium do not threaten to impair national security. The United States is reliant on imports to satisfy demand for vanadium products and is not producing significant amounts of vanadium from U.S.-origin material, but these conditions are not expected to deteriorate further. A number of U.S. vanadium producers are increasing their production capacity and/or modernizing currently idled facilities and mines. These initiatives will improve domestic capabilities specific to ferrovanadium and vanadium pentoxide, as well as in primary production. Even if primary production is not feasible are current vanadium prices, the availability of the resources allows for production potential in the event of national emergency. The increased availability of domestic primary vanadium, expansion of secondary production, and addition of domestic feedstock for secondary PO 00000 Frm 00041 Fmt 4701 Sfmt 4703 64787 production should mitigate current abnormal levels of reliance in imports. However, the Department recognizes that rising capacity does not necessarily mean the domestic vanadium industry is healthy. In addition to the long history of volatility of vanadium prices, the main users of vanadium—the steel and titanium industries—experienced major declines in demand in 2020 as a result of COVID–19, with the titanium industry particularly challenged due to its reliance on aerospace demand. If vanadium prices fail to rise, some of the capacity under development or exploration may not turn into production, and one or more secondary producers is likely face financial difficulty or challenges in sourcing affordable vanadium-bearing feedstock. Further, the Department’s lack of a finding of an immediate threat to national security does not indicate that a healthy domestic vanadium industry is not of vital importance to the United States. While the Secretary does not believe that imports of vanadium need to be adjusted at this time, there are steps that should be taken to support the domestic vanadium industry and related sectors, to ensure safe and reliable sources of vanadium in the event of a national emergency and to enhance and protect U.S. national security. B. Recommendations The Department has identified several actions that would help to ensure reliable domestic sources of vanadium and lessen the potential for imports to threaten national security. These actions are not intended to be exhaustive or exclusive; the Secretary recommends pursuing all proposed actions. Recommendation 1—Expansion of the National Defense Stockpile To Include High Purity Vanadium Pentoxide The USG should support domestic vanadium production and ensure a source of vanadium in the event of national emergency by re-adding vanadium pentoxide to the National Defense Stockpile. Vanadium pentoxide was part of the stockpile until 1997; the stockpile held 6,200 tons of contained vanadium 181 in 1965 and had a goal of 7,000 tons though it held just 651 tons prior to the decision to reduce the target level to zero in 1993, following the end of the cold war.182 Using high purity 181 Vanadium is generally reported in terms of ‘‘contained vanadium’’, or the weight of only the vanadium portion of a vanadium compound. Vanadium represents 56% of the weight of vanadium pentoxide. 182 USGS Vanadium Mineral Commodity Summaries. https://www.usgs.gov/centers/nmic/ vanadium-statistics-and-information. E:\FR\FM\18NON5.SGM 18NON5 khammond on DSKJM1Z7X2PROD with NOTICES5 64788 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices vanadium pentoxide—suitable for use in titanium alloys or chemical uses as well as conversion into ferrovanadium for use in the steel industry—would ensure vanadium held in the stockpile could be used for any necessary product in the event of national security. National Defense Stockpile goals were initially set to ensure sufficient product to support one year’s demand for the entire country but were later narrowed to focus on defense-specific needs, primarily due to funding constraints. Given the importance of vanadium and other critical minerals to the economy, the economic and national security of the United States would be better served by pursuing stockpile goals that support national security beyond defensespecific requirements. The re-addition of vanadium to the stockpile would require authorization and funding from Congress. The Department recommends that the size of the proposed vanadium addition to the stockpile should be based on three benchmarks: Defense system requirements, broader national security requirements, and total domestic demand. As discussed above, defense system requirements may conservatively amount to 273 metric tons of vanadium content per year; this inventory level would be worth approximately $10.5 million based on average vanadium pentoxide prices since 2016.183 Critical infrastructure requirements add an estimated 4,527 tons per year, resulting in a minimum stockpile goal based on total national security requirements of 4,800 tons of contained vanadium, at a cost of $184.8 million. Finally, total domestic apparent consumption (including defense and critical infrastructure needs) averaged 8,590 tons of contained vanadium annually from 2016 to 2019. Establishing a stockpile goal at this level, sufficient to meet all domestic demand would, would be valued at $330.6 million. Beyond the minimum stockpile level, the Secretary further recommends that the stockpile of vanadium pentoxide be authorized to expand in size during periods of unusually low prices (with purchases made from domestic producers), while remaining unchanged or shrinking during periods of higherthan-average prices. This policy would help mitigate the large historic price swings that have caused significant financial distress and impeded capital investment in the domestic vanadium industry while helping to regulate domestic prices. Implementing this policy would require legislative changes to the Strategic and Critical Materials Stockpiling Act (50 U.S.C. 98, et seq.) (Stockpiling Act). While the mitigation of critical mineral price swings and the purchase of critical minerals from domestic producers at a premium when prices are unusually low serves the interest of national defense, the Stockpiling Act requires that the stockpile ‘‘not be used for economic or budgetary purposes,’’ which may present a challenge in allowing the stockpile to exceed minimum defense needs based on prices. Allowing the stockpile to be used for economic purposes if such actions support the health and competitiveness of affected industries would help enhance U.S. national security. As an additional potential benefit, once the vanadium holdings in the National Defense Stockpile are established, they could—with the authorization of Congress and in cooperation with the Department of Energy—be used without cost to support another sector: Large scale energy storage. As noted above, a potential new use for vanadium is in vanadium redox flow batteries, which have the advantage of using vanadium in both parts of the electrolyte, eliminating the risk of cross-contamination and allowing for the vanadium to be reclaimed from the batteries at a low cost with minimal yield loss.184 With vanadium accounting for approximately 30% of the cost of a vanadium redox flow battery and initial battery cost reductions needed to enable larger scale use, the USG could reduce the costs of the stockpile and support the energy storage sector by leasing a portion of the stockpile to be managed by vanadium redox flow battery companies, on condition of the leased vanadium being immediately reclaimable in the event of a national emergency. Given restrictions on transfers to and from the stockpile, this use of material in the stockpile would require either a legislative change to the Stockpiling Act or the designation of the leased material as still being part of the stockpile despite being used for energy storage. 183 Average price per pound vanadium pentoxide from 2016–2019 of $9.80, based on data from USGS: https://pubs.usgs.gov/periodicals/mcs2020/ mcs2020-vanadium.pdf. 184 Vanitec estimates cost of conversion from leachate to vanadium pentoxide at $1 per pound vanadium pentoxide with a 95% yield. https:// www.vanitec.org/vanadium/ESC-Meetings. VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 Recommendation 2—Recycling Promotion The Federal Strategy to Ensure Secure and Reliable Supplies of Critical PO 00000 Frm 00042 Fmt 4701 Sfmt 4703 Minerals (Federal Strategy) identifies an available, on-demand supply of critical minerals as ‘‘essential to the economic prosperity and national defense of the United States.’’ 185 The Federal Strategy recommends the support of recycling and reprocessing of critical minerals, including vanadium. Given that nearly all vanadium production in the United States is performed through recycling, the USG should support the vanadium industry through USG-wide actions to promote the recycling of materials containing critical minerals. A 2002 EPA analysis, carried out in support of the May 8, 2002 final rule on the identification and listing of spent catalysts as hazardous waste, showed that in 1999, just 55% of spent catalyst was recycled, in large part because the cost of recycling was estimated to be three times that of landfill disposal.186 Bringing the recycling of vanadiumbearing wastes generated in the United States to or near 100% has the potential to greatly expand the availability of vanadium products of domestic origin. Such recycling will occur naturally with higher vanadium prices, as refiners typically receive a metals credit from vanadium producers based on vanadium sale price, but can also be encouraged through the consideration of recycling tax deductions or credits as well as EPA review of their regulatory authority governing disposal of hazardous waste. For example, additional information submitted by industry to the Department reported that the 2020 International Maritime Organization’s (IMO) regulation requiring the reduction of allowable levels of sulfur in maritime fuels from 3.5% to 0.5% has increased refinery catalyst use, which is expected to result in increased availability of spent catalyst used to produce vanadium.187 Similar regulations in the United States would support both the EPA mission to protect human health and the environment and domestic production of critical minerals. Recommendation 3—Continue USG Actions to Support Critical Minerals Many of the challenges domestic vanadium producers face are not unique to vanadium; with this investigation the Department has completed Section 232 investigations on four of the 35 critical minerals. While the specific challenges of each critical mineral are distinct, 185 https://www.commerce.gov/sites/default/files/ 2020-01/Critical_Minerals_Strategy_Final.pdf. 186 67 FR 30811 and https://archive.epa.gov/ epawaste/hazard/web/pdf/backdoc.pdf. 187 https://ig9we1q348z124x3t10meupcwpengine.netdna-ssl.com/wp-content/uploads/ AMG-Annual-Report-Web-FINAL.pdf. E:\FR\FM\18NON5.SGM 18NON5 Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES5 many industrial trends are similar and broad solutions may be more effective than individual targeting. There are several ongoing and proposed U.S. government actions that support the domestic supply of critical minerals. Continuing to pursue these actions will provide necessary support to the domestic vanadium industry as well as to the broader critical minerals sector. Among the key actions that will enable strong domestic critical minerals industries are Executive Order 13817 and the resulting Federal Strategy, Executive Order 13953 (Addressing the Threat to the Domestic Supply Chain From Reliance on Critical Minerals From Foreign Adversaries and Supporting the Domestic Mining and Processing Industries), proposals from the USG Nuclear Fuel Working Group, work being carried out by the Titanium Sponge Working Group, and legislative action to support domestic production of critical minerals. Since the list of suitable substitutions for vanadium in steel and certain chemical processes includes other minerals on the critical minerals list (including manganese, niobium, titanium, tungsten, and platinum), actions to support production of critical minerals as a whole would also help to address domestic vanadium supply challenges. The Federal Strategy, developed pursuant to Executive Order 13817, was announced in June 2019, with six calls to action containing 24 goals and 61 recommended actions that federal agencies should pursue to improve the availability of critical minerals and their downstream supply chains in the United States to help reduce the VerDate Sep<11>2014 18:15 Nov 17, 2021 Jkt 256001 country’s vulnerability to supply chain disruptions. Many of the identified goals of the Federal Strategy are consistent with the findings and recommendations of this investigation, including: (a) Support for downstream materials production capacity; (b) enhancing the National Defense Stockpile’s ability to meet military as well as civilian requirements; (c) securing access to critical minerals through trade and investment with allies; (d) identifying methods to encourage secondary use of critical minerals; and (e) streamlining permit processes for critical mineral projects. The President issued Executive Order 13953, ‘‘Addressing the Threat to the Domestic Supply Chain From Reliance on Critical Minerals From Foreign Adversaries and Supporting the Domestic Mining and Processing Industries,’’ (E.O. 13953), in September 2020. The Order identifies the need to ensure a consistent supply of critical minerals and declares a national emergency to reduce the threat posed by the country’s undue reliance on critical minerals from foreign adversaries. Many of the actions taken pursuant to E.O. 13953 will support the domestic vanadium industry, particularly vanadium mining. In addition to Executive actions, there have recently been several legislative proposals that would provide support for vanadium and other critical minerals. Examples include H.R. 8143 (also known as the Reclaiming American Rare Earths (RARE) Act) and S. 3694 (the Onshoring Rare Earths PO 00000 Frm 00043 Fmt 4701 Sfmt 9990 64789 (ORE) Act of 2020). Both bills as written restrict the definition of critical minerals to a subset of those identified by the Department of Interior in response to E.O. 13817, and need to be expanded to include vanadium and other critical minerals, but otherwise have features of significant value to the domestic vanadium industry. In addition to allowing a tax deduction for investments in property used for mining, reclaiming, or recycling critical materials, these bills would support the function of critical minerals in the broader economy by providing grants or allowing tax deductions for critical minerals extracted in the United States. In addition to expanding the bills to include vanadium (as noted above), in order to provide the most value to the country, the Department recommends that any legislation should ensure that extraction incentives include recycling and reclamation. Finally, the Department’s Section 232 investigations into imports of Uranium and Titanium sponge resulted in the creation of USG working groups tasked with developing recommendations additional to those made in each report. Given the significant intersections between the vanadium industry and the uranium and titanium industries, the implementation of the working groups’ recommendations will support the vanadium industry as well. Matthew S. Borman, Deputy Assistant Secretary for Export Administration. [FR Doc. 2021–24957 Filed 11–17–21; 8:45 am] BILLING CODE 3510–33–P E:\FR\FM\18NON5.SGM 18NON5

Agencies

[Federal Register Volume 86, Number 220 (Thursday, November 18, 2021)]
[Notices]
[Pages 64748-64789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-24957]



[[Page 64747]]

Vol. 86

Thursday,

No. 220

November 18, 2021

Part V





Department of Commerce





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Bureau of Industry and Security





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Publication of a Report on the Effect of Imports of Vanadium on the 
National Security: An Investigation Conducted Under Section 232 of the 
Trade Expansion Act of 1962, as Amended; Notice

Federal Register / Vol. 86 , No. 220 / Thursday, November 18, 2021 / 
Notices

[[Page 64748]]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

RIN 0694-XC079


Publication of a Report on the Effect of Imports of Vanadium on 
the National Security: An Investigation Conducted Under Section 232 of 
the Trade Expansion Act of 1962, as Amended

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Publication of a report.

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SUMMARY: The Bureau of Industry and Security (BIS) in this notice is 
publishing a report that summarizes the findings of an investigation 
conducted by the U.S. Department of Commerce (the ``Department'') 
pursuant to Section 232 of the Trade Expansion Act of 1962, as amended 
(``Section 232''), into the effect of imports of vanadium on the 
national security of the United States. This report was completed on 
February 22, 2021 and posted on the BIS website in July 2021. BIS has 
not published the appendices to the report in this notification of 
report findings, but they are available online at the BIS website, 
along with the rest of the report (see the ADDRESSES section).

DATES: The report was completed on February 22, 2021. The report was 
posted on the BIS website in July 2021.

ADDRESSES: The full report, including the appendices to the report, are 
available online at https://www.bis.doc.gov/index.php/documents/section-232-investigations/2793-vanadium-section-232-report-public-with-appendices/file.

FOR FURTHER INFORMATION CONTACT: Kevin Coyne, Industrial Studies 
Division, Bureau of Industry and Security, U.S. Department of Commerce, 
(202) 482-5481, [email protected]. Unless otherwise protected by 
law, any information received from the public during the course of this 
investigation may be made publicly available. For more information 
about the Section 232 program, including the regulations and the text 
of previous investigations, please see www.bis.doc.gov/232.

The Effect of Imports of Vanadium on the National Security

An Investigation Conducted Under Section 232 of the Trade Expansion Act 
of 1962, as Amended

U.S. Department of Commerce

Bureau of Industry and Security

Office of Technology Evaluation

February 22, 2021

Table of Contents

I. Executive Summary
    A. Findings
    1. Vanadium Is Essential to U.S. National Security
    2. Imports of Vanadium Have Mixed Effects on the Economic 
Welfare of the U.S. Vanadium Industry
    3. Displacement of Domestically-Produced Vanadium by Imports 
Affects Our Internal Economy, But Is Mitigated by Ongoing Actions
    4. Increased Global Capacity and Production of Vanadium Will 
Further Impact the Long-Term Viability of U.S. Vanadium Production
    5. Unilaterally Increasing Domestic Prices of Vanadium Would 
Harm Critical U.S. Industries
    B. Conclusion
    C. Recommendations
II. Legal Framework
    A. Section 232 Requirements
    B. Discussion
III. Investigative Process
    A. Initiation of Investigation
    B. Public Comments
    C. Information Gathering and Data Collection Activities
    D. Interagency Consultation
IV. Product Scope of Investigation
V. Background on U.S. Vanadium Industry
    A. Vanadium Production
    B. Vanadium Uses
VI. Global Vanadium Industry Conditions
    A. Overview
    B. Prior Trade Investigations
    C. U.S. Duties on Vanadium Imports
VII. Findings
    A. Vanadium Is Essential to U.S. National Security
    1. Vanadium Is Considered a Critical Mineral
    2. Vanadium Is Required for National Defense Systems
    3. Vanadium Is Required for Critical Infrastructure
    4. Vanadium Has Significant Effects on Other Critical Industries
    B. Imports of Vanadium Have Mixed Effects on the Economic 
Welfare of the U.S. Vanadium Industry
    1. The U.S. Is Presently Reliant on Imports of Vanadium
    2. U.S. Reliance on Imports of Vanadium Is Not Increasing
    3. Prices
    4. Employment
    5. Financial Outlook
    6. Exploration
    7. Capital Expenditures
    8. Environmental Factors
    C. Displacement of Domestically-Produced Vanadium by Imports 
Affects Our Internal Economy, but Is Mitigated by Ongoing Actions
    1. U.S. Production of Vanadium Is Well Below Domestic Demand
    2. Domestic Production Is Highly Concentrated and Limits 
Capacity Available for a National Emergency
    3. Domestic Vanadium Production Currently Requires Significant 
Imports of Vanadium Feedstock, Limiting Capacity Available for a 
National Emergency
    4. Trade Actions Have Been Successful in Mitigating Artificially 
Low-Priced Imports of Vanadium
    5. Critical Minerals Agreements Will Help Ensure Reliable 
Supplies of Vanadium
    D. Increased Global Capacity and Production of Vanadium Will 
Further Impact the Long-Term Viability of U.S. Vanadium Production
    1. China Possesses an Outsized Role in the Global Price of 
Vanadium
    2. Expansion of Low-Cost Production in Several Countries Will 
Place Downward Pressure on Global Vanadium Prices
    3. Downward Price Pressure May Be Mitigated by Increased Demand 
for Steel, Titanium, and Energy Storage
    4. Significant Price Swings Impair the Ability of Domestic 
Producers To Plan and Carry Out Capital Expenditures
    E. Unilaterally Increasing Domestic Prices of Vanadium Would 
Harm Critical U.S. Industries
    1. Domestic Vanadium Prices Significantly Exceeding World Prices 
Would Disadvantage the U.S. Steel Industry
    2. Domestic Vanadium Prices Significantly Exceeding World Prices 
Would Harm the U.S. Titanium Industry, to the Benefit of Russian and 
Chinese Titanium Producers
VIII. Conclusion
    A. Determination
    B. Recommendations

APPENDICES

Appendix A: Section 232 Investigation Notification Letter to 
Secretary of Defense Mark Esper, May 21, 2020
Appendix B: Federal Register Notice--Notice of Requests for Public 
Comments on Section 232 National Security Investigation of Imports 
of Vanadium, June 3, 2020
Appendix C: Federal Register Notice--Reopening of Comment Period for 
Section 232 National Security Investigation of Imports of Vanadium, 
September 25, 2020
Appendix D: Summary of Public Comments
Appendix E: Survey for Data Collection

    Prepared by Bureau of Industry and Security

    https://www.bis.doc.gov

I. Executive Summary

    This report summarizes the findings of an investigation conducted 
by the U.S. Department of Commerce (the ``Department'') pursuant to 
Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 
1862 (``Section 232'')), into the effect of imports of vanadium \1\ on 
the national security of the United States.
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    \1\ See Figure 1 in Section IV, ``Product Scope of the 
Investigation,'' for the vanadium products addressed by this report.
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    Vanadium is used primarily as a strengthening agent in steel 
products, particularly for products in the construction industry and in 
tool steel. A smaller but essential use is in titanium aerospace 
alloys; military and

[[Page 64749]]

commercial aircraft are dependent on vanadium-containing titanium 
products. Vanadium also has significant chemical uses, including as a 
catalyst in the production of sulfuric acid--itself an important 
industrial material used in a wide range of production--and in large 
scale energy storage.
    There are three general methods of vanadium production: Primary 
(mining), co-production (from mined ore in concert with steelmaking), 
and secondary production or recycling (from residues and waste 
materials). Production generally results in vanadium pentoxide, which 
can be used in titanium and non-metallurgical uses or further 
converted, generally to ferrovanadium for incorporation into steel.
    There is currently one primary producer of vanadium in the United 
States (uranium miner Energy Fuels Resources). There are two active 
secondary producers (the companies that submitted the Section 232 
application, AMG Vanadium and U.S. Vanadium), plus a third secondary 
producer currently modernizing an idle facility (Gladieux Metals 
Recycling). The primary producer only produced vanadium during one of 
the last five years and supplied less than 4% of U.S. demand.
    Globally, primary and co-production of vanadium is concentrated in 
four countries: China, Russia, South Africa, and Brazil, with China 
accounting for over half of global production. Since 1995, the United 
States has found that imports of ferrovanadium from all major primary 
producers except Brazil have been sold at less than fair value, 
resulting in antidumping duties. These duties remain in effect for 
China and South Africa but have since been revoked for Russia.
    Although the United States is reliant on imports of vanadium 
pentoxide, ferrovanadium, or vanadium-bearing waste products to meet 
domestic demand, this import reliance will be mitigated by a major 
expansion being carried out by AMG Vanadium doubling their 
ferrovanadium production capacity, and the soon-expected completion of 
Gladieux's renovation, which will reintroduce significant domestic 
vanadium pentoxide production. In addition, two mining projects are in 
the exploratory or permitting phase, potentially adding domestic 
production capacity as soon as 2023.
    The biggest challenge the industry faces is low and volatile 
vanadium prices. Prices are currently below the levels required for 
cost effective primary production in the United States, and make it 
difficult for secondary producers to source feedstock and operate 
profitably. Adding to producers' woes are the major demand declines due 
to COVID-19, with demand for vanadium in titanium products hit 
especially hard as a result of decreased consumption by the aerospace 
industry.
    Given vanadium's almost-exclusive use in concert with steel and 
titanium, and, as steel and titanium are both considered critical to 
national security--with their domestic production threatened by 
imports, as reported in recent Section 232 reports--the Department 
finds that unilaterally imposing import tariffs or quotas in order to 
raise the domestic price of vanadium would largely impact domestic 
steel and titanium industries and would therefore have significant 
negative effects on the economic and national security of the United 
States. Cost increases for only domestic steel and titanium producers 
would put these critical industries, already threatened by low-cost 
imports, at a further disadvantage relative to foreign producers.
    In conducting this investigation, the Secretary of Commerce (the 
``Secretary'') noted the Department's prior investigations under 
Section 232. This report incorporates the statutory analysis from the 
Department's 2018 reports on the imports of steel and aluminum \2\ with 
respect to applying the terms ``national defense'' and ``national 
security'' in a manner that is consistent with the statute and 
legislative intent.\3\
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    \2\ U.S. Department of Commerce. Bureau of Industry and 
Security. The Effect of Imports of Steel on the National Security 
(Washington, DC: 2018) (``Steel Report'') and U.S. Department of 
Commerce. Bureau of Industry and Security. The Effect of Imports of 
Aluminum on the National Security (Washington, DC: 2018) (``Aluminum 
Report''). https://www.bis.doc.gov/index.php/documents/steel/2224-the-effect-of-imports-of-steel-on-the-national-security-with-redactions-20180111/file https://www.bis.doc.gov/index.php/documents/aluminum/2223-the-effect-of-imports-of-aluminum-on-the-national-security-with-redactions-20180117/file.
    \3\ Steel Report at 13-14; Aluminum Report at 12-13.
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    As required by the statute, the Secretary considered all factors 
set forth in Section 232(d). In particular, the Secretary examined the 
effect of imports on national security requirements, specifically:
    i. Domestic production needed for projected national defense 
requirements;
    ii. the capacity of domestic industries to meet such requirements;
    iii. existing and anticipated availabilities of the human 
resources, products, raw materials, and other supplies and services 
essential to the national defense;
    iv. the requirements of growth of such industries and such supplies 
and services including the investment, exploration, and development 
necessary to assure such growth; and
    v. the importation of goods in terms of their quantities, 
availabilities, character, and use as those affect such industries; and 
the capacity of the United States to meet national security 
requirements.
    In preparing this report, the Secretary also recognized the close 
relation of the economic welfare of the United States to its national 
security. Factors that can compromise the nation's economic welfare 
include, but are not limited to, the impact of ``foreign competition on 
the economic welfare of individual domestic industries; and any 
substantial unemployment, decrease in revenues of government, loss of 
skills, or any other serious effects resulting from the displacement of 
any domestic products by excessive imports.'' See 19 U.S.C. 1862(d). In 
particular, this report assesses whether vanadium is being imported 
``in such quantities'' and ``under such circumstances'' as to 
``threaten to impair the national security.'' \4\
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    \4\ 19 U.S.C. 1862(b)(3)(A).
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A. Findings

    In conducting the investigation, the Secretary found:
1. Vanadium Is Essential to U.S. National Security
    (a) Vanadium is a critical mineral. The Department of Interior 
included vanadium on the 2018 List of Critical Minerals required by 
Executive Order 13817, issued December 20, 2017.\5\ Pursuant to the 
Executive Order, the list established vanadium as essential to the 
national security of the United States and found that the absence of a 
vanadium supply would have significant consequences for the U.S. 
economy and national security.
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    \5\ https://www.usgs.gov/news/interior-releases-2018-s-final-list-35-minerals-deemed-critical-us-national-security-and.
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    (b) Vanadium is required for national defense systems because of 
its use in steel and titanium alloys. Vanadium is irreplaceable in key 
titanium aerospace applications, and many military airframes contain 
significant amounts of vanadium.
    (c) Vanadium is required for critical infrastructure. A key feature 
in the high-strength, low-alloy (HSLA) steel products used in the 
construction industry, as well as in tool steel and

[[Page 64750]]

high-speed steels, vanadium steel alloys are used throughout U.S. 
critical infrastructure. In addition, nearly all vanadium-bearing 
titanium products are used in the critical transportation or defense 
sectors.
    (d) The vanadium industry has significant effects on other 
industries critical to U.S. national security. As stated above, 
vanadium has essential uses in steel and titanium products, and 
vanadium resources in the United States are often co-located with 
uranium resources. The Department has recently found that imports in 
all three of these industries threaten to impair U.S. national 
security.
2. Imports of Vanadium Have Mixed Effects on the Economic Welfare of 
the U.S. Vanadium Industry
    (a) The United States is presently reliant on imports of vanadium. 
The only primary vanadium producer in the United States has only 
produced during one of the last five years, due to low vanadium prices. 
Domestic secondary producers of vanadium import significant quantities 
of their feedstock, [TEXT REDACTED].
    (b) U.S. reliance on imports of vanadium is not increasing. 
Although the country is reliant on imports of vanadium to meet civilian 
demand, major U.S. producers of ferrovanadium and vanadium pentoxide 
are in the process of expanding or restarting operations. Given the 
successful completion of these initiatives, U.S. capacity for 
ferrovanadium production from vanadium-bearing waste is projected to 
more than double in 2021, and U.S. capacity for vanadium pentoxide 
production from vanadium-bearing waste is projected to increase 
significantly with the re-opening of a secondary production facility. 
In addition, several domestic mining companies have idle production 
capacity or are exploring the development of vanadium mines. If 
domestic vanadium prices rise, or in the event of a national emergency, 
these companies may increase production and capacity, including through 
new mines.
    (c) Given continuing low domestic prices, the U.S. vanadium 
industry may face significant financial challenges. [TEXT REDACTED] 
However, it is difficult to accurately characterize the financial 
health of the industry due to recent facility turnover, significant 
ongoing investments, and recent lack of operational activities.
    (d) Significant resources exist in the United States for primary 
production. At least three companies have mines that have produced 
vanadium in the past, and two additional projects are under 
development.
    (e) Secondary production of vanadium is environmentally beneficial. 
The vanadium-bearing waste products used in secondary production are 
classified by the Environmental Protection Agency (EPA) as hazardous 
waste. However, secondary production reclaims critical minerals and can 
divert significant amounts of material from landfills, instead using 
them in products critical to national defense.
3. Displacement of Domestically-Produced Vanadium by Imports Affects 
Our Internal Economy, But Is Mitigated by Ongoing Actions
    (a) U.S. production of vanadium is well below domestic demand. 
Primary and secondary producers produced an annual average of 3.4 
million kilograms of vanadium content from 2016 to 2019, while domestic 
imports of key vanadium products approached 8 million kilograms.
    (b) Domestic production is highly concentrated and limits the 
capacity available for a national emergency. Just three domestic 
companies carried out vanadium production in 2019. Additional capacity 
in the future is not guaranteed, based on low vanadium prices.
    (c) Domestic vanadium production currently requires significant 
imports of vanadium feedstock, limiting vanadium production capacity 
available for a national emergency. Only one vanadium producer in 
recent years has used entirely U.S. origin material, producing the 
equivalent of 1.4% of total domestic demand since 2016. Secondary 
producers all use significant levels of foreign feedstock; the United 
States is unable to satisfy all domestic demand with U.S. sourced 
material.
    (d) Recent trade actions have successfully mitigated artificially 
low-priced imports of ferrovanadium. Of the four countries with 
significant primary production of vanadium, three have been subject to 
the imposition of antidumping duties on ferrovanadium based on 
petitions from domestic ferrovanadium producers. In all cases, imports 
of ferrovanadium from the subject countries fell to close to zero 
following the imposition of the duties.
    (e) Critical minerals agreements with other countries will help 
ensure reliable supplies of vanadium. The United States government 
(USG) released in June 2019 A Federal Strategy to Ensure Secure and 
Reliable Supplies of Critical Minerals, which includes a goal of 
enhanced international trade and cooperation related to critical 
minerals.\6\ The United States has subsequently entered into official 
critical minerals collaborations with Canada and Australia, both of 
which have significant vanadium resources.
---------------------------------------------------------------------------

    \6\ https://www.commerce.gov/data-and-reports/reports/2019/06/federal-strategy-ensure-secure-and-reliable-supplies-critical-minerals.
---------------------------------------------------------------------------

4. Increased Global Capacity and Production of Vanadium Will Further 
Impact the Long-Term Viability of U.S. Vanadium Production
    (a) China, which accounts for an estimated 50 to 60% of global 
vanadium production and consumption, possesses an outsized role in 
determining the global price of vanadium. This concentration of supply 
and demand means that policy changes in China have significant effects 
on the global vanadium market, including major price changes in the 
near past.
    (b) Expansion of low-cost production in countries other than China 
will place downward pressure on global vanadium prices. Mines in 
development or exploration in Kazakhstan, Canada, and Australia have 
the ability to nearly double current global mine production, should 
they all enter production.
    (c) Downward price pressure may be mitigated by increased demand 
for steel, titanium, and energy storage. Although currently 
significantly affected by COVID-19, higher demand in the steel and 
titanium industries would put upward pressure on vanadium prices. 
Additionally, annual growth projections for the use of vanadium-based 
batteries range from 13 to 42% through 2027, which could produce 
significant additional demand.
    (d) Significant price swings impair the ability of domestic 
producers to plan and carry out capital expenditures. With vanadium 
projects taking years to complete and major price swings a common 
occurrence, companies may be challenged to find financing throughout 
the course of the development of new vanadium capabilities, or may find 
their projects not viable once completed.
5. Unilaterally Increasing Domestic Prices of Vanadium Would Harm 
Critical U.S. Industries
    (a) Domestic vanadium prices significantly exceeding world prices 
would disadvantage the U.S. steel industry. The Department's 2018 
Section 232 investigation on steel imports found that the steel 
industry was threatened by imports and in need of assistance to remain 
viable. As the predominant user of vanadium, the domestic steel 
industry would face new

[[Page 64751]]

threats from foreign steel producers if its input costs were 
significantly higher than those in other countries.
    (b) Domestic vanadium prices significantly exceeding world prices 
would also harm the U.S. titanium industry, to the benefit of Russian 
and Chinese producers. The titanium industry is dependent on vanadium 
because vanadium accounts for between 12 and 14% of the cost of a 
standard titanium alloy. The U.S. titanium industry is facing 
significant financial challenges from declines in demand (related to 
COVID-19), and may not be able to bear additional costs that 
international competitors do not.

B. Conclusion

    Based on these findings, the Secretary concludes that the present 
quantities and circumstances of vanadium imports do not threaten to 
impair the national security as defined in Section 232. Although 
vanadium is critical to national security and the United States is 
currently dependent on imported sources of vanadium, [TEXT REDACTED] 
several significant factors, including the health of the U.S. industry, 
availability of idle domestic resources, existing USG actions, and the 
importance of vanadium to competitive steel and titanium industries, 
indicate that imports of vanadium do not currently threaten to impair 
national security.
    The United States is currently reliant on imports to satisfy demand 
for vanadium products and is not producing significant amounts of 
vanadium from U.S.-origin material, but these circumstances are not 
expected to deteriorate. Two domestic secondary producers are in the 
process of expanding and/or upgrading their facilities, which will add 
significantly to the U.S. ability to produce ferrovanadium and vanadium 
pentoxide from vanadium-bearing waste materials.
    Furthermore, in addition to the one existing domestic primary 
producer, several other companies are in the process of exploring 
vanadium mining ventures and will be in a position to produce within 
several years if vanadium prices rise sufficiently. Even if primary 
production is not feasible at current vanadium prices, the availability 
of these resources allows for production potential in the event of 
national emergency. An increase in the production of domestic primary 
vanadium, expansion of secondary production, and the addition of 
domestic feedstock for secondary production should mitigate the current 
levels of reliance on imports.
    However, the projected rise in capacity does not necessarily mean 
that the domestic vanadium industry is healthy. Vanadium prices have a 
long history of volatility, with prices going through cycles of surging 
and plunging. The main users of vanadium--the steel and titanium 
industries--experienced major declines in demand in 2020 related to 
COVID-19, with the titanium industry particularly challenged by a large 
decrease in aerospace demand. If vanadium prices fail to rise, some of 
the capacity under exploration may not turn into production, and one or 
more secondary producers may face financial difficulty or challenges in 
sourcing vanadium-bearing feedstock.
    Further, the lack of a finding of a threat to national security 
does not indicate that a healthy domestic vanadium industry is not of 
vital importance to the United States. While the Secretary does not 
believe that imports of vanadium need to be adjusted at this time, 
there are several steps that can and should be taken to support the 
domestic vanadium industry and related sectors to ensure safe and 
reliable sources of vanadium in the event of a national emergency, 
thereby enhancing and protecting U.S. national security.

C. Recommendations

    The Department has identified several actions that would help to 
ensure reliable domestic sources of vanadium and lessen the potential 
for imports to threaten national security. These actions are not 
intended to be exhaustive or exclusive; the Secretary recommends 
pursuing all proposed actions.
Recommendation 1--Expansion of the National Defense Stockpile To 
Include High Purity Vanadium Pentoxide
    The USG should support domestic vanadium production and ensure a 
source of vanadium in the event of national emergency by re-adding 
vanadium pentoxide to the National Defense Stockpile. Vanadium 
pentoxide was part of the stockpile until 1997; the stockpile held 
6,200 tons of contained vanadium \7\ in 1965 and had a goal of 7,000 
tons though it held just 651 tons prior to the decision to reduce the 
target level to zero in 1993, following the end of the cold war.\8\ 
Using high purity vanadium pentoxide--suitable for use in titanium 
alloys or chemical uses as well as conversion into ferrovanadium for 
use in the steel industry--would ensure vanadium held in the stockpile 
could be used for any necessary product in the event of national 
security.
---------------------------------------------------------------------------

    \7\ Vanadium is generally reported in terms of ``contained 
vanadium'', or the weight of only the vanadium portion of a vanadium 
compound. Vanadium represents 56% of the weight of vanadium 
pentoxide.
    \8\ USGS Vanadium Mineral Commodity Summaries. https://www.usgs.gov/centers/nmic/vanadium-statistics-and-information.
---------------------------------------------------------------------------

    National Defense Stockpile goals were initially set to ensure 
sufficient product to support one year's demand for the entire country 
but were later narrowed to focus on defense-specific needs, primarily 
due to funding constraints. Given the importance of vanadium and other 
critical minerals to the economy, the economic and national security of 
the United States would be better served by pursuing stockpile goals 
that support national security beyond defense-specific requirements. 
The re-addition of vanadium to the stockpile would require 
authorization and funding from Congress.
    The Department recommends that the size of the proposed vanadium 
addition to the stockpile should be based on three benchmarks: Defense 
system requirements, broader national security requirements, and total 
domestic demand. As discussed above, defense system requirements may 
conservatively amount to 273 metric tons of vanadium content per year; 
this inventory level would be worth approximately $10.5 million based 
on average vanadium pentoxide prices since 2016.\9\ Critical 
infrastructure requirements add an estimated 4,527 tons per year, 
resulting in a minimum stockpile goal based on total national security 
requirements of 4,800 tons of contained vanadium, at a cost of $184.8 
million. Finally, total domestic apparent consumption (including 
defense and critical infrastructure needs) averaged 8,590 tons of 
contained vanadium annually from 2016 to 2019. Establishing a stockpile 
goal at this level, sufficient to meet all domestic demand, would be 
valued at $330.6 million.
---------------------------------------------------------------------------

    \9\ Average price per pound vanadium pentoxide from 2016-2019 of 
$9.80, based on data from USGS: https://pubs.usgs.gov/periodicals/mcs2020/mcs2020-vanadium.pdf.
---------------------------------------------------------------------------

    Beyond the minimum stockpile level, the Secretary further 
recommends that the stockpile of vanadium pentoxide be authorized to 
expand in size during periods of unusually low prices (with purchases 
made from domestic producers), while remaining unchanged or shrinking 
during periods of higher-than-average prices. This policy would help 
mitigate the large historic price swings that have caused significant 
financial distress and impeded capital investment in the domestic 
vanadium industry while helping to regulate domestic prices.

[[Page 64752]]

    Implementing this policy would require legislative changes to the 
Strategic and Critical Materials Stockpiling Act (50 U.S.C. 98, et 
seq.) (Stockpiling Act). While the mitigation of critical mineral price 
swings and the purchase of critical minerals from domestic producers at 
a premium when prices are unusually low serves the interest of national 
defense, the Stockpiling Act requires that the stockpile ``not be used 
for economic or budgetary purposes,'' which may present a challenge in 
allowing the stockpile to exceed minimum defense needs based on prices. 
Allowing the stockpile to be used for economic purposes if such actions 
support the health and competitiveness of affected industries would 
help enhance U.S. national security.
    As an additional potential benefit, once the vanadium holdings in 
the National Defense Stockpile are established, they could--with the 
authorization of Congress and in cooperation with the Department of 
Energy--be used without cost to support another sector: Large scale 
energy storage. As noted above, a potential new use for vanadium is in 
vanadium redox flow batteries, which have the advantage of using 
vanadium in both parts of the electrolyte, eliminating the risk of 
cross-contamination and allowing for the vanadium to be re-claimed from 
the batteries at a low cost with minimal yield loss.\10\
---------------------------------------------------------------------------

    \10\ Vanitec estimates cost of conversion from leachate to 
vanadium pentoxide at $1 per pound vanadium pentoxide with a 95% 
yield. https://www.vanitec.org/vanadium/ESC-Meetings.
---------------------------------------------------------------------------

    With vanadium accounting for approximately 30% of the cost of a 
vanadium redox flow battery and initial battery cost reductions needed 
to enable larger scale use, the USG could reduce the costs of the 
stockpile and support the energy storage sector by leasing a portion of 
the stockpile to be managed by vanadium redox flow battery companies, 
on condition of the leased vanadium being immediately reclaimable in 
the event of a national emergency. Given restrictions on transfers to 
and from the stockpile, this use of material in the stockpile would 
require either a legislative change to the Stockpiling Act or the 
designation of the leased material as still being part of the stockpile 
despite being used for energy storage.
Recommendation 2--Recycling Promotion
    The Federal Strategy to Ensure Secure and Reliable Supplies of 
Critical Minerals (Federal Strategy) identifies an available, on-demand 
supply of critical minerals as ``essential to the economic prosperity 
and national defense of the United States.'' \11\ The Federal Strategy 
recommends the support of recycling and reprocessing of critical 
minerals, including vanadium. Given that nearly all vanadium production 
in the United States is performed through recycling, the USG should 
support the vanadium industry through USG-wide actions to promote the 
recycling of materials containing critical minerals.
---------------------------------------------------------------------------

    \11\ https://www.commerce.gov/sites/default/files/2020-01/Critical_Minerals_Strategy_Final.pdf.
---------------------------------------------------------------------------

    A 2002 EPA analysis, carried out in support of the May 8, 2002 
final rule on the identification and listing of spent catalysts as 
hazardous waste, showed that in 1999, just 55% of spent catalyst was 
recycled, in large part because the cost of recycling was estimated to 
be three times that of landfill disposal.\12\ Bringing the recycling of 
vanadium-bearing wastes generated in the United States to or near 100% 
has the potential to greatly expand the availability of vanadium 
products of domestic origin. Such recycling will occur naturally with 
higher vanadium prices, as refiners typically receive a metals credit 
from vanadium producers based on vanadium sale price, but can also be 
encouraged through the consideration of recycling tax deductions or 
credits as well as EPA review of their regulatory authority governing 
disposal of hazardous waste.
---------------------------------------------------------------------------

    \12\ 67 FR 30811 and https://archive.epa.gov/epawaste/hazard/web/pdf/backdoc.pdf.
---------------------------------------------------------------------------

    For example, additional information submitted by industry to the 
Department reported that the 2020 International Maritime Organization's 
(IMO) regulation requiring the reduction of allowable levels of sulfur 
in maritime fuels from 3.5% to 0.5% has increased refinery catalyst 
use, which is expected to result in increased availability of spent 
catalyst used to produce vanadium.\13\ Similar regulations in the 
United States would support both the EPA mission to protect human 
health and the environment and domestic production of critical 
minerals.
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    \13\ https://ig9we1q348z124x3t10meupc-wpengine.netdna-ssl.com/wp-content/uploads/AMG-Annual-Report-Web-FINAL.pdf.
---------------------------------------------------------------------------

Recommendation 3--Continue USG Actions To Support Critical Minerals
    Many of the challenges domestic vanadium producers face are not 
unique to vanadium; with this investigation the Department has 
completed Section 232 investigations on four of the 35 critical 
minerals. While the specific challenges of each critical mineral are 
distinct, many industrial trends are similar and broad solutions may be 
more effective than individual targeting. There are several ongoing and 
proposed U.S. government actions that support the domestic supply of 
critical minerals. Continuing to pursue these actions will provide 
necessary support to the domestic vanadium industry as well as to the 
broader critical minerals sector.
    Among the key actions that will enable strong domestic critical 
minerals industries are Executive Order 13817 and the resulting Federal 
Strategy, Executive Order 13953 (Addressing the Threat to the Domestic 
Supply Chain From Reliance on Critical Minerals From Foreign 
Adversaries and Supporting the Domestic Mining and Processing 
Industries), proposals from the USG Nuclear Fuel Working Group, work 
being carried out by the Titanium Sponge Working Group, and legislative 
action to support domestic production of critical minerals. Since the 
list of suitable substitutions for vanadium in steel and certain 
chemical processes includes other minerals on the critical minerals 
list (including manganese, niobium, titanium, tungsten, and platinum), 
actions to support production of critical minerals as a whole would 
also help to address domestic vanadium supply challenges.
    The Federal Strategy, developed pursuant to Executive Order 13817, 
was announced in June 2019, with six calls to action containing 24 
goals and 61 recommended actions that federal agencies should pursue to 
improve the availability of critical minerals and their downstream 
supply chains in the United States to help reduce the country's 
vulnerability to supply chain disruptions. Many of the identified goals 
of the Federal Strategy are consistent with the findings and 
recommendations of this investigation, including:
    (a) Support for downstream materials production capacity;
    (b) enhancing the National Defense Stockpile's ability to meet 
military as well as civilian requirements;
    (c) securing access to critical minerals through trade and 
investment with allies;
    (d) identifying methods to encourage secondary use of critical 
minerals; and
    (e) streamlining permit processes for critical mineral projects.
    The President issued Executive Order 13953, ``Addressing the Threat 
to the Domestic Supply Chain From Reliance on Critical Minerals From 
Foreign Adversaries and Supporting the Domestic Mining and Processing 
Industries,'' (E.O. 13953), in September 2020. The Order identifies the 
need to ensure a consistent supply of critical

[[Page 64753]]

minerals and declares a national emergency to reduce the threat posed 
by the country's undue reliance on critical minerals from foreign 
adversaries. Many of the actions taken pursuant to E.O. 13953 will 
support the domestic vanadium industry, particularly vanadium mining.
    In addition to Executive actions, there have recently been several 
legislative proposals that would provide support for vanadium and other 
critical minerals. Examples include H.R. 8143 (also known as the 
Reclaiming American Rare Earths (RARE) Act) and S. 3694 (the Onshoring 
Rare Earths (ORE) Act of 2020). Both bills as written restrict the 
definition of critical minerals to a subset of those identified by the 
Department of Interior in response to E.O. 13817, and need to be 
expanded to include vanadium and other critical minerals, but otherwise 
have features of significant value to the domestic vanadium industry. 
In addition to allowing a tax deduction for investments in property 
used for mining, reclaiming, or recycling critical materials, these 
bills would support the function of critical minerals in the broader 
economy by providing grants or allowing tax deductions for critical 
minerals extracted in the United States. In addition to expanding the 
bills to include vanadium (as noted above), in order to provide the 
most value to the country, the Department recommends that any 
legislation should ensure that extraction incentives include recycling 
and reclamation.
    Finally, the Department's Section 232 investigations into imports 
of Uranium and Titanium sponge resulted in the creation of USG working 
groups tasked with developing recommendations additional to those made 
in each report. Given the significant intersections between the 
vanadium industry and the uranium and titanium industries, the 
implementation of the working groups' recommendations will support the 
vanadium industry as well.

II. Legal Framework

A. Section 232 Requirements

    Section 232 of the Trade Expansion Act of 1962, as amended, 
provides the Secretary with the authority to conduct investigations to 
determine the effect on the national security of the United States of 
imports of any article. It authorizes the Secretary to conduct an 
investigation if requested by the head of any department or agency, 
upon application of an interested party, or upon his own motion. See 19 
U.S.C. 1862(b)(1)(A).
    Section 232 directs the Secretary to submit to the President a 
report with recommendations for ``action or inaction under this 
section'' and requires the Secretary to advise the President if any 
article ``is being imported into the United States in such quantities 
or under such circumstances as to threaten to impair the national 
security.'' See 19 U.S.C. 1862(b)(3)(A).
    Section 232(d) directs the Secretary and the President to, in light 
of the requirements of national security and without excluding other 
relevant factors, give consideration to the domestic production needed 
for projected national defense requirements and the capacity of the 
United States to meet national security requirements. See 19 U.S.C. 
1862(d).
    Section 232(d) also directs the Secretary and the President to 
``recognize the close relation of the economic welfare of the Nation to 
our national security, and . . . take into consideration the impact of 
foreign competition on the economic welfare of individual domestic 
industries'' by examining whether any substantial unemployment, 
decrease in revenues of government, loss of skills or investment, or 
other serious effects resulting from the displacement of any domestic 
products by excessive imports, or other factors, results in a 
``weakening of our internal economy'' that may impair the national 
security.\14\ See 19 U.S.C. 1862(d).
---------------------------------------------------------------------------

    \14\ An investigation under Section 232 looks at excessive 
imports for their threat to the national security, rather than 
looking at unfair trade practices as in an antidumping 
investigation.
---------------------------------------------------------------------------

    Once an investigation has been initiated, Section 232 mandates that 
the Secretary provide notice to the Secretary of Defense that such an 
investigation has been initiated. Section 232 also requires the 
Secretary to do the following:

    (1) ``Consult with the Secretary of Defense regarding the 
methodological and policy questions raised in [the] investigation;''
    (2) ``Seek information and advice from, and consult with, 
appropriate officers of the United States;'' and
    (3) ``If it is appropriate and after reasonable notice, hold 
public hearings or otherwise afford interested parties an 
opportunity to present information and advice relevant to such 
investigation.'' \15\ See 19 U.S.C. 1862(b)(2)(A)(i)-(iii).
---------------------------------------------------------------------------

    \15\ Department regulations (i) set forth additional authority 
and specific procedures for such input from interested parties, see 
15 CFR 705.7 and 705.8, and (ii) provide that the Secretary may vary 
or dispense with those procedures ``in emergency situations, or when 
in the judgment of the Department, national security interests 
require it.'' Id., 705.9.

As detailed in the report, all of the requirements set forth above have 
been satisfied.
    In conducting the investigation, Section 232 permits the Secretary 
to request that the Secretary of Defense provide an assessment of the 
defense requirements of the article that is the subject of the 
investigation. See 19 U.S.C. 1862(b)(2)(B).
    Upon completion of a Section 232 investigation, the Secretary is 
required to submit a report to the President no later than 270 days 
after the date on which the investigation was initiated. See 19 U.S.C. 
1862(b)(3)(A). The report must:

    (1) Set forth ``the findings of such investigation with respect 
to the effect of the importation of such article in such quantities 
or under such circumstances upon the national security;''
    (2) Set forth, ``based on such findings, the recommendations of 
the Secretary for action or inaction under this section;'' and
    (3) ``If the Secretary finds that such article is being imported 
into the United States in such quantities or under such 
circumstances as to threaten to impair the national security . . . 
so advise the President.'' See 19 U.S.C. 1862(b)(3)(A).

    All unclassified and non-proprietary portions of the report 
submitted by the Secretary to the President must be published.
    Within 90 days after receiving a report in which the Secretary 
finds that an article is being imported into the United States in such 
quantities or under such circumstances as to threaten to impair the 
national security, the President shall:

    (1) ``Determine whether the President concurs with the finding 
of the Secretary''; and
    (2) ``If the President concurs, determine the nature and 
duration of the action that, in the judgment of the President, must 
be taken to adjust the imports of the article and its derivatives so 
that such imports will not threaten to impair the national 
security'' (see 19 U.S.C. 1862(c)(1)(A)).

B. Discussion

    While Section 232 does not specifically define ``national 
security,'' both Section 232, and the implementing regulations at 15 
CFR part 705, contain non-exclusive lists of factors that the Secretary 
must consider in evaluating the effect of imports on the national 
security. Congress in Section 232 explicitly determined that ``national 
security'' includes, but is not limited to, ``national defense'' 
requirements. See 19 U.S.C. 1862(d)).
    In a 2001 report, the Department determined that ``national 
defense'' includes both the defense of the United States directly, and 
the ``ability to

[[Page 64754]]

project military capabilities globally.'' \16\ The Department also 
concluded in 2001 that, ``in addition to the satisfaction of national 
defense requirements, the term ``national security'' can be interpreted 
more broadly to include the general security and welfare of certain 
industries, beyond those necessary to satisfy national defense 
requirements, which are critical to the minimum operations of the 
economy and government.'' The Department called these ``critical 
industries.'' \17\ While this report uses these reasonable 
interpretations of ``national defense'' and ``national security,'' it 
uses the more recent 16 critical infrastructure sectors identified in 
Presidential Policy Directive 21 \18\ instead of the 28 industry 
sectors identified in the 2001 Report.\19\
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    \16\ Department of Commerce, Bureau of Export Administration; 
The Effects of Imports of Iron Ore and Semi-Finished Steel on the 
National Security; Oct. 2001 (``2001 Iron and Steel Report'') at 5.
    \17\ Id.
    \18\ Presidential Policy Directive 21; Critical Infrastructure 
Security and Resilience; February 12, 2013 (``PPD-21'').
    \19\ See Op. Cit. at 16.
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    Section 232 directs the Secretary to determine whether imports of 
any article are being made ``in such quantities'' or ``under such 
circumstances'' that those imports ``threaten to impair the national 
security.'' See 19 U.S.C. 1862(b)(3)(A). The statutory construction 
makes clear that either the quantities or the circumstances, standing 
alone, may be sufficient to support an affirmative finding. The two may 
also be considered together, particularly when the circumstances act to 
prolong or magnify the impact of the quantities being imported.
    The statute does not define a threshold for when ``such 
quantities'' of imports are sufficient to threaten to impair the 
national security, nor does it define the ``circumstances'' that might 
qualify.
    Similarly, the statute does not require a finding that the 
quantities or circumstances are impairing the national security. 
Instead, the threshold question under Section 232 is whether the 
quantities or circumstances ``threaten to impair the national 
security.'' See 19 U.S.C. 1862(b)(3)(A). This makes evident that 
Congress expected an affirmative finding under Section 232 before an 
actual impairment of the national security.\20\
---------------------------------------------------------------------------

    \20\ The 2001 Iron and Steel Report used the phrase 
``fundamentally threaten to impair'' when discussing how imports may 
threaten to impair national security. See 2001 Iron and Steel Report 
at 7 and 37. Because the term ``fundamentally'' is not included in 
the statutory text and could be perceived as establishing a higher 
threshold, the Secretary expressly does not use the qualifier in 
this report. The statutory threshold in Section 232(b)(3)(A) is 
unambiguously ``threaten to impair'' and the Secretary adopts that 
threshold without qualification. 19 U.S.C. 1862(b)(3)(A).
---------------------------------------------------------------------------

    Section 232(d) contains a list of factors for the Secretary to 
consider in determining if imports ``threaten to impair the national 
security'' \21\ of the United States, and this list is mirrored in the 
implementing regulations. See 19 U.S.C. 1862(d) and 15 CFR 705.4. 
Congress was careful to note twice in Section 232(d) that the list 
provided, while mandatory, is not exclusive.\22\ Congress' illustrative 
list is focused on the ability of the United States to maintain the 
domestic capacity to provide the articles in question as needed to 
maintain the national security of the United States.\23\ Congress broke 
the list of factors into two equal parts using two separate sentences. 
The first sentence focuses directly on ``national defense'' 
requirements, thus making clear that ``national defense'' is a subset 
of the broader term ``national security.'' The second sentence focuses 
on the broader economy and expressly directs that the Secretary and the 
President ``shall recognize the close relation of the economic welfare 
of the Nation to our national security.'' \24\ See 19 U.S.C. 1862(d).
---------------------------------------------------------------------------

    \21\ 19 U.S.C. 1862(b)(3)(A).
    \22\ See 19 U.S.C. 1862(d) (``the Secretary and the President 
shall, in light of the requirements of national security and without 
excluding other relevant factors . . .'' and ``serious effects 
resulting from the displacement of any domestic products by 
excessive imports shall be considered, without excluding other 
factors . . .'').
    \23\ This reading is supported by Congressional findings in 
other statutes. See, e.g., 15 U.S.C. 271(a)(1)(``The future well-
being of the United States economy depends on a strong manufacturing 
base . . .'') and 50 U.S.C. 4502(a)(``Congress finds that--(1) the 
security of the United States is dependent on the ability of the 
domestic industrial base to supply materials and services . . . 
(2)(C) to provide for the protection and restoration of domestic 
critical infrastructure operations under emergency conditions . . . 
(3) . . . the national defense preparedness effort of the United 
States government requires--(C) the development of domestic 
productive capacity to meet--(ii) unique technological requirements 
. . . (7) much of the industrial capacity that is relied upon by the 
United States Government for military production and other national 
defense purposes is deeply and directly influenced by--(A) the 
overall competitiveness of the industrial economy of the United 
States; and (B) the ability of industries in the United States, in 
general, to produce internationally competitive products and operate 
profitably while maintaining adequate research and development to 
preserve competitiveness with respect to military and civilian 
production; and (8) the inability of industries in the United 
States, especially smaller subcontractors and suppliers, to provide 
vital parts and components and other materials would impair the 
ability to sustain the Armed Forces of the United States in combat 
for longer than a short period.'').
    \24\ Accord 50 U.S.C. 4502(a).
---------------------------------------------------------------------------

    In addition to ``national defense'' requirements, two of the 
factors listed in the second sentence of Section 232(d) are 
particularly relevant in this investigation. Both are directed at how 
``such quantities'' of imports threaten to impair national security See 
19 U.S.C. 1862(b)(3)(A). In administering Section 232, the Secretary 
and the President are required to ``take into consideration the impact 
of foreign competition on the economic welfare of individual domestic 
industries'' and any ``serious effects resulting from the displacement 
of any domestic products by excessive imports'' in ``determining 
whether such weakening of our internal economy may impair the national 
security.'' See 19 U.S.C. 1862(d).
    After careful examination of the facts in this investigation, the 
Secretary has determined that the present quantities and circumstance 
of vanadium imports do not threaten to impair the national security, as 
defined in Section 232. Although vanadium is critical to national 
security and the United States is currently dependent on imported 
sources of vanadium, several significant factors, including the health 
of the U.S. industry, availability of idle domestic resources, existing 
USG actions, and the importance of vanadium to competitive domestic 
steel and titanium industries, indicate that imports of vanadium do not 
threaten to impair national security.

III. Investigative Process

A. Initiation of Investigation

    On November 19, 2019, AMG Vanadium LLC and U.S. Vanadium LLC 
(hereafter ``Applicants'') petitioned the Secretary to conduct an 
investigation under Section 232 of the Trade Expansion Act of 1962, as 
amended, to determine the effect of imports of vanadium on the national 
security.
    Upon receipt of the petition, the Department carefully reviewed the 
material facts outlined in the petition and held initial discussions 
internally as well as with the Department of Defense. Legal counsel at 
the Department also carefully reviewed the petition to ensure it met 
the requirements of the Section 232 statute and the implementing 
regulations. Subsequently, on May 28, 2020, the Department accepted the 
petition and initiated the investigation. Pursuant to Section 
232(b)(1)(b), the Department notified the U.S. Department of Defense of 
its intent to conduct an investigation in a May 21, 2020 letter from 
Secretary Ross to then Secretary of Defense, Mark Esper (see Appendix 
A).

B. Public Comments

    On June 3, 2020, the Department published a Federal Register Notice 
(see

[[Page 64755]]

Appendix B--Federal Register, Vol. 85, No. 107, 34179) announcing the 
initiation of an investigation to determine the effect of imports of 
vanadium on the national security. The notice also announced the 
opening of the public comment period. In the notice, the Department 
invited interested parties to submit written comments, opinions, data, 
information, or advice relevant to the criteria listed in Section 705.4 
of the National Security Industrial Base Regulations (15 CFR 705.4) as 
they affect the requirements of national security, including the 
following:
    (a) Quantity of the articles subject to the investigation and other 
circumstances related to the importation of such articles;
    (b) Domestic production capacity needed for these articles to meet 
projected national defense requirements;
    (c) The capacity of domestic industries to meet projected national 
defense requirements;
    (d) Existing and anticipated availability of human resources, 
products, raw materials, production equipment, facilities, and other 
supplies and services essential to the national defense;
    (e) Growth requirements of domestic industries needed to meet 
national defense requirements and the supplies and services including 
the investment, exploration and development necessary to assure such 
growth;
    (f) The impact of foreign competition on the economic welfare of 
any domestic industry essential to our national security;
    (g) The displacement of any domestic products causing substantial 
unemployment, decrease in the revenues of government, loss of 
investment or specialized skills and productive capacity, or other 
serious effects;
    (h) Relevant factors that are causing or will cause a weakening of 
our national economy; and
    (i) Any other relevant factors
    The initial public comment period ended on July 20, 2020, and was 
followed by a public comment rebuttal period, which ended on August 17, 
2020. Following requests from the general public, the Department 
published a copy of the Applicants' petition on September 25, 2020 and 
opened an additional public comment period, which ended October 9, 
2020.
    The Department received 32 responsive submissions during the 
initial public comment period, which were posted on Regulations.gov for 
public review and rebuttal filing. The Department received 47 rebuttal 
filings from 11 commenters, which were posted on Regulations.gov for 
public review. During the additional comment period, the Department 
received and posted seven comments on Regulations.gov.
    Parties who submitted comments included representatives of the 
domestic vanadium production industry, representatives of the domestic 
uranium industry, representatives of the foreign vanadium production 
industry, consumers of vanadium products from the steel, titanium, and 
energy storage industries, as well as representatives of foreign 
governments, and other concerned organizations. The Department 
carefully reviewed all of the public comments and factored them into 
the investigative process. The public comments of key stakeholders are 
summarized in Appendix C, which also includes a link to the docket 
number (BIS-2020-0002) under which all public comments can be viewed in 
full on Regulations.gov.

C. Information Gathering and Data Collection Activities

    Due to the limited number of firms engaged in the U.S. vanadium 
industry, it was determined that a public hearing was not necessary to 
conduct a comprehensive investigation. In lieu of holding a public 
hearing on this investigation, the Department issued a separate 
mandatory survey (see Appendix E) to participants in the vanadium 
production and distribution industry, collecting both qualitative and 
quantitative information. The survey was sent to 34 companies with the 
ability to develop, produce, or distribute vanadium products for use in 
the United States. Eight of these companies did not have locations in 
the United States, and were invited to participate in the survey on a 
voluntary basis.
    The surveys provided a method for respondents to disclose 
confidential and non-public information. These surveys, to which 
response was mandatory for domestic respondents, were conducted using 
statutory authority pursuant to Section 705 of the Defense Production 
Act of 1950, as amended (50 U.S.C. 4555) (DPA), and collected detailed 
information concerning factors such as imports/exports, production, 
capacity utilization, employment, operating status, global competition, 
and financial information. The resulting data provided the Department 
with detailed industry information that was otherwise not publicly 
available and was needed to effectively conduct analysis for this 
investigation.
    The Department deems the information furnished in the survey 
responses confidential and will not publish or disclose it except in 
accordance with Section 705 of the DPA, which prohibits the publication 
or disclosure of this information unless the President determines that 
the withholding of such information is contrary to the interest of the 
national defense. Therefore, the information submitted to the 
Department in response to the survey will not be shared with any non-
government entity other than in aggregate form.

D. Interagency Consultation

    The Department consulted with the Department of Defense's Office of 
Industrial Policy and the Defense Logistics Agency, regarding 
methodological and policy questions that arose during the 
investigation. The Department also consulted with other U.S. Government 
agencies with expertise and information regarding the vanadium industry 
including the Department of Energy, the Department of State, the Office 
of the United States Trade Representative, the Department of Homeland 
Security, the Environmental Protection Agency, and the Department of 
Interior's U.S. Geological Survey.

IV. Product Scope of Investigation

    The scope of this investigation defined vanadium products at the 
Harmonized Tariff Schedule of the United States (HTS) 10-digit level. 
The nine product categories and related HTS codes covered by this 
report are shown below in Figure 1.

          Figure 1--Vanadium Product Scope of the Investigation
------------------------------------------------------------------------
                                                           10 Digit HTS
               Heading/subheading/product                      code
------------------------------------------------------------------------
Vanadium Oxides.........................................    2825.30.0010
                                                            2825.30.0050
Ferrovanadium...........................................    7202.92.0000
Vanadium Carbides.......................................    2849.90.5000
Vanadates...............................................    2841.90.1000
Vanadium Ore and Concentrates...........................    2615.90.6090
Ash and Residues Containing Vanadium....................    2620.40.0030
                                                            2620.99.1000
Vanadium Sulfate........................................    2833.29.3000
Vanadium Hydrides, Nitrides, Azides, Silicides, and         2850.00.2000
 Borides................................................
Vanadium, Unwrought and Wrought.........................    8112.92.7000
                                                            8112.99.2000
------------------------------------------------------------------------
Source: United States International Trade Commission and U.S. Department
  of Commerce, Bureau of Industry and Security.


[[Page 64756]]

    In order to ensure that the full vanadium production process was 
covered, these HTS codes include vanadium products as well as vanadium-
containing precursors. Vanadium is most commonly traded as vanadium 
oxides (typically vanadium pentoxide (V2O5)) and 
ferrovanadium (FeV), with usage in steelmaking accounting for the vast 
majority of consumption.
    Detailed information was collected in the Department's survey 
responses from U.S. vanadium producers regarding vanadium-containing 
products. Data throughout this report is presented, to the extent 
possible, in kilograms or metric tons of contained vanadium. For 
example, vanadium pentoxide is 56% vanadium by weight, while vanadium 
content in ferrovanadium varies from 35% to 80% (though is typically 
consistent for a given producer). Prices of vanadium pentoxide, in 
keeping with industry conventions, are quoted in U.S. Dollars per pound 
of vanadium pentoxide (not vanadium content).
    This report also considers the state of industries that depend on 
vanadium, in particular the U.S. titanium and steel industries, both of 
which manufacture materials that the U.S. government has recognized as 
critical to national security. As the Department is aware that the 
principal customers of vanadium are steel producers, understanding 
potential ramifications on the U.S. steel industry was necessary to 
ensure a complete analysis of the effect of vanadium imports on the 
national security. Vanadium is also a key element in the production of 
titanium alloy products that are critical to national security, with 
titanium sponge the subject of a recent Section 232 investigation and 
the focus of an ongoing working group. The Secretary's recommendations 
consider the interdependence of the U.S. vanadium industry and these 
crucial U.S. industries.

V. Background on U.S. Vanadium Industry

A. Vanadium Production

    Vanadium is produced through three general methods: primary 
production (mining), co-production (from mined ore in concert with 
steelmaking), and secondary production (from residues and waste 
materials). Nearly all vanadium in the United States is generated 
through secondary production, with some vanadium mining occurring 
together with uranium mining in sandstone-hosted deposits.
    Currently there is one primary producer of vanadium in the United 
States: Energy Fuels Resources (USA), Inc. (Energy Fuels). Although 
Energy Fuels' vanadium production activities are dependent on vanadium 
market prices, the company also may produce vanadium as a by-product of 
uranium mining, depending on uranium market prices. The United States 
had no primary production of vanadium from 2014 to 2018; Energy Fuels 
restarted production in 2019 following a surge in vanadium prices.\25\ 
The company produced approximately 1.8 million pounds of vanadium 
pentoxide in 2019--equivalent to approximately 460,000 kilograms of 
contained vanadium--prior to ceasing production ``due to weak vanadium 
market conditions.'' \26\ Energy Fuels' production accounted for under 
1% of estimated worldwide primary- and co-production in 2019, with the 
remainder produced in four countries: China, Russia, South Africa, and 
Brazil (see Figure 2).
---------------------------------------------------------------------------

    \25\ United States Geological Survey Mineral Commodity 
Summaries--Vanadium, https://www.usgs.gov/centers/nmic/vanadium-statistics-and-information.
    \26\ Energy Fuels, Inc. 2019 SEC Form 10-K, https://www.energyfuels.com/financials.

[[Page 64757]]



                            Figure 2--Estimated Worldwide Mine Production of Vanadium
                                                  [metric tons]
----------------------------------------------------------------------------------------------------------------
             Country                   2015            2016            2017            2018            2019
----------------------------------------------------------------------------------------------------------------
China...........................          42,000          45,000          40,000          40,000          40,000
Russia..........................          16,000          16,000          18,000          18,000          18,000
South Africa....................          12,000          10,000           7,960           7,700           8,000
Brazil..........................           6,000           8,000           5,210           5,500           7,000
United States...................               0               0               0               0             460
                                 -------------------------------------------------------------------------------
    Total.......................          76,000          79,000          71,200          71,200          73,000
----------------------------------------------------------------------------------------------------------------
Source: United States Geological Survey Mineral Commodity Summaries--Vanadium, https://www.usgs.gov/centers/nmic/vanadium-statistics-and-information, and Energy Fuels 2019 SEC 10-K filing.

    Energy Fuels sold approximately 50,000 of the 460,000 kilograms of 
contained vanadium it produced in 2019, with the remainder kept in 
inventory.\27\ The company reports that its U.S. mines contain 6.6 
million kilograms of measured vanadium content, with another 3.6 
million kilograms indicated or inferred.\28\ Energy Fuels also operates 
the only U.S. facility that can process both vanadium ore and 
conventional uranium, the White Mesa Mill.
---------------------------------------------------------------------------

    \27\ Energy Fuels, Inc. 2019 Annual Presentation, https://www.energyfuels.com/presentation.
    \28\ Ibid.
---------------------------------------------------------------------------

    Two Canada-based companies are in the process of exploring the 
development of mines located in the United States. In May 2020, First 
Vanadium Corporation announced the results of its Preliminary Economic 
Assessment (PEA) for an open pit mine near Carlin, Nevada, and forecast 
16 years of vanadium production capabilities totaling 180 million 
pounds of vanadium pentoxide, equivalent to 46 million kilograms of 
vanadium content.\29\ The second company, Silver Elephant Mining, owns 
Nevada Vanadium LLC, which is in the process of developing the 
Gibellini vanadium project near Eureka, Nevada. The Gibellini project 
is in the permitting process, with the Bureau of Land Management 
expected to reach a decision by August 2021.\30\ The company plans to 
begin production in late 2023, producing 130 million pounds of vanadium 
pentoxide (33 million kilograms of vanadium content) over 14 years.\31\ 
Other domestic vanadium resources exist, including Western Uranium & 
Vanadium's Sunday Mine Complex in Colorado and Anfield Resources' 
Velvet-Wood Mine in Utah, both of which have previously produced 
vanadium and have the potential to provide primary sources of vanadium, 
should market conditions support such production. In 2017, the United 
States Geological Survey (USGS) listed a total of 18 vanadium deposits 
in the United States, though data was not available on the extent of 
the deposits for most.\32\ The identification of most of these deposits 
is drawn from assessments carried out in 1968 and 1975 by the American 
Institute of Mining, Metallurgical, and Petroleum Engineers and the 
U.S. Geological Survey.\33\
---------------------------------------------------------------------------

    \29\ ``First Vanadium Announces Positive Preliminary Economic 
Assessment for the Carlin Vanadium Project in Nevada'', https://www.firstvanadium.com/index.php/news/2020/548-irstanadiumnnouncesositivereliminaryconomicsse20200511.
    \30\ Bureau of Land Management Accepting Comments for Gibellini 
Mine, August 17, 2020. Available at https://www.blm.gov/press-release/bureau-land-management-accepting-comments-gibellini-mine.
    \31\ Silver Elephant Mining Corporate Presentation: Gibellini 
Vanadium, https://www.silverelephantmining.com/projects/gibellini-vanadium/.
    \32\ Vanadium: Chapter U of Critical Mineral Resources of the 
United States--Economic and Environmental Geology Prospects for 
Future Supply (2017). https://pubs.usgs.gov/pp/1802/u/pp1802u.pdf.
    \33\ Fischer, R.P., 1968, The uranium and vanadium deposits of 
the Colorado Plateau region, in Ridge, J.D., ed., Ore deposits of 
the United States, 1933-1967: New York, N.Y., American Institute of 
Mining, Metallurgical, and Petroleum Engineers; Fischer, R.P., 1975, 
Geology and resources of base-metal vanadate deposits: U.S. 
Geological Survey Professional Paper 926[hairsp]-A, https://pubs.er.usgs.gov/publication/pp926A and Fischer, R.P., 1975, 
Vanadium resources in titaniferous magnetite deposits: U.S. 
Geological Survey Professional Paper 926-B, https://pubs.er.usgs.gov/publication/pp926B.
---------------------------------------------------------------------------

    Worldwide, most vanadium is produced via co-production with 
steelmaking, with vanadium-bearing iron ore used in steel furnaces that 
produce a vanadium slag that is further converted into vanadium 
pentoxide and ferrovanadium. Co-production accounted for 71% of global 
vanadium production in 2019.\34\ The concentrations of vanadium-bearing 
iron ore in China, Russia, and South Africa have made co-production 
more economically feasible in these countries than in others.
---------------------------------------------------------------------------

    \34\ Bushveld Minerals, About Vanadium, https://www.bushveldminerals.com/about-vanadium/.
---------------------------------------------------------------------------

    The main method of vanadium production in the United States is 
secondary production, using fossil fuel spent catalysts, residues, and 
ashes as feedstock. Fossil fuels can produce vanadium-bearing waste 
both through the use of vanadium catalysts used in the refining process 
and in the vanadium-rich residues generated from the burning of fuels 
high in vanadium content. After recovery, the spent catalysts and 
residues can be processed into vanadium pentoxide and ferrovanadium 
(see Figure 3). Secondary production of vanadium accounted for an 
estimated 11% of worldwide vanadium production in 2019, with the United 
States accounting for roughly one-third of the worldwide total (4% of 
total global production).\35\
---------------------------------------------------------------------------

    \35\ Ibid.
---------------------------------------------------------------------------

BILLING CODE 3510-33-P

[[Page 64758]]

[GRAPHIC] [TIFF OMITTED] TN18NO21.082

BILLING CODE 3510-33-C

[[Page 64759]]

    Both Applicants are secondary producers of vanadium, using 
vanadium-bearing waste feedstock to produce vanadium products: AMG 
Vanadium operates a facility in Cambridge, Ohio that produces 
ferrovanadium, and U.S. Vanadium operates a facility in Hot Springs, 
Arkansas that produces vanadium pentoxide. In addition to the 
Applicants there is one other domestic secondary vanadium producer: 
Gladieux Metals Recycling in Freeport, Texas and one converter: 
Evergreen Metallurgical (doing business as Bear Metallurgical Company) 
in Butler, Pennsylvania.
    AMG Vanadium's Ohio facility, which was originally built by the 
Vanadium Corporation of America, dates to 1952. Updates to the facility 
in 1970, following a merger with the Foote Mineral Corporation, led to 
the use of vanadium bearing slag as the facility's raw material input. 
A further overhaul after the acquisition of the facility by Advanced 
Metallurgical Group NV in 2007 resulted in AMG Vanadium's current use 
of spent catalyst as feedstock.\36\
---------------------------------------------------------------------------

    \36\ AMG Vanadium: Our History, at https://amg-v.com/timeline_amg_v/.
---------------------------------------------------------------------------

    AMG Vanadium is the country's largest producer of ferrovanadium, 
with average annual production from 2016 to 2019 of [TEXT 
REDACTED].\37\ As stated above, the company uses vanadium-bearing spent 
catalyst as feedstock; [TEXT REDACTED].\38\
---------------------------------------------------------------------------

    \37\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
    \38\ Ibid.
---------------------------------------------------------------------------

    The completion of a new facility in Zanesville, Ohio (approximately 
25 miles from its existing Cambridge facility) will allow AMG Vanadium 
to more than double its ferrovanadium production capacity to 5.5 
million kilograms per year.\39\ The new facility is expected to be 
completed in 2021, at a cost of just over $200 million, and will 
support approximately 100 new jobs.\40\ The company has indicated that 
its expansion makes sense despite low vanadium prices, based on the 
fees it receives from refiners to process spent catalyst, which they 
expect to exceed their operating costs in 2021.\41\ [TEXT REDACTED] 
\42\
---------------------------------------------------------------------------

    \39\ AMG Vanadium to Duplicate Ohio Recycling Facility. https://www.spglobal.com/marketintelligence/en/news-insights/trending/2zqx3jqhyx72gfgkcowuzq2.
    \40\ AMG Vanadium Constructing a Second Ohio Plant, Investing 
More Than $200 Million. https://www.jobsohio.com/news/posts/amg-vanadium-constructing-a-second-ohio-plant-investing-more-than-200-million/.
    \41\ AMG Annual General Meeting Minutes (May 1, 2019), as 
provided in public comments by Bushveld Minerals Limited, available 
at https://www.regulations.gov/document?D=BIS-2020-0002-0013.
    \42\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
---------------------------------------------------------------------------

    In October 2019, U.S. Vanadium LLC (U.S. Vanadium) purchased the 
vanadium production facility located in Hot Springs, Arkansas, from 
EVRAZ Stratcor (Stratcor), which had owned the facility since 2006. 
Vanadium production in Hot Springs dates from mining and milling 
operations established in 1966 by Union Carbide Corporation, which sold 
the mill to Stratcor in 1986 and closed the mine in 1989.\43\
---------------------------------------------------------------------------

    \43\ Vanadium Mining, Encyclopedia of Arkansas. https://encyclopediaofarkansas.net/entries/vanadium-mining-5915/.
---------------------------------------------------------------------------

    U.S. Vanadium was the only company to produce vanadium pentoxide in 
the United States in 2020, following Energy Fuels' cessation of 
production and the ongoing idling of Gladieux Metals Recycling. [TEXT 
REDACTED] \44\
---------------------------------------------------------------------------

    \44\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
---------------------------------------------------------------------------

    Gladieux Metals Recycling (Gladieux) is the owner of an idle 
vanadium production facility in Freeport, Texas, which it purchased out 
of bankruptcy from Gulf Chemical and Metallurgical Corporation (Gulf) 
in 2017.\45\ Gulf, which was majority-owned by the French company 
Eramet, had entered into bankruptcy and idled the vanadium processing 
facility as a result of low vanadium and molybdenum prices as well as 
the costs arising from environmental challenges. These costs included 
11 felony pollution charges and a resulting $2.75 million fine in 2010, 
a $7.5 million fine in 2013, and over $50 million in capital 
expenditures related to environmental matters.\46\ While the facility 
has been idle since 2017, Gladieux has been overhauling operations and 
has invested more than [TEXT REDACTED] to increase the plant's 
efficiency and make it more environmentally sound.\47\
---------------------------------------------------------------------------

    \45\ Callahan, Erinn. ``Recycling company buys Gulf Chemical.'' 
The Facts, May 16, 2017. https://thefacts.com/news/article_fe738e6b-8b64-54fb-afd0-c66cbe35f63e.html.
    \46\ Gulf Chemical & Metallurgical Corporation Chapter 11 
Bankruptcy Filing, as provided in public comments by Bushveld 
Minerals Limited, available at https://www.regulations.gov/document?D=BIS-2020-0002-0013.
    \47\ Gladieux Metals Recycling. Comment in response to Notice of 
Request for Public Comments on Section 232 National Security 
Investigation of Imports of Vanadium, July 20, 2020. https://www.regulations.gov/document?D=BIS-2020-0002-0033.
---------------------------------------------------------------------------

    Gladieux expects to restart operations [TEXT REDACTED].\48\ [TEXT 
REDACTED]. Gladieux will use spent catalyst as its feedstock; [TEXT 
REDACTED].\49\
---------------------------------------------------------------------------

    \48\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
    \49\ Ibid.
---------------------------------------------------------------------------

    Bear Metallurgical (Bear) owns a facility in Butler, Pennsylvania, 
which [TEXT REDACTED], but converts vanadium pentoxide to 
ferrovanadium, primarily on a fee basis for customers.\50\ Bear 
reported that [TEXT REDACTED] \51\ Bear produced [TEXT REDACTED].\52\
---------------------------------------------------------------------------

    \50\ Often referred to as a tolling arrangement, with Bear as 
the ``toller'' and their customers, who provide material to be 
converted, as ``tollees.''
    \51\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
    \52\ Ibid.
---------------------------------------------------------------------------

    Prior to declaring bankruptcy in 2016, Bear was a wholly-owned 
subsidiary of Gulf Chemical and Metallurgical (Gulf). The company 
reported entering into bankruptcy because low vanadium and molybdenum 
prices limited their toll conversion volumes, with their reliance on 
Gulf being a significant factor; as noted above Gulf itself also 
declared bankruptcy in 2016, and subsequently idled vanadium pentoxide 
production.\53\ Bear was purchased in 2016 by Yilmaden Holding, a 
subsidiary of the Turkey-based Yildirim Group.\54\
---------------------------------------------------------------------------

    \53\ Gulf Chemical & Metallurgical Corporation Chapter 11 
Bankruptcy Filing, as provided in public comments by Bushveld 
Minerals Limited, available at https://www.regulations.gov/document?D=BIS-2020-0002-0013.
    \54\ Mughal, Sarah. ``Report: Yildirim Unit Wins Tender for Bear 
Metallurgical Assets.'' September 11, 2016. S&P Global Market 
Intelligence. https://www.spglobal.com/marketintelligence/en/news-insights/trending/tetcr1ex6irl2ixbbkkqtw2.
---------------------------------------------------------------------------

    [TEXT REDACTED].
    [TEXT REDACTED] \55\
---------------------------------------------------------------------------

    \55\ USGS Vanadium Mineral Commodity Summary, 2020. https://pubs.usgs.gov/periodicals/mcs2020/mcs2020-vanadium.pdf.

---------------------------------------------------------------------------

[[Page 64760]]

[GRAPHIC] [TIFF OMITTED] TN18NO21.083


[[Page 64761]]



B. Vanadium Uses

    The vast majority of vanadium is used in steelmaking. Estimates for 
both U.S. and worldwide usage put the steel industry at 90 to 93% of 
total vanadium usage.\56\ The inclusion of small amounts of vanadium--
typically well under 1% of the total volume--into steel adds 
``strength, toughness, and wear resistance,'' as well as oxidation 
prevention.\57\ The resulting high-strength, low-alloy (HSLA) steel 
products are common in the construction industry, particularly in 
earthquake-resistant rebar, as well as in buildings, bridges, and 
cranes. HSLA steel products are also used in the automotive sector, in 
shipbuilding, and in various defense-related uses such as armor 
plating.\58\ Additionally, use of vanadium is common in tool steel, 
with chromium-vanadium steel commonly used in hand tools with vanadium 
concentrations of 0.15 to 0.2%.\59\ Vanadium is also used at 
significantly higher concentrations in high speed steel used in cutting 
and drilling tools, as well as aerospace applications such as gas 
engine turbines, at concentrations that can exceed 5% vanadium.
---------------------------------------------------------------------------

    \56\ Vanadium: Chapter U of Critical Mineral Resources of the 
United States--Economic and Environmental Geology Prospects for 
Future Supply (2017). https://pubs.usgs.gov/pp/1802/u/pp1802u.pdf.
    \57\ Ibid.
    \58\ Ibid.
    \59\ Which is better for hand tools? Chromium-Molybdenum or 
Chromium-Vanadium Steel. https://www.tekton.com/crmo-or-crv-steel.
---------------------------------------------------------------------------

    Substitution for vanadium is possible in most steel products. 
Molybdenum produces similar mechanical properties in tool steels and is 
substituted on the basis of price and the existence of pre-established 
supply chains.\60\ In HSLA steels, niobium is a standard substitute for 
vanadium, though ``significant technical adjustments to the steel 
production process'' are required.\61\ Many Chinese steel mills, for 
instance, carried out this substitution in 2018 in response to a surge 
in vanadium prices.\62\ Nonetheless, vanadium is generally preferred in 
applications such as rebar, though Roskill--a major metal and chemical 
industry research and consultancy group--notes that ``once mills are 
accustomed to niobium and have made the technical changes, they are 
unlikely to fully switch back.'' \63\
---------------------------------------------------------------------------

    \60\ Ibid.
    \61\ Vanadium: Chapter U of Critical Mineral Resources of the 
United States--Economic and Environmental Geology Prospects for 
Future Supply (2017). https://pubs.usgs.gov/pp/1802/u/pp1802u.pdf.
    \62\ Press Release: Roskill: Niobium industry looking for a 
future beyond steel. https://www.globenewswire.com/news-release/2020/02/10/1982500/0/en/Roskill-Niobium-industry-looking-for-a-future-beyond-steel.html.
    \63\ Vanadium Outlook to 2029, 18th Edition, Publicly available 
summary, https://roskill.com/market-report/vanadium/.
---------------------------------------------------------------------------

    Compared to its use in steel alloys, the aggregate use of vanadium 
in titanium alloys accounts for a much smaller percentage--
approximately 3 to 5% of total vanadium demand--but it is 
``irreplaceable in aerospace applications.'' \64\ Most titanium 
products contain vanadium; the vanadium is typically incorporated into 
the titanium melt process as a master alloy that is 65% vanadium and 
35% aluminum, producing a variety of titanium mill products. The most 
common is Ti-6Al-4V, a product that is 4% vanadium by weight and 
between 12 and 14% by cost.\65\ Other titanium alloys contain up to 15% 
vanadium by weight.
---------------------------------------------------------------------------

    \64\ Vanadium: Chapter U of Critical Mineral Resources of the 
United States--Economic and Environmental Geology Prospects for 
Future Supply (2017). https://pubs.usgs.gov/pp/1802/u/pp1802u.pdf.
    \65\ Titanium Metals Corporation Public Comment on Section 232 
National Security Investigation of Imports of Vanadium. Available at 
https://www.regulations.gov/document?D=BIS-2020-0002-0019.
---------------------------------------------------------------------------

    Most titanium products are used in the aerospace and military 
sectors, which account for approximately two-thirds of titanium mill 
product demand.\66\ Titanium accounts for approximately 14% of the 
Boeing 787 airframe, for instance, and up to 39% of the weight of F-22 
fighter jet.\67\ Other national security titanium applications include 
ship components, military ground vehicles, and armor. Industrial use of 
titanium accounts for approximately 25% of demand; vanadium is used in 
the chemical industry, power plants, and desalination plants, but these 
sectors are more likely to use unalloyed ``commercially pure'' 
titanium.
---------------------------------------------------------------------------

    \66\ Olin, Chris. Titanium Market Update: Highlighting Global 
Trends in 2017. Longbow Research.
    \67\ Boeing 787: From the Ground Up. https://www.boeing.com/commercial/aeromagazine/articles/qtr_4_06/article_04_2.html and U.S. 
Department of Commerce. Bureau of Industry and Security. The Effect 
of Imports of Titanium Sponge on the National Security.
---------------------------------------------------------------------------

    The primary remaining vanadium uses, accounting for 2 to 4% of 
total vanadium demand, are categorized as chemical or non-metallurgical 
use. One key non-metallurgical use is in catalysts, with vanadium-based 
products being the most common catalysts used for selective catalytic 
reduction to reduce the production of nitrogen oxides in industrial 
power plants.\68\ Vanadium is used as a catalyst in the production of 
sulfuric acid, itself an important industrial material used in the 
production of fertilizer, pulp and paper, titanium dioxide, cellulosic 
fibers and plastics, explosives, electronic chips, batteries, and 
pharmaceuticals.\69\ Consumption of sulfuric acid is ``regarded as one 
of the best indexes of a nation's industrial development.'' \70\ A 
significant national security use of vanadium within the chemical 
industry is in longwave-infrared (LWIR) imaging, used for night vision 
and targeting systems. Vanadium oxide is the most frequently used 
material in the bolometers supporting LWIR imaging.\71\
---------------------------------------------------------------------------

    \68\ Types of Catalysts for SCR Operations, https://sviindustrial.com/2020/04/08/types-of-catalysts-for-scr-operations/.
    \69\ PubChem Sulfuric acid compound summary, NIH National 
Library of Medicine, National Center for Biotechnology Information. 
https://pubchem.ncbi.nlm.nih.gov/compound/Sulfuric-acid#section=Uses.
    \70\ National Mineral Information Center, Sulfur Statistics and 
information. https://www.usgs.gov/centers/nmic/sulfur-statistics-and-information.
    \71\ Andrew Voshell, Nibir Dhar, Mukti M. Rana, ``Materials for 
microbolometers: vanadium oxide or silicon derivatives,'' Proc. SPIE 
10209, Image Sensing Technologies: Materials, Devices, Systems, and 
Applications IV, 102090M (28 April 2017); doi: 10.1117/12.2263999.

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[[Page 64762]]

    An additional chemical use of vanadium is in large scale batteries. 
This accounts for a very small percentage of current usage--estimated 
well under 1% of total demand--but is an area in which some researchers 
have seen potential for significant expansion. Vanadium redox flow 
batteries (VRBs) were first patented in 1986, and VRB technology was 
advanced by Pacific Northwest National Laboratory in 2011, 
significantly shrinking the size of the batteries and increasing 
temperature tolerance.\72\ These batteries have attributes that make 
them valuable for use in energy grids such as longer life cycles, lack 
electrolyte cross-contamination, and the ability to remain idle without 
losing capacity.\73\ The vanadium accounts for approximately 30% of the 
cost of a vanadium redox flow battery, requiring between 3 and 6 
kilograms of vanadium per kilowatt-hour of energy storage.\74\ 
Estimates of the potential market growth of the vanadium redox flow 
battery vary wildly, from minimal amounts to estimates exceeding 40% 
compound annual growth.\75\ To date, use of vanadium redox flow 
batteries has not shown sharp growth, in part due to cost. As the 
Department of Energy noted as part of its 2020 Energy Storage Grand 
Challenge Draft Roadmap, ``future capital cost reductions will require 
replacing vanadium with lower cost raw materials to approach the $100/
kWh targets required for wider-scale deployment of energy storage.'' 
\76\
---------------------------------------------------------------------------

    \72\ Yang, Z Gary. It's Big and Long-Lived, and It Won't Catch 
Fire: The Vanadium Redox-Flow Battery. IEEE Spectrum, October 26, 
2017. https://spectrum.ieee.org/green-tech/fuel-cells/its-big-and-longlived-and-it-wont-catch-fire-the-vanadium-redoxflow-battery.
    \73\ Vanadium Redox Flow Batteries: Improving the performance 
and reducing the cost of vanadium redox flow batteries for large-
scale energy storage. October 2013. U.S. Department of Energy 
Electricity Delivery & Energy Reliability, Energy Storage Program. 
Available at https://www.energy.gov/sites/prod/files/VRB.pdf.
    \74\ Energy Storage & Vanadium Redox Flow Batteries 101, 
November 13, 2018. https://www.bushveldminerals.com/wp-content/uploads/2018/11/Energy-Storage-Vanadium-Redox-Flow-Batteries-101.pdf.
    \75\ Ibid.
    \76\ Department of Energy, ``Energy Storage Grand Challenge 
Draft Roadmap'', available at https://www.energy.gov/energy-storage-grand-challenge/energy-storage-grand-challenge.
---------------------------------------------------------------------------

VI. Global Vanadium Industry Conditions

A. Overview

    Primary and co-production of vanadium is largely undertaken in four 
countries: China, Russia, South Africa, and Brazil (see Figure 5). In 
addition to these countries, the United States Geological Survey (USGS) 
lists known reserves in the United States and Australia. Worldwide 
resources significantly exceed known reserves, which are considered ``a 
working inventory of mining companies' supplies of an economically 
extractable mineral commodity;'' global reserves are estimated at 22 
million metric tons, with world vanadium resources estimated to exceed 
63 million metric tons.\77\
---------------------------------------------------------------------------

    \77\ United States Geological Survey Mineral Commodity 
Summaries--Vanadium, https://www.usgs.gov/centers/nmic/vanadium-statistics-and-information.
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[[Page 64763]]

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BILLING CODE 3510-33-C
    Countries other than the United States that are in the process of 
developing significant reserves include Canada and Kazakhstan. 
Australia already maintains notable vanadium reserves, which it is 
seeking to expand, but does not have any recorded mine production. The 
Government of Australia reports nine vanadium production projects 
underway, with five of these at advanced stages of exploration, and 
some vanadium production possible in 2021.\78\ One mine--the Windimurra 
mine--completed a feasibility study in April 2020 and expects to 
produce 4,250 tons of vanadium content annually.\79\ The Windimurra 
mine has successfully produced vanadium in the past, operating from 
1999 to 2003 with an annual production capacity of 3,000 tons contained 
vanadium.\80\ Four other Australian projects are in the process of 
permitting, design, or pilot studies with a total potential annual 
production of 22,000 tons of contained vanadium.\81\
---------------------------------------------------------------------------

    \78\ Submission from the Australian Government to the United 
States Department of Commerce, Section 232 National Security 
Investigation into Imports of Vanadium, submitted to https://www.regulations.gov, docket BIS-2020-0002 July 20, 2020.
    \79\ Ibid.
    \80\ United States Geological Survey, Vanadium Minerals Yearbook 
reports. Available at https://www.usgs.gov/centers/nmic/vanadium-statistics-and-information.
    \81\ Submission from the Australian Government to the United 
States Department of Commerce, Section 232 National Security 
Investigation into Imports of Vanadium, submitted to https://www.regulations.gov, docket BIS-2020-0002 July 20, 2020.

---------------------------------------------------------------------------

[[Page 64764]]

    Several mining projects for vanadium-bearing iron ore in Canada are 
in exploratory phases. Two are in the Lac Dor[eacute] area of 
Qu[eacute]bec, with partial funding provided by the government of 
Qu[eacute]bec. One of the two, operated by BlackRock Metals, plans to 
begin operations in 2021, with cast iron and ferrovanadium as the main 
products.\82\ This project is expected to yield 5,200 tons of 
ferrovanadium annually with 80% vanadium content, to be processed at a 
nearby facility.\83\ The second company, VanadiumCorp Resources, is in 
the exploration phase, with drill testing programs completed in 2019 
and a mineral resource estimate completed in October 2020.\84\ The 
estimate showed 8 million metric tons of measured magnetite concentrate 
at 1.2% vanadium pentoxide content, equal to 56,000 tons of contained 
vanadium, with an additional 324,000 tons indicated and 155,000 tons 
inferred.\85\ A third Canadian company, Vanadium One Iron Corporation, 
released the results of its PEA in February 2020 for its Mont Sorcier 
property in Qu[eacute]bec, anticipating the ability to produce five 
million tons of ore per year with a 0.6% vanadium pentoxide 
content.\86\
---------------------------------------------------------------------------

    \82\ ``M[eacute]taux BlackRock a un client pour son titane'', 
Radio-Canada, May 8, 2019, https://ici.radio-canada.ca/nouvelle/1168744/ferrovanadium-usine-saguenay-client-mine-chibougamau.
    \83\ ``BlackRock Project: Iron Ore Exploitation at lac 
Dor[eacute]'', https://iaac-aeic.gc.ca/050/documents/p62105/90319E.pdf.
    \84\ VanadiumCorp Lac Dor[eacute] Vanadium Project, https://www.vanadiumcorp.com/projects/lac-dore-vanadium-project/.
    \85\ VanadiumCorp Reports Lac Dore Mineral Resource Estimate 
(MRE). October 29, 2020. https://www.vanadiumcorp.com/releases/vanadiumcorp-reports-the-lac-dore-mineral-resource-estimate-mre-2/.
    \86\ Vanadium One Iron Corporation PEA Results, February 2020, 
https://www.vanadiumone.com/pea-results/.

      Figure 6--Estimated New Mine Production Potential of Select Vanadium Projects in Canada and Australia
                                       [In metric tons contained vanadium]
----------------------------------------------------------------------------------------------------------------
                                                                                                     Estimated
            Country                      Project                  Status             Estimated        annual
                                                                                     reserves       production
----------------------------------------------------------------------------------------------------------------
Australia......................  Atlantic Vanadium:       In Development........         131,936           4,256
                                  Windimurra Mine.
Australia......................  Multicom: Saint Elmo     Finalizing                     112,000           5,600
                                  Mine.                    Environmental
                                                           Approvals.
Australia......................  Australian Vanadium      Feasibility Study.....          97,152           5,715
                                  Ltd: Australian
                                  Vanadium Project.
Australia......................  TNG Limited: Mount       Engineering Design....         124,320           3,360
                                  Peake Mine.
Australia......................  Technology Metals        Feasibility Study              114,688           7,168
                                  Australia: Gabanintha    Completed 2019.
                                  Mine.
                                                         -------------------------------------------------------
Australia......................  Total..................  ......................         580,096          26,099
Canada.........................  BlackRock Metals:        Authorized............         176,439           4,152
                                  Chibougamou Mine.
Canada.........................  VanadiumCorp Resources:  Mineral Resource               379,273          10,306
                                  Lac Dor[eacute]          Estimate Complete.
                                  Project.
Canada.........................  VanadiumOne: Mont        Preliminary Economic           117,600          16,800
                                  Sorcier Project.         Analysis Complete.
                                                         -------------------------------------------------------
Canada.........................  Total..................  ......................         673,312          31,258
----------------------------------------------------------------------------------------------------------------
Sources:
Submission from the Australian Government to the United States Department of Commerce, Section 232 National
  Security Investigation into Imports of Vanadium, submitted to https://www.regulations.gov, docket BIS-2020-
  0002 July 20, 2020.
BlackRock Mining Project Summary. Available at https://comexqc.ca/en/fiches-de-projet/projet-dexploitation-dun-gisement-fer-vanadium-metaux-blackrock-inc/.
VanadiumCorp Reports Lac Dor[eacute] Mineral Resource Estimate. October 29, 2020. Available at https://www.vanadiumcorp.com/releases/vanadiumcorp-reports-the-lac-dore-mineral-resource-estimate-mre-2/.
VanadiumOne Iron Corp. Preliminary Economic Analysis Results, February 2020. Available at https://www.vanadiumone.com/pea-results/.

    In Kazakhstan, the Ferro-Alloy Resources Group, based in Guernsey 
and listed on the London and Astana International Stock Exchanges, owns 
Firma Balusa, LLP, which holds the rights to the Balasausqandiq 
vanadium deposit in the southern part of the country. The site 
currently has minimal vanadium production, but has rapid expansion 
plans, forecasting in 2019 reaching production levels of 4,000 tons 
contained vanadium in 2020 and 13,000 tons in 2023.\87\ The projected 
2023 production would make Kazakhstan the world's third leading 
producer of mined vanadium based on current totals. The company's 
production levels appear significantly behind its initial plans, 
attributed primarily to the COVID-19 pandemic; through August of 2020 
the company indicated it had produced 168 tons of vanadium pentoxide 
(94 tons contained vanadium) from secondary concentrate, and indicated 
the development of the Balasausqandiq deposit was ongoing.\88\ The 
company says it ``plans to become the world's lowest cost primary 
producer.'' \89\
---------------------------------------------------------------------------

    \87\ Ferro-Alloy Resources Ltd Corporate Presentation, March 
2019. https://ferro-alloy.com/en/news/FAR%20-%20Corporate%20Presentation%20-%20%20update%20March%202019.pdf.
    \88\ Ferro-Alloy Resources Unaudited interim financial results 
for the six months to 30 June 2020. https://www.ferro-alloy.com/en/investors/financials/.
    \89\ Ferro-Alloy Resources Corporate Profile. https://www.ferro-alloy.com/en/company/corporate-profile/.
---------------------------------------------------------------------------

    Beyond the estimated 73,000 tons of mine-produced vanadium reported 
worldwide in 2019, secondary production added as much as 30,000 tons to 
worldwide totals, with most of the additional production in the U.S., 
Germany, Austria, Japan, and Taiwan.\90\ Significant producers outside 
of the U.S. include Treibacher in Austria, AMG Technologies in Germany, 
Shinko Chemical, Taiyo Koko, and Metal Technology in Japan, and Hong 
Jing Environment, Plum Movax, and Full Yield Industry of Taiwan. 
Interest in secondary production has risen in recent years as tightened 
environmental controls on fuels has increased interest in processing 
spent catalyst and fossil fuel residues. In addition to their U.S. 
expansion, AMG is exploring the

[[Page 64765]]

construction of facilities in Saudi Arabia and China to process 
catalysts from those regions.\91\
---------------------------------------------------------------------------

    \90\ Based on USGS estimates and Perles, Terry. Vanadium Market 
Fundamentals: China's 2019 4th International Vanadium Forum Chengdu, 
Sichuan, China. April 13, 2019. Submitted as public comment by 
Treibacher Industrie, July 20, 2020. Available at https://www.regulations.gov/document?D=BIS-2020-0002-0026.
    \91\ AMG 2019 Annual Report. Available at https://ig9we1q348z124x3t10meupc-wpengine.netdna-ssl.com/wp-content/uploads/AMG-Annual-Report-Web-FINAL.pdf and Shell & AMG Recycling B.V. Sign 
Agreement with Shandong Yulong Petrochemical Co., Ltd to Assess 
Building a Spent Residue Upgrading Catalyst Recycling Facility. 
Available at https://www.globenewswire.com/news-release/2020/10/26/2114333/0/en/Shell-AMG-Recycling-B-V-Sign-Agreement-with-Shandong-Yulong-Petrochemical-Co-Ltd-to-Assess-Building-a-Spent-Residue-Upgrading-Catalyst-Recycling-Facility.html.
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BILLING CODE 3510-33-P
[GRAPHIC] [TIFF OMITTED] TN18NO21.085

BILLING CODE 3510-33-C
    While China accounts for an estimated 50 to 60% of global vanadium 
production, exports of vanadium from China constitute only 
approximately 15% of worldwide vanadium exports, because most Chinese 
production is consumed domestically in the steel industry. Primary 
producers South Africa and Brazil, as well as European Union countries, 
which represent a much larger share of global vanadium exports than 
production. The European Union alone accounts for over one-quarter of 
global exports of contained vanadium (see Figure 8).

     Figure 8--Estimated 2019 Share of Production and Exports of Vanadium Content in Vanadium Pentoxide and
                                                  Ferrovanadium
----------------------------------------------------------------------------------------------------------------
                                                                Estimated 2019 share of  Estimated 2019 share of
                            Country                               world production (%)      world exports (%)
----------------------------------------------------------------------------------------------------------------
China.........................................................                       55                       15
Russia........................................................                       18                       15
European Union Countries *....................................                        9                       27
South Africa..................................................                        8                       13
Brazil........................................................                        7                       13
United States.................................................                        4                        4
Japan.........................................................                        2                        1
India.........................................................                        1                        1
South Korea...................................................                       <1                        7

[[Page 64766]]

 
Taiwan........................................................                       <1                        2
Thailand......................................................                       <1                        1
Canada........................................................                       <1                        2
----------------------------------------------------------------------------------------------------------------
Sources: U.S. Geological Survey, TTP Squared, Bureau of Industry and Security, IHS Markit Global Trade Atlas.
* Includes exports within the European Union.

    Vanadium production generally results first in vanadium pentoxide, 
which may be exported or further processed into ferrovanadium for use 
in steel. A large portion of the difference between world production 
and export share for E.U. countries results from their import of 
vanadium oxides--principally from Russia--for conversion into 
ferrovanadium, which was then exported (see Figure 9). In fact, nearly 
all Russian exports of vanadium oxide went to the Czech Republic, home 
to EVRAZ Nikom, one of the E.U.'s main producers of ferrovanadium.

                                       Figure 9--Top World Trade Pairings 2016-2019: Vanadium Oxides (HTS 2825.30)
                                                                [In tons vanadium oxide]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                             Share of        Share of
             Exporter                     Importer             2016            2017            2018            2019          country's    world  exports
                                                                                                                            exports (%)         (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Russia............................  Czech Republic......           6,656           8,656           8,676           9,683              99              23
South Africa......................  Netherlands.........           3,415           3,225           3,871           3,711              56              10
China.............................  South Korea.........           3,140           4,620           3,186           2,750              47               9
Brazil............................  Netherlands.........           1,740           4,343           4,039           3,380              37               9
Brazil............................  South Korea.........           3,640           1,460             660           2,320              22               5
South Korea.......................  Japan...............           1,181           2,357           1,840           2,051              73               5
South Africa......................  United States.......           1,676           1,744           1,603           1,521              26               4
Brazil............................  United States.......             660           1,377           2,442           1,993              18               4
China.............................  Netherlands.........           2,376           1,860           1,199             615              21               4
Netherlands.......................  Austria.............               2              46           3,100           1,773              75               3
Brazil............................  Canada..............             980             940           1,320           1,340              13               3
China.............................  Japan...............             926             720             917             722              11               2
China.............................  United States.......             930             565             639              69               8               1
Brazil............................  Japan...............             680             440             440             440               6               1
China.............................  Canada..............             120             420             599             510               6               1
South Africa......................  Japan...............             267             244             391             560               6               1
Taiwan............................  United States.......             533             510              57             126              38               1
Thailand..........................  India...............              60             320             520             240              55               1
Brazil............................  India...............             260             660             200               0               3               1
South Africa......................  India...............               0               0             486             480               4               1
                                                         -----------------------------------------------------------------------------------------------
All Countries.....................  All Countries.......          33,293          37,220          39,074          38,719  ..............  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: IHS Markit Global Trade Atlas.

    Czech ferrovanadium, in turn, was exported principally to the 
United States, Japan, Netherlands, and Germany (see Figure 10). Other 
major exporters of ferrovanadium include the Netherlands (the principal 
importer of South African vanadium oxide), South Korea (the principal 
importer of Chinese vanadium oxides), and China which, despite 
exporting a relatively small percentage of their production still 
accounts for a major portion of global exports due to the sheer size of 
their production.

                                       Figure 10--Top World Trade Pairings 2016-2019: Ferrovanadium (HTS 7202.92)
                                                                 [In tons ferrovanadium]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                             Share of        Share of
             Exporter                     Importer             2016            2017            2018            2019          country's    world  exports
                                                                                                                            exports (%)         (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Netherlands.......................  Germany.............           1,902           1,832           3,758           1,913              28               7
South Africa......................  Netherlands.........           2,112           1,662           1,563           1,579              59               5
China.............................  Netherlands.........           2,380           1,540           1,549             930              28               5
South Korea.......................  Netherlands.........           1,364           1,714           1,543           1,333              53               4
China.............................  Japan...............           1,467           1,323           1,635           1,370              25               4
China.............................  South Korea.........             975             995           1,667           1,661              23               4

[[Page 64767]]

 
Czech Republic....................  United States.......           1,016             940           1,045           1,691              18               3
Netherlands.......................  United States.......           1,398             186           2,091             893              13               3
Czech Republic....................  Japan...............           1,025             740           1,020             806              14               3
Netherlands.......................  Italy...............             718             895           1,039             523               9               2
China.............................  Taiwan..............           1,109             595             787             644              14               2
Canada............................  United States.......             142             767             869           1,266              91               2
United States.....................  Canada..............             474             295           1,403             843              59               2
Czech Republic....................  Netherlands.........             870             457             270           1,184              11               2
Czech Republic....................  Germany.............           1,162           1,009             361             247              11               2
Netherlands.......................  Spain...............             784             654             484             175               6               2
South Africa......................  Japan...............             312             404             605             640              17               1
South Korea.......................  Japan...............             596             258             459             601              17               1
Russia............................  Netherlands.........             404             700             360             420              32               1
United States.....................  Mexico..............             304             266             642             315              30               1
                                                         -----------------------------------------------------------------------------------------------
All Countries.....................  All Countries.......          33,477          30,849          39,300          32,367  ..............  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: IHS Markit Global Trade Atlas.

    In recent years, the global vanadium market has been subject to 
severe price fluctuations. Three times since 2004 the benchmark 
vanadium pentoxide price has more than doubled in under a year, after 
which a precipitous drop to more typical price levels occurs (see 
Figure 11). These rapid price changes have led to a history of 
investment and expansion during price spikes and plant idlings and 
bankruptcies in market economies during and following price drops. 
Starting new primary production has been especially challenging, as new 
mining ventures can take many years to progress through exploration and 
permitting to production. The Windimurra mine in Australia, for 
instance, is in the midst of its fourth re-opening attempt since 1999, 
having operated from 2000 to 2003, invested in reopening from 2005 to 
2009 that ultimately failed to materialize, reopening with new 
ownership from 2012 to 2014, and currently under development by a new 
owner.\92\
---------------------------------------------------------------------------

    \92\ McKinnon, Stuart. Vanadium Price Boom Offers Hope of 
WIndimurra Revival. The West Australian, April 2, 2018. Available at 
https://thewest.com.au/business/mining/vanadium-price-boom-offers-hope-of-windimurra-revival-ng-b88792684z.

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[[Page 64768]]

[GRAPHIC] [TIFF OMITTED] TN18NO21.086

    Compared to primary production facilities, secondary production 
facilities can have less extended lead times, but still take years to 
complete. The establishment of AMG Vanadium's new facility in Ohio was 
announced in October 2018, broke ground in August 2019, and is expected 
to be completed in 2021.\93\ The Gladieux facility in Freeport, Texas 
was purchased in 2017 and is not yet operational.
---------------------------------------------------------------------------

    \93\ AMG Vanadium Muskingum County Facility website. https://amg-v.com/muskingumfacility/.
---------------------------------------------------------------------------

B. Prior Trade Investigations

    The U.S. government has previously taken action against 
artificially low-priced vanadium product imports. Several antidumping 
investigations conducted by the Department of Commerce and the USITC 
affirm that sources of imported ferrovanadium from nearly all countries 
that mine vanadium ore have engaged in dumping that injures U.S. 
producers. Among the significant miners of vanadium ore, only Brazil 
has not been subject to an antidumping finding. AMG Vanadium (or its 
predecessor) has been a petitioner for all ferrovanadium antidumping 
cases, joined by Bear, Gulf, and Stratcor (or its predecessor) for the 
petitions on China, South Africa, and Korea. Figure 12 lists USITC 
investigations into vanadium imports since 1995:

                    Figure 12--U.S. International Trade Commission Vanadium Cases Since 1995
----------------------------------------------------------------------------------------------------------------
              Investigation                                   Date                              Finding
----------------------------------------------------------------------------------------------------------------
Ferrovanadium and Nitrided Vanadium from   July 30, 1995.............................  Affirmative.
 Russia.
Ferrovanadium and Nitrided Vanadium from   May 15, 2001..............................  Affirmative.
 Russia (First Review).
Ferrovanadium from China and South Africa  January 28, 2003..........................  Affirmative.
Ferrovanadium and Nitrided Vanadium from   September 28, 2006........................  Affirmative.
 Russia (Second Review).
Ferrovanadium from China and South Africa  November 24, 2008.........................  Affirmative.
 (First Review).
Ferrovanadium from China and South Africa  January 28, 2015..........................  Affirmative.
 (Second Review).
Ferrovanadium and Nitrided Vanadium from   August 22, 2012...........................  Negative.
 Russia (Third Review).
Ferrovanadium from Korea.................  March 17, 2017............................  Affirmative.
Ferrovanadium from China and South Africa  August 7, 2020............................  Affirmative.
 (Third Review).
----------------------------------------------------------------------------------------------------------------
Source: United States International Trade Commission.

Russia
    In July 1995, the Department of Commerce found that imports of 
ferrovanadium and nitrided vanadium from Russia were sold in the United 
States at less than fair value, and the USITC found that the dumped 
imports were materially injuring the U.S. industry. In the course of 
the

[[Page 64769]]

investigation, USITC determined that ferrovanadium and nitrided 
vanadium, despite having somewhat disparate end uses, constituted a 
single like product based on the significant vanadium content and 
generally interchangeable use in steel alloys.\94\
---------------------------------------------------------------------------

    \94\ U.S. International Trade Commission. Ferrovanadium and 
Nitrided Vanadium from Russia. Investigation No. 731-TA-702, Final. 
https://www.usitc.gov/publications/701_731/pub2904.pdf.
---------------------------------------------------------------------------

    This affirmative finding was renewed following the Department of 
Commerce's and USITC's first five-year review of the antidumping duty 
order in May 2001, as well as the second five-year review in September 
2006. At the third set of five-year reviews completed in August 2012, 
the USITC noted there had been no subject imports since 1996, and that 
in the case of nitrided vanadium there had been no U.S. production 
since 1992.\95\ However, while there were no imports of ferrovanadium 
from Russia during the time period, there were imports of Russian 
vanadium pentoxide, which were then converted to ferrovanadium in the 
U.S., as well as imports of ferrovanadium from Russian-owned EVRAZ 
Nikom in the Czech Republic, made from Russian-sourced vanadium 
pentoxide.\96\
---------------------------------------------------------------------------

    \95\ U.S. International Trade Commission. Ferrovanadium and 
Nitrided Vanadium from Russia. Investigation No. 731-TA-702 (Third 
Review). https://www.usitc.gov/publications/701_731/pub4345.pdf.
    \96\ Ibid.
---------------------------------------------------------------------------

    The USITC's third review found, contrary to the prior reviews, that 
imports of ferrovanadium from Russia would not be likely to 
significantly increase if the antidumping order was revoked. The 
decision noted that Russian capacity and production had declined from 
prior significant excesses, with less focus on exporting 
ferrovanadium.\97\ The report also noted the increased tendency to 
supply the U.S. market with vanadium pentoxide, rather than the subject 
product ferrovanadium. On this basis, the antidumping order against 
Russian ferrovanadium was revoked in October 2011.
---------------------------------------------------------------------------

    \97\ Ibid.
---------------------------------------------------------------------------

China and South Africa
    In January 2003 the Department of Commerce determined that imports 
of ferrovanadium from China and South Africa were sold in the United 
States at less than fair value and the USITC found that the dumped 
imports were materially injuring the U.S. industry. In the first sunset 
reviews (completed November 2008), second sunset reviews (completed 
January 2015), and third sunset reviews (completed August 2020), the 
Department of Commerce and the USITC determined that revocation of the 
existing antidumping duty orders on ferrovanadium from China and South 
Africa would likely lead to continuation or recurrence of dumping and 
material injury to an industry in the United States within a reasonably 
foreseeable time.\98\
---------------------------------------------------------------------------

    \98\ Ferrovanadium from the People's Republic of China and the 
Republic of South Africa: Continuation of Antidumping Duty Orders, 
73 FR 77609, December 19, 2008; Ferrovanadium From the People's 
Republic of China and the Republic of South Africa: Continuation of 
Antidumping Duty Orders, 80 FR 8607, February 18, 2015; 
Ferrovanadium From the Republic of South Africa and the People's 
Republic of China: Continuation of Antidumping Duty Orders, 85 FR 
51408, August 20, 2020.
---------------------------------------------------------------------------

    Following the imposition of the antidumping order in 2002, imports 
of ferrovanadium from China fell from an average of 497,000 kilograms 
of contained vanadium per year from 1999 to 2001 to ``zero or close to 
zero in every year since 2002.'' \99\ USITC cited China's status as the 
world's largest producer of ferrovanadium and its continued increases 
in capacity as reasons for an affirmative injury finding.
---------------------------------------------------------------------------

    \99\ U.S. International Trade Commission. Ferrovanadium and 
Nitrided Vanadium from China and South Africa. Investigation Nos. 
731-TA-986-987 (Third Review). https://www.usitc.gov/publications/701_731/pub5099.pdf.
---------------------------------------------------------------------------

    Imports of ferrovanadium from South Africa showed similar declines 
following the initial antidumping order. From an average of 758,000 
kilograms of vanadium content per year from 1999 to 2001, by 2003 
imports had fallen to account for no more than 0.1% of U.S. market 
share.\100\ As was the case with Russian providers, since the 
imposition of antidumping duties South African vanadium has continued 
to enter the United States in other forms not subject to antidumping 
duties, such as vanadium pentoxide and nitrided vanadium.
---------------------------------------------------------------------------

    \100\ Ibid.
---------------------------------------------------------------------------

Korea
    In March 2017 the Department of Commerce determined that imports of 
ferrovanadium from Korea were sold in the United States at less than 
fair value and the USITC found that the dumped imports were materially 
injuring the U.S. industry. Unlike Russia, China, and South Africa, 
Korea is not a significant source of vanadium production. Rather, the 
USITC noted that Korean ferrovanadium was produced primarily from 
vanadium pentoxide originally sourced from China.\101\ The USITC found 
that ferrovanadium from Korea was sold in the United States in 
``increasing and significant volume . . . at declining prices.'' \102\
---------------------------------------------------------------------------

    \101\ U.S. International Trade Commission. Ferrovanadium and 
Nitrided Vanadium from Korea. Investigation Nos. 731-TA-1315. 
https://www.usitc.gov/publications/701_731/pub4683.pdf.
    \102\ Ibid.
---------------------------------------------------------------------------

C. U.S. Duties on Vanadium Imports

    As of November 2020, all vanadium products in the scope of this 
investigation, with the exception of vanadium ore and concentrates 
(Harmonized Tariff Schedule of the United States (HTSUS) 2615.90.6090) 
and ash and residues containing vanadium (HTSUS 2620.40.0030 and 
2620.99.1000) are subject to duties between 2 and 5.5% (see Figure 13).

                 Figure 13--Duties on Vanadium Products
------------------------------------------------------------------------
                                           10 Digit HTS
       Heading/subheading/product              code       Duty (percent)
------------------------------------------------------------------------
Vanadium Oxides.........................    2825.30.0010             5.5
                                            2825.30.0050             5.5
Ferrovanadium...........................    7202.92.0000           * 4.2
Vanadium Carbides.......................    2849.90.5000             3.7
Vanadates...............................    2841.90.1000             5.5
Vanadium Ore and Concentrates...........    2615.90.6090            Free
Ash and Residues Containing Vanadium....    2620.40.0030            Free
                                            2620.99.1000            Free
Vanadium Sulfate........................    2833.29.3000             5.5
Vanadium Hydrides, Nitrides, Azides,        2850.00.2000             5.5
 Silicides, and Borides.................

[[Page 64770]]

 
Vanadium, Unwrought and Wrought.........    8112.92.7000               2
                                            8112.99.2000               2
------------------------------------------------------------------------
Source: United States International Trade Commission and U.S. Department
  of Commerce, Bureau of Industry and Security, as of December 7, 2020.
* Ferrovanadium products from China, South Africa, and Korea are subject
  to additional antidumping duties.

    Antidumping duties on ferrovanadium add significantly to the rates 
for ferrovanadium from China, South Africa, and Korea (see Figure 14).

             Figure 14--Antidumping Duties on Ferrovanadium
------------------------------------------------------------------------
                                                           Dumping rate
           Country                 Exporter/producer         (percent)
------------------------------------------------------------------------
China........................  Pangang Group                       12.97
                                International Economic &
                                Trading Corporation.
                               China-Wide...............           66.71
South Africa.................  Highveld Steel and                 116.00
                                Vanadium Corporation,
                                Ltd.
                               Xstrata South Africa               116.00
                                (Proprietary) Limited.
                               All Others...............          116.00
Korea........................  Korvan Ind. Co., Ltd.....            3.22
                               Fortune Metallurgical               54.69
                                Group Co., Ltd.
                               Woojin Ind. Co., Ltd.....           54.69
                               All Others...............            3.22
------------------------------------------------------------------------
Source: Federal Register; 68 FR 4168, 68 FR 4169, 82 FR 14874.

    In addition to the above general and antidumping duties, China has 
been subject to Section 301 duties on all subject vanadium products 
except HTSUS 2620.40.0030 (ash and residue containing mainly aluminum 
and vanadium-bearing materials) of 10% starting September 21, 2018 and 
25% starting August 20, 2019. Prior to the imposition of Section 301 
duties, vanadium oxides was the only category of vanadium product with 
significant imports from China. Imports of vanadium via vanadium oxides 
fell from a monthly average of 31,500 kilograms in the year prior to 
the initial announcement of Section 301 tariffs to 7,200 kilograms per 
month in year following the imposition of tariffs. Between the initial 
announcement of Section 301 duties in April 2018 and the imposition of 
duties on vanadium products in September 2018, imports of vanadium 
oxides from China rose to 96,000 kilograms of contained vanadium per 
month, perhaps due to companies increasing inventories in anticipation 
of duties (see Figure 15).
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[[Page 64771]]

[GRAPHIC] [TIFF OMITTED] TN18NO21.087

BILLING CODE 3510-33-C

VII. Findings

A. Vanadium Is Essential to U.S. National Security

1. Vanadium Is Considered a Critical Mineral
    Vanadium is one of the 35 minerals included by the Department of 
Interior (DOI) on the Critical Minerals List. This list, which 
President Trump directed DOI to define in E.O. 13817, includes minerals 
which meet the following criteria:
    (i) A non-fuel mineral or mineral material essential to the 
economic and national security of the United States,
    (ii) the supply chain of which is vulnerable to disruption, and
    (iii) that serves an essential function in the manufacturing of a 
product, the absence of which would have significant consequences for 
our economy or our national security.\103\
---------------------------------------------------------------------------

    \103\ White House, ``Presidential Executive Order on a Federal 
Strategy to Ensure Secure and Reliable Supplies of Critical 
Materials'', (December 20, 2017), https://trumpwhitehouse.archives.gov/presidential-actions/presidential-executive-order-federal-strategy-ensure-secure-reliable-supplies-critical-minerals/.
---------------------------------------------------------------------------

    In its report, Critical mineral resources of the United States--
Economic and environmental geology and prospects for future supply, 
USGS observed that vanadium is used in steel alloys which are in turn 
used in critical sectors including bridges, pipelines, ships, rail 
cars, truck bodies, and military vehicles, and is ``irreplaceable for 
its role in aerospace applications'' via titanium alloys.\104\ For this 
reason among others, and based on input from other U.S. government 
agencies, USGS included vanadium on the critical minerals list.
---------------------------------------------------------------------------

    \104\ Kelley, K.D., Scott, C.T., Polyak, D.E., and Kimball, 
B.E., 2017, Vanadium, chap. U of Schulz, K.J., DeYoung, J.H., Jr., 
Seal, R.R., II, and Bradley, DC, eds., Critical mineral resources of 
the United States--Economic and environmental geology and prospects 
for future supply: U.S. Geological Survey Professional Paper 1802, 
p. U1-U36, https://doi.org/10.3133/pp1802U.
---------------------------------------------------------------------------

    As discussed in Section V of this report, in addition to its use in 
alloys, vanadium is a vital component in the production of vanadium 
redox flow batteries (VRBs), chemical catalysts, ceramics, electronics, 
and other vanadium chemicals. VRBs are a potential area of large scale 
energy storage, a fast-growing sector that will help support the growth 
and reliability of the power grid. As noted above, sulfuric acid's wide 
array of manufacturing uses means its production is highly correlated 
with industrial development. Though a small percentage of overall 
vanadium demand, these catalyst uses are essential for multiple 
critical infrastructure and commercial sectors.
    USGS cited continued need for steel products as a driver of 
vanadium demand, specifically noting expansion of Chinese demand, 
increased vanadium content in steel rebar in China and Japan, growing 
steel production in India, and expansion of energy uses of vanadium. As 
a result, USGS predicts that new sources of vanadium and more efficient 
extraction from existing sources will be required to supplement the 
current limited supply. Further, as vanadium is required for the 
manufacture of titanium products and is a significant alloying agent in 
high strength steel, limited vanadium production capacity could create 
a supply bottleneck. Such a bottleneck is

[[Page 64772]]

one of the ``vulnerabilities'' identified in E.O. 13817.\105\
---------------------------------------------------------------------------

    \105\ White House, ``Presidential Executive Order on a Federal 
Strategy to Ensure Secure and Reliable Supplies of Critical 
Materials''.
---------------------------------------------------------------------------

2. Vanadium Is Required for National Defense Systems
    Vanadium, as a result of its use in steel and titanium alloys, is a 
critical input to many defense systems. The 2017 and 2019 Department of 
Commerce Section 232 reports on the effects of steel and of titanium 
sponge on national security found that those metals were required for 
national defense. Therefore, because vanadium is frequently used in 
these metals and there is no suitable substitute for vanadium in many 
of these products, vanadium is also required to meet national defense 
needs.
    DLA has identified [TEXT REDACTED] defense systems that require the 
use of vanadium, including but not limited to the [TEXT REDACTED]. The 
average titanium content for military airframes that entered service 
after 2000 is 30%, implying vanadium content of roughly 1% by 
weight.\106\ For example, each F-22A Raptor aircraft contains at least 
six separate titanium alloys, some containing as much as 15% vanadium 
by weight, with a finished aircraft containing approximately 9,000 
pounds of titanium.\107\ Building each aircraft requires significantly 
more material: About 50 metric tons of titanium, which in turn requires 
approximately 2 metric tons of vanadium content based on a standard Ti-
6Al-4V alloy.\108\ The F-35 Lightning II requires an estimated 15 tons 
of titanium per plane to build.\109\ Overall, defense uses account for 
an estimated 10% of titanium demand, equivalent to approximately 43 
tons of vanadium content per year.\110\
---------------------------------------------------------------------------

    \106\ U.S. Department of Commerce. Bureau of Industry and 
Security. The Effect of Imports of Titanium Sponge on the National 
Security (Washington, DC: 2019) (``Titanium Report'') and based on 
use of standard Ti-6Al-4V alloy.
    \107\ Cotton, James D. et al. Titanium Alloys on the F-22 
Fighter Airframe. Advanced Materials & Processes, May 2002. https://www.asminternational.org/documents/10192/1756963/amp16005p025.pdf/c0972040-8169-4998-8699-f051fab52d9b/AMP16005P025.
    \108\ Seong, Somi et al. Titanium: Industrial Base, Price 
Trends, and Technology Initiatives, 2009. https://www.rand.org/content/dam/rand/pubs/monographs/2009/RAND_MG789.pdf.
    \109\ Ibid.
    \110\ Based on average annual 2016-2019 USGS vanadium apparent 
consumption of 8,590 tons, titanium uses accounting for 5% of 
vanadium consumption, and defense use accounting for 10% of titanium 
demand.
---------------------------------------------------------------------------

    The Department's 2018 Steel Report aligns with this finding. The 
report found that the Department of Defense has ``a large and ongoing 
need for a range of steel products that are used in fabricating weapons 
and related systems for the nation's defense.'' Among the defense steel 
uses cited were aircraft carriers, submarines, and tanks, as well as 
the high-strength steel alloys used on aircraft and discussed above. 
The Steel Report indicated that Department of Defense's steel 
requirements amount to 3% of annual overall U.S. steel production, 
equivalent to approximately 230 metric tons of vanadium content per 
year.\111\ In addition to direct incorporation of vanadium into defense 
systems, the production of these systems relies on vanadium-containing 
infrastructure, as tool steels and high speed steels often have a 
significantly higher vanadium content than other steel.
---------------------------------------------------------------------------

    \111\ Based on average annual 2016-2019 USGS vanadium apparent 
consumption of 8,590 tons, steel uses accounting for 90% of vanadium 
consumption, and defense use accounting for 3% of steel demand.
---------------------------------------------------------------------------

3. Vanadium Is Required for Critical Infrastructure
    As with national defense systems, vanadium is a key component of 
much of the steel and titanium used in U.S. critical infrastructure. 
Vanadium is a key feature in high-strength, low-alloy (HSLA) steel 
products used in the construction industry, including earthquake-
resistant rebar, bridges, and construction cranes. Hand tools and high-
speed steel tools for cutting and boring commonly contain vanadium as a 
strengthening agent. The commercial aerospace industry also relies on 
vanadium through its use of titanium alloys, and the chemical 
production industry uses vanadium directly for production of sulfuric 
acid.
    The Department's 2018 Steel Report determined that 54 million 
metric tons of steel per year were consumed in critical industries, 
accounting for half of all domestic steel consumption.\112\ Steel had 
uses in all of the United States' 16 critical infrastructure sectors, 
with the transportation, energy, and water treatment sectors 
specifically noted as vulnerable to disruption. A conservative estimate 
of the use of vanadium in critical infrastructure via steel products 
amounts to 3,865 tons of vanadium demand annually.\113\
---------------------------------------------------------------------------

    \112\ Based on the 16 designated critical infrastructure sectors 
identified pursuant to Presidential Policy Directive 21 (PPD-21). 
https://www.cisa.gov/critical-infrastructure-sectors.
    \113\ Based on average annual 2016-2019 USGS vanadium apparent 
consumption of 8,590 tons, steel uses accounting for 90% of vanadium 
consumption, and critical infrastructure use accounting for 50% of 
steel demand. Use is likely higher, as critical infrastructure 
sectors are more likely to use HSLA and full alloy steels.
---------------------------------------------------------------------------

    In the titanium industry, nearly all vanadium-bearing titanium 
products have end-uses in critical infrastructure and defense sectors. 
Beyond the 10% of titanium consumed via military uses, an estimated 55% 
of consumption is in commercial aerospace products--part of the 
transportation critical infrastructure sector--with nearly all 
remaining consumption in industrial or medical uses. Use of vanadium in 
critical infrastructure via titanium products thus amounts to between 
236 tons and 365 tons per year.\114\
---------------------------------------------------------------------------

    \114\ Based on average annual 2016-2019 USGS vanadium apparent 
consumption of 8,590 tons, titanium uses accounting for 5% of 
vanadium consumption, and critical infrastructure use accounting for 
between 55% and 85% of titanium demand; commercial aerospace 
estimated at 55% of titanium demand, but up to 85% of vanadium-
alloyed titanium demand, with industrial and medical titanium 
commonly unalloyed.
---------------------------------------------------------------------------

    Nearly all non-metallurgical uses of vanadium are also related to 
critical infrastructure. The energy sector is a primary destination; 
vanadium is used as a catalyst in industrial power plants and as the 
electrolyte in vanadium redox flow batteries. The other significant 
non-metallurgical use is in the chemical production sector, where 
vanadium is used as a catalyst in the production of sulfuric acid and 
maleic anhydride. With non-metallurgical use accounting for an 
estimated 5% of vanadium demand, direct vanadium use in critical 
infrastructure amounts to approximately 430 tons per year.\115\
---------------------------------------------------------------------------

    \115\ Based on average annual 2016-2019 USGS vanadium apparent 
consumption of 8,590 t.
---------------------------------------------------------------------------

    With indirect use in all 16 critical infrastructure sectors, direct 
use in the energy and chemical production sectors, and an 
``irreplaceable'' status in titanium alloys used in the transportation 
sector, vanadium has a key role in U.S. critical infrastructure. 
Overall annual critical infrastructure use of vanadium amounts 
conservatively to 4,542 tons.
4. Vanadium Has Significant Effects on Other Critical Industries
    As discussed above, vanadium has essential uses in steel and 
titanium production, and vanadium resources in the United States are 
often co-located with uranium. Titanium and uranium have been 
identified as critical minerals by the Department of Interior, with 
steel, titanium sponge, and uranium all the subjects of recent Section 
232 investigations. The impact of the vanadium industry on other 
critical industries is significant, underscoring vanadium's status as a 
critical commodity.
    Following the Section 232 investigation into the effect of imports

[[Page 64773]]

of steel products on national security, on March 8, 2018, the President 
issued a proclamation concurring with the Secretary of Commerce's 
finding that imports of steel articles threatened to impair U.S. 
national security, and imposing a 25% tariff on imports. The goal of 
the tariff was to help ensure the economic viability of the domestic 
steel industry, which was threatened by low-cost imports. The basis for 
the President's actions, and the Secretary's findings, was the critical 
role of the steel industry in national security.
    As discussed above, the steel industry accounts for approximately 
90% of the U.S. demand for vanadium.\116\ Compared to the estimated $92 
billion worth of raw steel produced in the United States in 2019, 
vanadium costs constituted only a small expense for the overall 
industry. However, certain industry sectors incurred far higher cost 
exposure to vanadium. In an industry threatened by low-cost imports, 
even minor cost changes can have significant effects on domestic 
producers. Domestic producers challenged by low-cost imports for more 
than one essential ``ingredient'' for their product (e.g., steel and 
vanadium) face even more daunting odds.
---------------------------------------------------------------------------

    \116\ Equivalent to 7,731 tons contained vanadium, valued at 
$297 million based on U.S. Geological Survey Vanadium Mineral 
Commodity Summary, apparent consumption and average vanadium 
pentoxide prices.
---------------------------------------------------------------------------

    Aside from steel, the primary use of vanadium is for use in 
titanium alloys. In March 2019, following a petition from Titanium 
Metals Corporation (TIMET), the Department of Commerce initiated a 
Section 232 investigation into the effect of imports of titanium sponge 
on U.S. national security. The Secretary's report found that imports of 
titanium sponge and scrap depressed U.S. prices and constituted a 
threat to national security, but did not recommend adjustment of 
imports, favoring other measures. The President issued a proclamation 
on February 27, 2020 concurring with the Secretary's finding.\117\ In 
preparing its report, the Department found that an area of particular 
concern for the U.S. titanium industry is the advance of Russian and 
Chinese producers in aerospace-quality titanium product capabilities.
---------------------------------------------------------------------------

    \117\ Memorandum on the Effect of Titanium Sponge Imports on the 
National Security. Available at https://trumpwhitehouse.archives.gov/presidential-actions/memorandum-effect-titanium-sponge-imports-national-security/.
---------------------------------------------------------------------------

    The President's February 2020 proclamation also directed the 
formation of a working group to ensure U.S. access to titanium sponge. 
Since its formation, the Titanium Sponge Working Group (TSWG) has 
explored measures that may help to ensure access to titanium sponge for 
U.S. national defense and critical infrastructure purposes. The TWSG, 
co-led by the Departments of Commerce and Defense, is considering a 
series of recommendations to move toward this goal. [TEXT REDACTED].
    Accounting for approximately 5% of domestic vanadium demand, the 
U.S. titanium industry consumes an estimated 430 tons of contained 
vanadium annually, valued at $17 million.\118\ As noted in above, in a 
standard Ti-6Al-4V alloy, vanadium makes up 4% of the weight and 
between 12 and 14% of the product cost, making the titanium industry 
relatively exposed to vanadium cost changes.
---------------------------------------------------------------------------

    \118\ Based on U.S. Geological Survey Vanadium Mineral Commodity 
Summary, apparent consumption and average vanadium pentoxide prices.
---------------------------------------------------------------------------

    In the United States, primary vanadium production is currently 
performed only in conjunction with uranium mining. The only company to 
produce mined vanadium in the United States in recent years, Energy 
Fuels, was one of the applicants in the Section 232 investigation into 
the effect of imports of uranium on national security. The Section 232 
report on uranium was completed and sent to the President in April 
2019. In his report, the Secretary found that uranium was being 
imported in such quantities and under such circumstances as to threaten 
to impair national security.
    The President's responsive proclamation, issued in July 2019, 
expressed concern about domestic uranium supplies and directed the 
establishment of a Nuclear Fuel Working Group (NFWG) to carry out a 
``comprehensive review of the entire domestic nuclear supply chain.'' 
\119\
---------------------------------------------------------------------------

    \119\ Memorandum on the Effect of Uranium Imports on the 
National Security and Establishment of the United States Nuclear 
Fuel Working Group. https://trumpwhitehouse.archives.gov/presidential-actions/memorandum-effect-uranium-imports-national-security-establishment-united-states-nuclear-fuel-working-group/.
---------------------------------------------------------------------------

    In April 2020, the Secretary of Energy announced the NFWG's 
findings and recommendations in a Strategy to Restore American Nuclear 
Energy Leadership. The Strategy recommended ``taking immediate and bold 
action to strengthen the uranium mining and conversion industries.'' 
\120\ The report also cited the inclusion in the President's Fiscal 
Year 2021 Budget Request of $150 million for a domestic uranium 
reserve. The Fiscal Year 2021 Budget passed by Congress included $75 
million for establishment of a uranium reserve.
---------------------------------------------------------------------------

    \120\ Department of Energy, Secretary Brouillette Announces The 
Nuclear Fuel Working Group's Strategy To Restore American Nuclear 
Energy Leadership. April 23, 2020. https://www.energy.gov/articles/secretary-brouillette-announces-nuclear-fuel-working-groups-strategy-restore-american.
---------------------------------------------------------------------------

    As demonstrated by the comments submitted by several companies with 
uranium mining resources in response to the Notice of Request for 
Public Comments on Section 232 National Security Investigation of 
Imports of Vanadium, industry sees a clear connection in the critical 
nature of vanadium and uranium. For example, Energy Fuels submitted a 
comment supporting a recommendation for Section 232 relief for 
vanadium, in part on the basis that there was ``significant 
uncertainty'' about a successful outcome for implementation of the 
NFWG's recommendations.\121\ Energy Fuels also wrote that vanadium 
relief ``together with a reasonable uranium price'' would enable the 
company to mine both uranium and vanadium in the future. Another 
uranium mining company, Nuvemco, LLC, submitted a comment that included 
their submission to the NFWG, based on the adjacency of the two mining 
sectors in the United States.
---------------------------------------------------------------------------

    \121\ Energy Fuels Resources (USA) Inc. Comment in response to 
Notice of Request for Public Comments on Section 232 National 
Security Investigation of Imports of Vanadium, July 20, 2020. 
https://www.regulations.gov/document?D=BIS-2020-0002-0016.
---------------------------------------------------------------------------

B. Imports of Vanadium Have Mixed Effects on the Economic Welfare of 
the U.S. Vanadium Industry

1. The U.S. is Presently Reliant on Imports of Vanadium
    Though the scope of this investigation covers 12 discrete 10-digit 
HTS codes, the bulk of the vanadium imported into the United States 
consists of just two products: vanadium pentoxide and ferrovanadium. 
The third most frequently imported vanadium product is carbides, a 
product sector heavily dominated by South Africa exports of vanadium 
carbide nitride, which is used as an alternative to ferrovanadium in 
steel production. The remaining vanadium products imported into the 
United States that are covered under the scope of this investigation 
either constitute niche application areas or are used as inputs or 
feedstock in order to produce vanadium products.

[[Page 64774]]



                             Figure 16--U.S. Imports of Vanadium Products, 2017-2020
                                              [in millions of USD]
----------------------------------------------------------------------------------------------------------------
                                                                                                         2020
               HTSUS                       Description            2017         2018         2019     (projected)
----------------------------------------------------------------------------------------------------------------
7202.92.0000......................  Ferrovanadium...........       $94.60      $232.65      $167.90       $56.65
2825.30.0010......................  Vanadium pentoxide              60.32       168.95       109.92        36.90
                                     (anhydride).
2849.90.5000......................  Carbides, whether or not        49.38        90.84        98.89        27.57
                                     chemically defined,
                                     nesoi * (excluding of
                                     boron, of chromium, or
                                     of tungsten).
2620.99.1000......................  Ash & residues (except          14.51        63.90        54.48         0.48
                                     from the manufacture of
                                     iron or steel),
                                     containing mainly
                                     vanadium.
8112.99.2000......................  Vanadium and articles           10.75        17.22        17.64         6.08
                                     thereof, wrought, waste
                                     and scrap, powders,
                                     nesoi.
2620.40.0030......................  Ash and residues (other   ...........  ...........         4.29         9.99
                                     than from the
                                     manufacture of iron or
                                     steel), containing
                                     mainly aluminum,
                                     vanadium-bearing
                                     materials.
2841.90.1000......................  Vanadates, (vanadium             6.24        17.46         3.26         2.04
                                     content).
2615.90.6090......................  Vanadium ores and                0.28         8.45         9.49         0.54
                                     concentrates.
2825.30.0050......................  Vanadium oxides and              3.68         5.45         6.84         3.02
                                     hydroxides, except
                                     vanadium pentoxide,
                                     nesoi.
8112.92.7000......................  Vanadium and articles            2.60         2.21         4.10         0.07
                                     thereof, unwrought,
                                     powders, except waste
                                     and scrap.
2850.00.2000......................  Hydrides, nitrides,              1.08         0.92         0.85         0.65
                                     azides, silicides and
                                     borides, whether or not
                                     chemically defined, of
                                     vanadium.
2833.29.3000......................  Vanadium sulfate........         0.05         0.12         0.62         0.27
                                   -----------------------------------------------------------------------------
    Total.........................  ........................       243.49       608.17       478.28       144.26
----------------------------------------------------------------------------------------------------------------
Source: ITC Dataweb, 2020 data through November.
*nesoi indicates ``not elsewhere specified or indicated.''

    Any measurement of the United States' reliance on imports of 
vanadium must take into account the wide array of vanadium products and 
end uses. U.S. vanadium import reliance varies depending on the type of 
vanadium product. Additionally, because some vanadium products are used 
to produce other vanadium products, import reliance calculations must 
consider domestic capabilities for both the vanadium end products and 
their vanadium-bearing feedstocks.
    Domestic production capabilities exist for ferrovanadium (50% and 
80%), vanadium oxides and hydroxides (including regular grade and high 
purity vanadium pentoxide), vanadates, vanadium ore and concentrates, 
vanadium master alloys, and vanadium sulfates. The United States does 
not currently have domestic capability for vanadium carbides (HTS 
2849.90.5000) or vanadium hydrides, sulfides, nitrides, azides, 
silicides, and borides (HTS 2850.00.2000), [TEXT REDACTED].\122\ The 
United States has very limited capacity to produce vanadium ore and 
concentrates, with recent production intermittent and linked to uranium 
production.
---------------------------------------------------------------------------

    \122\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
---------------------------------------------------------------------------

    The following import analysis focuses primarily on ferrovanadium 
and vanadium pentoxide, recent import trends for these products and 
their feedstocks, and the United States' reliance on imports to satisfy 
domestic demand.
Ferrovanadium
    Ferrovanadium imports to the United States have fluctuated 
significantly in the past decade, generally tracking higher prices with 
lower imports, with sources increasingly concentrated in Europe and 
Canada (see Figure 17). In 2019, the last year for which full data is 
available, the United States imported roughly 2.3 million kilograms of 
contained vanadium of ferrovanadium, from Canada (43%), Austria (25%), 
Russia (6%) and others (26%). These imports accounted for approximately 
[TEXT REDACTED] of total U.S. demand for ferrovanadium in 2019, with 
the remaining demand filled by the domestic ferrovanadium producer AMG 
Vanadium and converter Bear Metallurgical. Import reliance fluctuated 
between [TEXT REDACTED] from 2016 to 2019, averaging roughly [TEXT 
REDACTED] over the period.\123\
---------------------------------------------------------------------------

    \123\ Data from U.S. Department of Commerce, Bureau of Industry 
and Security, Section 232 Investigation into Imports of Vanadium 
Survey. U.S. ferrovanadium producers produced and sold enough 
material to satisfy an average of [TEXT REDACTED] of apparent 
domestic consumption between 2016 and 2019. The U.S. exported an 
average of 373,154 kilograms of contained vanadium in ferrovanadium 
each year, resulting in domestic production filling approximately 
[TEXT REDACTED] of domestic demand.
---------------------------------------------------------------------------

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[[Page 64775]]

[GRAPHIC] [TIFF OMITTED] TN18NO21.088

BILLING CODE 3510-33-C
    While the United States' two domestic producers of ferrovanadium 
have produced and sold enough material to satisfy [TEXT REDACTED] of 
U.S. demand from 2016 to 2019, the companies' operations require 
sourcing vanadium-bearing feedstock in order to produce ferrovanadium. 
These U.S. producers convert either vanadium-bearing waste products 
(ash, residues, and spent catalysts) or vanadium pentoxide in order to 
produce ferrovanadium. Therefore, in order to fully capture the U.S.'s 
level of reliance on imports for ferrovanadium, U.S. ferrovanadium 
producers' reliance on imported feedstock must be taken into account.
Ash, Residues, and Spent Refinery Catalyst Feedstock for Ferrovanadium 
Production
    AMG Vanadium, one of the U.S.'s two current producers of 
ferrovanadium, produces ferrovanadium by recycling spent refinery 
catalysts. Between 2016 and 2019, the [TEXT REDACTED].\124\ In 2019, 
U.S. imports of vanadium-bearing waste product were almost exclusively 
sourced in Canada, with Mexico as the primary other source since 2010, 
[TEXT REDACTED]. (See Figure 18).
---------------------------------------------------------------------------

    \124\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.

---------------------------------------------------------------------------

[[Page 64776]]

[GRAPHIC] [TIFF OMITTED] TN18NO21.089

    [TEXT REDACTED].\125\ [TEXT REDACTED]. However, the company's 
initiative to double its production capacity (via the opening of a new 
facility) means that the company will soon have the ability to [TEXT 
REDACTED]. [TEXT REDACTED].\126\
---------------------------------------------------------------------------

    \125\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
    \126\ Ibid.
---------------------------------------------------------------------------

Vanadium Pentoxide Feedstock for Ferrovanadium Production
    Another feedstock source used to produce ferrovanadium is vanadium 
pentoxide. Evergreen Metallurgical (dba Bear Metallurgical (Bear)) 
operates a Pennsylvania facility that converts customer-provided 
vanadium pentoxide into ferrovanadium with 80% vanadium content (FeV-
80). Bear does not source its own vanadium pentoxide, but instead acts 
as a service provider by toll-producing vanadium pentoxide into FeV-80 
for customers. Since the idling of the only U.S. facility that produces 
regular grade vanadium pentoxide (less than 99% purity), Bear has been 
heavily reliant on imported vanadium pentoxide feedstock from its 
customers.\127\ That facility was owned by Bear's parent (Gulf 
Chemical) prior to their bankruptcy and the idling and sale of the 
facility in 2017 to Gladieux.
---------------------------------------------------------------------------

    \127\ Gladieux Metals Recycling (GMR) owns a Freeport, Texas 
facility that converted vanadium-bearing waste products (spent 
catalysts) into vanadates and vanadium pentoxide (including high 
purity vanadium pentoxide). The facility was in operation until 2017 
when it was idled and sold to new ownership from previous owners 
Gulf Chemical & Metallurgical Corp. Gladieux has not produced and 
sold any material since 2017, but is in the process of upgrading the 
facility, and plans to restart [TEXT REDACTED] U.S. Vanadium 
operates a facility that produces high purity vanadium pentoxide, 
typically used in titanium or chemical uses rather than 
ferrovanadium production.
---------------------------------------------------------------------------

    Therefore, although Bear's conversion of vanadium pentoxide into 
ferrovanadium satisfied approximately [TEXT REDACTED] of total U.S. 
demand for ferrovanadium between 2016 and 2019, the company [TEXT 
REDACTED].\128\
---------------------------------------------------------------------------

    \128\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
---------------------------------------------------------------------------

    In summary, while domestically-produced ferrovanadium was 
sufficient to meet approximately [TEXT REDACTED] of total domestic 
demand for ferrovanadium from 2016 to 2019, both domestic ferrovanadium 
producers [TEXT REDACTED].
    The following section addresses U.S. import trends for vanadium 
oxides and hydroxides, including regular grade vanadium pentoxide, high 
purity vanadium pentoxide, and other vanadium oxides and hydroxides. 
These products are used in Bear's ferrovanadium conversion activities 
as well as in the company's production of vanadium products used for 
chemical and aerospace applications.
Vanadium Oxides and Hydroxides
    Demand for vanadium oxides and hydroxides--driven by vanadium 
pentoxide--accounts for close to half of all vanadium demand in the 
United States. On average, imports of vanadium pentoxide account for 
over 90% of all oxide imports each year.\129\ Since 2010, overall 
vanadium oxide and hydroxide imports, including imports of vanadium 
pentoxide, have ranged between 2 million and 4.5 million kilograms of 
contained vanadium (imports in 2020 are projected to fall below two 
million, the lowest level since 2009) (see Figure

[[Page 64777]]

19). Between 2010 and 2015, Russian-sourced oxides and hydroxides were 
a major portion of U.S. imports, accounting for nearly 35% of imports, 
but were largely replaced by growing imports from Brazil and South 
Africa beginning in 2016.
---------------------------------------------------------------------------

    \129\ ITC Dataweb.
    [GRAPHIC] [TIFF OMITTED] TN18NO21.090
    
BILLING CODE 3510-33-C
    Russian ferrovanadium, which had been absent from the U.S. market 
from 1997, returned to U.S. markets in 2014 following the October 2011 
revocation of the antidumping order. Imports of Russian vanadium oxides 
have been largely replaced by imports of Russian ferrovanadium, though 
not at levels approaching the 2010 to 2014 period.
    Vanadium oxides and hydroxides cover a range of vanadium products 
with different application areas. A nuanced measurement of the U.S.'s 
import reliance for this category of goods must take into account each 
type of product with the category, including regular grade vanadium 
pentoxide, high purity vanadium pentoxide, and other oxides and 
hydroxides.
Vanadium Pentoxide
    Vanadium pentoxide can generally be divided into high purity 
(suitable for use in the chemical and titanium industries) and regular 
purity (more commonly converted to ferrovanadium for use in the steel 
industry). No domestic producers are currently producing regular purity 
vanadium pentoxide, though Gladieux is planning to restart production 
[TEXT REDACTED]. With Gladieux's facility idled since 2016, the U.S. 
has been close to 100% reliant on imports for regular grade vanadium 
pentoxide. U.S. Vanadium is the primary domestic producer of high 
purity vanadium pentoxide; Energy Fuels also provided small amounts in 
2019.
    Much of the regular purity vanadium pentoxide in the United States 
is converted into FeV-80 at Bear's Pennsylvania facility. With annual 
vanadium pentoxide imports from 2016 to 2019 averaging 3.8 million 
kilograms of vanadium content, and the company processing regular 
purity vanadium an annual average of [TEXT REDACTED] of vanadium 
content during this period, at least [TEXT REDACTED] of vanadium 
pentoxide imports were provided to Bear for conversion into 
ferrovanadium.\130\
---------------------------------------------------------------------------

    \130\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
---------------------------------------------------------------------------

    U.S. import reliance on vanadium pentoxide has risen significantly, 
from 55% in 2016 to 87% in 2017 and to close to 100% in 2018, due in 
part to the sole domestic producer of regular purity vanadium pentoxide 
(the Gulf/Gladieux facility in Freeport, Texas) idling operations in 
order to modernize the facility. The other major producer of vanadium 
pentoxide--the Hot Springs, Arkansas facility operated by EVRAZ 
Stratcor until its sale to U.S. Vanadium in 2019, which produces high 
purity vanadium pentoxide--has reportedly had a history of feedstock 
supply difficulties leading to production difficulties, which were 
exacerbated in 2017 following sanctions prohibiting

[[Page 64778]]

imports from Venezuela.\131\ As a primary producer of vanadium, Energy 
Fuels is the only domestic entity entirely independent of foreign 
sources for generating vanadium pentoxide.
---------------------------------------------------------------------------

    \131\ Bushveld Minerals Limited. Comment in response to Notice 
of Request for Public Comments on Section 232 National Security 
Investigation of Imports of Vanadium, July 20, 2020. https://www.regulations.gov/document?D=BIS-2020-0002-0013.
---------------------------------------------------------------------------

    Energy Fuels has moderate vanadium pentoxide production capacity, 
producing high purity vanadium pentoxide containing 460,000 kilograms 
of vanadium in 2019, of which only a small portion was sold 
(approximately 410,000 kilograms was unsold and remained in the 
company's inventory). However, should vanadium prices rise, Energy 
Fuels has the capability to restart vanadium mining operations, with 
the capacity to produce [TEXT REDACTED].\132\ With Gladieux planning to 
resume operations and U.S. Vanadium increasing production levels of 
high purity vanadium pentoxide [TEXT REDACTED], direct U.S. import 
reliance for vanadium pentoxide will likely decrease in the future. 
[TEXT REDACTED] \133\
---------------------------------------------------------------------------

    \132\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
    \133\ Ibid.
---------------------------------------------------------------------------

    However, because U.S. secondary producers are reliant on imports of 
vanadium-bearing wastes for most of their feedstock, the United States 
will likely continue to be dependent on foreign sources of vanadium to 
meet domestic demand for vanadium pentoxide.
Other Vanadium Products
    While ferrovanadium and vanadium oxide products are the most 
heavily traded vanadium products, the United States is also reliant on 
imports for other vanadium products including vanadates, vanadium 
carbides, vanadium sulfates, and vanadium hydrides, sulfides, nitrides, 
azides, silicides, and borides.
    Of these products, the United States has production capacity for 
only vanadium sulfate and vanadate production, and is completely import 
reliant for vanadium carbides and vanadium hydrides, sulfides, 
nitrides, azides, silicides, and borides.\134\ Of these products, 
vanadium carbides comprised the largest share of trade by a significant 
margin during the period of study. Imports of vanadium carbides 
averaged $67 million annually from 2016 to 2019, while the imports of 
vanadium sulfate, vanadates, and vanadium hydrides, sulfides, nitrides, 
azides, silicides, and borides combined averaged $9 million annually 
during the same time period.\135\
---------------------------------------------------------------------------

    \134\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
    \135\ ITC Dataweb.
---------------------------------------------------------------------------

    Imports of vanadium carbides, relatively stable since 2010, have 
come overwhelmingly from South Africa (see Figure 20). The most 
commonly imported carbide product is in the form of nitrided vanadium 
carbide sold as Nitrovan[supreg]. As noted in the USITC's 2012 
antidumping report for the third sunset review on imports of 
ferrovanadium and nitrided vanadium from Russia, the U.S. has not 
produced nitrided vanadium since 1992.\136\
---------------------------------------------------------------------------

    \136\ U.S. International Trade Commission. Ferrovanadium and 
Nitrided Vanadium from Russia. Investigation No. 731-TA-702, (Third 
Review). https://www.usitc.gov/publications/701_731/pub4345.pdf.
---------------------------------------------------------------------------

BILLING CODE 3510-33-P

[[Page 64779]]

[GRAPHIC] [TIFF OMITTED] TN18NO21.091

    In summary, understanding the overall U.S. import reliance on 
vanadium must take into account the structure of the vanadium supply 
chain, including the original feedstock of the vanadium products. [TEXT 
REDACTED]. The United States has no producers of vanadium carbides, nor 
of vanadium hydrides, nitrides, azides, silicides, and borides. For the 
balance of vanadium products the United States is not directly import 
reliant, but to the extent that it is reliant on imports of vanadium 
feedstock and vanadium pentoxide, it is because these products depend 
on non-U.S. origin inputs.

                                                 [TEXT REDACTED]
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[[Page 64780]]

 
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2. U.S. Reliance on Imports of Vanadium Is Not Increasing
    Imports of contained vanadium to the United States have not 
increased since 2014 and have decreased moderately since that time (see 
Figure 22). Even before the 2020 plunge in imports (driven by COVID-19-
related demand declines), overall contained vanadium imports in 2019 
were 4% below the 2010-2019 average.
[GRAPHIC] [TIFF OMITTED] TN18NO21.092

BILLING CODE 3510-33-C
    Further, import reliance is not likely to increase. Major U.S. 
producers of ferrovanadium and vanadium pentoxide are in the process of 
expanding or restarting operations. U.S. capacity for ferrovanadium 
production from vanadium-bearing waste will more than double in 2021 
with the opening of AMG Vanadium's new facility; the production 
increase will exceed annual average imports of ferrovanadium. U.S. 
capacity for vanadium pentoxide production from vanadium-bearing waste 
will also [TEXT REDACTED].
    However, despite these upcoming significant increases in vanadium 
pentoxide and ferrovanadium production capacity, the United States will 
remain heavily reliant on foreign sources of vanadium, as significant 
quantities of the feedstock that U.S. producers use are sourced from 
outside the country. Mitigating factors on this reliance include that 
[TEXT REDACTED].\137\
---------------------------------------------------------------------------

    \137\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
---------------------------------------------------------------------------

    In addition, several mining companies with locations in the United 
States have idle production capacity, significant inventory, and/or are 
exploring the development of vanadium mines. For example, Energy Fuels 
retains 410,000 kilograms of vanadium in inventory from 2019 
production, and has

[[Page 64781]]

indicated the ability to produce [TEXT REDACTED].\138\ The Gibellini 
project in Carlin, Nevada expects to receive permits in 2021 and begin 
production in 2023, with an annual production forecast of 2.4 million 
kilograms of vanadium content per year.\139\ Should both of these 
producers achieve their full capacity, their production would equal 
[TEXT REDACTED] of vanadium content per year, or [TEXT REDACTED] of 
annual domestic demand from 2016 to 2019. An increase in the 
availability of domestic primary vanadium, expansion of secondary 
production, and the addition of domestic feedstock for secondary 
production would mitigate current high reliance on imports.
---------------------------------------------------------------------------

    \138\ Ibid.
    \139\ Silver Elephant Mining Corporate Presentation: Gibellini 
Vanadium, https://www.silverelephantmining.com/projects/gibellini-vanadium/.
---------------------------------------------------------------------------

3. Prices
    Vanadium prices have a long history of volatility, with resulting 
impacts on the availability of vanadium resources and the viability of 
vanadium producers, as well as patterns of investment. The benchmark 
vanadium pentoxide price has more than doubled in short spans three 
times since 2004, most notably rising from $7 per pound in September 
2004 to nearly $35 per pound in May 2005 before falling to $10 per 
pound by June 2006.
    Such cycles may be more the standard than an anomaly in the 
vanadium industry. In 1977, the primary U.S. producer of vanadium 
oxide--Union Carbide--cut its production due to low prices and, in 
1978, announced the idling of its Arkansas mine and mill.\140\ Less 
than a decade later, in 1985, the U.S. Bureau of Mines wrote that the 
domestic vanadium industry was in the midst of a ``major restructuring 
. . . triggered by (1) the sharp decline in ferrovanadium consumption 
by U.S. steel producers during the 1982-83 recession, and (2) 
continuing depressed prices for co-product uranium oxide.'' \141\ Just 
four years later, they reported:
---------------------------------------------------------------------------

    \140\ Bureau of Mines Minerals Yearbook, Vanadium 1977.
    \141\ Bureau of Mines Minerals Yearbook, Vanadium 1985.

    The year 1988 proved to be a boom year for vanadium producers as 
tight supply and strong demand by the steel industry and other 
consumers pushed up the price of vanadium compounds. . . . By the 
end of 1989, vanadium's fortunes had turned full circle as the 
market witnessed prices headed for levels lower than at any time 
since the early 1980s.\142\
---------------------------------------------------------------------------

    \142\ Bureau of Mines Minerals Yearbook, Vanadium 1989.

    Price-related closures and investments have continued. The 
Australian Windimurra mine, for instance, closed as the result of low 
prices in 2003 only to be purchased by a new company when prices spiked 
in 2005. After an investment of more than $100 million, prices fell and 
the mine was not reopened.\143\ In the United States, during the latest 
price spike, AMG Vanadium announced the approval for construction of 
its new facility (in October 2018); \144\ the owners of the Gibellini 
property completed its Preliminary Economic Assessment (PEA) (in May 
2018); and First Vanadium carried out its maiden mineral resource 
classification (in February 2019).
---------------------------------------------------------------------------

    \143\ McKinnon, Stuart. Vanadium Price Boom Offers Hope of 
WIndimurra Revival. The West Australian, April 2, 2018. Available at 
https://thewest.com.au/business/mining/vanadium-price-boom-offers-hope-of-windimurra-revival-ng-b88792684z.
    \144\ AMG ADVANCED METALLURGICAL GROUP N.V. COMPLETES 
FEASIBILITY STUDY TO EXPAND SPENT CATALYST PROCESSING CAPACITY. 
https://amg-v.com/oct-16-18-news/.
---------------------------------------------------------------------------

    The introduction of new capacity is tied to vanadium prices, as 
extraction that is not viable at $6 per pound vanadium pentoxide can 
become profitable at $12 per pound. First Vanadium's PEA assumes a 
vanadium pentoxide price of $10.65 per pound, well above current 
prices, and a cost of production of $5.17 per pound.\145\ Only [TEXT 
REDACTED] U.S. producers of vanadium pentoxide or vanadium ore indicate 
the ability to produce at current prices, though the number of 
producers rises [TEXT REDACTED] once prices increase to $10 per pound 
of vanadium pentoxide and [TEXT REDACTED] at $13 per pound.\146\ This 
is consistent with the world cost curve, which shows most currently 
viable production operates below a cost of $8 per pound (see Figure 
23).
---------------------------------------------------------------------------

    \145\ First Vanadium Announces Positive Preliminary Economic 
Assessment for the Carlin Vanadium Project in Nevada https://www.firstvanadium.com/index.php/news/2020/548-irstanadiumnnouncesositivereliminaryconomicsse20200511).
    \146\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
---------------------------------------------------------------------------

BILLING CODE 3510-33-P

[[Page 64782]]

[GRAPHIC] [TIFF OMITTED] TN18NO21.093

4. Employment
    Although never a major employer, aggregate employment in the U.S. 
vanadium industry has waxed and waned during the last decade. The 
sector currently employs more people than it has during that time 
period, however, this current increase has not been shared equally 
across industry participants. While some producers have added 
employees, others have not.
    Employment levels among vanadium producers were most notably 
affected by the 2017 idling and ongoing refurbishment of Gladieux's 
Texas facility. The facility's closure caused aggregate industry 
employment to drop sharply in 2017 but the numbers rebounded sharply in 
2018 (see Figure 24).
[GRAPHIC] [TIFF OMITTED] TN18NO21.094


[[Page 64783]]


BILLING CODE 3510-33-C
    [TEXT REDACTED]
    Most U.S. producers of vanadium products indicate that the 
volatility of vanadium prices make it difficult to recruit and retain 
employees. [TEXT REDACTED]
5. Financial Outlook
    The U.S. vanadium production industry is small and in the midst of 
significant restructuring, making the industry's overall financial 
outlook difficult to characterize. However, it is clear that the 
industry has been significantly impacted by rapid changes in vanadium 
prices, particularly the collapse in price in 2019 from a high of 
approximately $30 per pound of vanadium pentoxide in November 2018 to 
less than $7 per pound by the end of 2019 and by the ongoing impacts of 
COVID-19 on the steel and titanium industries.
    [TEXT REDACTED]
    [TEXT REDACTED] \147\
---------------------------------------------------------------------------

    \147\ AMG Annual General Meeting Minutes (May 1, 2019), as 
provided in public comments by Bushveld Minerals Limited, available 
at https://www.regulations.gov/document?D=BIS-2020-0002-0013.
---------------------------------------------------------------------------

    Given its acquisition of EVRAZ Stratcor's Arkansas facility in 
October 2019, it is difficult to fully assess the financial health of 
U.S. Vanadium, as the facility's business practices are in transition. 
[TEXT REDACTED]
    [TEXT REDACTED]
    The facility of the remaining U.S. secondary producer, Gladieux, 
remains idle as the company completes the extensive modernization 
started after Gladieux purchased the facility from Gulf Chemical in 
2017. [TEXT REDACTED]
    [TEXT REDACTED]
    The only other company that has produced vanadium production since 
2016 is Energy Fuels Resources, whose primary business line is uranium 
mining. [TEXT REDACTED]
    [TEXT REDACTED]
6. Exploration
    In addition to Energy Fuels' primary production capacity, several 
other companies have properties that have mined vanadium in the past or 
are now under exploration. However, future profitable production at any 
of these properties is dependent upon an increase in the price of 
vanadium.
    Western Uranium & Vanadium [TEXT REDACTED].\148\
---------------------------------------------------------------------------

    \148\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
---------------------------------------------------------------------------

    Nuvemco, LLC owns the Last Chance Mine in Colorado, which has been 
idle since 2009 but the company says can return to operations within 
120 days.\149\ [TEXT REDACTED]
---------------------------------------------------------------------------

    \149\ https://www.nuvemco.com/Projects.html.
---------------------------------------------------------------------------

    Two additional projects are under development: First Vanadium 
Corporation's Carlin Vanadium Project and Nevada Vanadium LLC's (Nevada 
Vanadium) Gibellini Vanadium Project. The Gibellini project is in the 
permitting process, with BLM expected to reach a decision by August 
2021.\150\ Nevada Vanadium plans to begin production in late 2023, 
producing vanadium pentoxide with 33 million kilograms of vanadium 
content over 14 years.\151\ [TEXT REDACTED]
---------------------------------------------------------------------------

    \150\ Bureau of Land Management Accepting Comments for Gibellini 
Mine, August 17, 2020. Available at https://www.blm.gov/press-release/bureau-land-management-accepting-comments-gibellini-mine.
    \151\ Silver Elephant Mining Corporate Presentation: Gibellini 
Vanadium, https://www.silverelephantmining.com/projects/gibellini-vanadium/.
---------------------------------------------------------------------------

    First Vanadium Corporation completed the PEA for its Carlin project 
in 2020, forecasting 16 years of vanadium production capabilities 
totaling 46 million kilograms of vanadium content.\152\ [TEXT REDACTED]
---------------------------------------------------------------------------

    \152\ ``First Vanadium Announces Positive Preliminary Economic 
Assessment for the Carlin Vanadium Project in Nevada'', https://www.firstvanadium.com/index.php/news/2020/548-irstanadiumnnouncesositivereliminaryconomicsse20200511.
---------------------------------------------------------------------------

7. Capital Expenditures
    U.S. producers of vanadium have made significant capital 
expenditures in the last four years, with the construction of AMG 
Vanadium's new Ohio facility and Gladieux's overhaul of its Texas 
facility at the forefront. AMG Vanadium's expansion will more than 
double its ferrovanadium production capacity, adding over 2.5 million 
kilograms per year of capacity and 100 new jobs at an estimated cost of 
$200 million.\153\ [TEXT REDACTED] Gladieux has invested more than 
[TEXT REDACTED] in the restart of its Texas facility, planning to open 
vanadium pentoxide production [TEXT REDACTED] with [TEXT REDACTED].
---------------------------------------------------------------------------

    \153\ AMG Vanadium Constructing a Second Ohio Plant, Investing 
More Than $200 Million. https://www.jobsohio.com/news/posts/amg-vanadium-constructing-a-second-ohio-plant-investing-more-than-200-million/.
---------------------------------------------------------------------------

    [TEXT REDACTED]
    Among potential primary producers, [TEXT REDACTED]
8. Environmental Factors
    Vanadium-bearing waste products--the primary source material for 
vanadium production in the United States--are classified by the EPA as 
hazardous wastes.\154\ The recycling of these materials and reclamation 
of critical minerals constitutes an important step in both protecting 
human health and promoting an assured supply of critical minerals. AMG 
Vanadium claims a ``99% conversion rate for all raw material,'' and has 
a policy not to send spent catalyst to landfill.\155\
---------------------------------------------------------------------------

    \154\ 63 FR 56710.
    \155\ https://amg-v.com/wp-content/uploads/2019/11/The_Gold_Standard_Risk_Mitigation_Handbook_Nov_2019.pdf.
---------------------------------------------------------------------------

    However, the recycling and reclamation process is expensive and 
subject to fines if not implemented correctly or fully. For example, 
one of the causes of Gulf's 2016 bankruptcy was the challenge and 
resulting costs of managing the pollutants from its Texas facility. The 
company spent more than $60 million on environmental protection-related 
expenditures and fines between 2010 and 2016. As noted above, since 
Gladieux purchased the facility in 2017, it has invested more than 
[TEXT REDACTED] in updating the facility to ``best in class'' 
standards.
    Most vanadium-bearing spent catalysts are covered by a rule 
published by the EPA on August 26, 1998.\156\ That rule identifies 
spent catalysts from hydrotreating and hydrorefining as hazardous 
wastes, does not comment on spent hydrocracking catalyst. In 2002, the 
EPA later issued a clarification of the scope of the hazardous waste 
listings; as part of that rulemaking process, the agency gathered 
industry data on quantities of spent catalyst generated and recycled in 
the United States.\157\ This data showed that the country generated 
31,313 tons of spent catalyst classified as hazardous waste in 1999, 
with 55% of it recycled/reclaimed. The EPA estimated the cost of 
reclamation at $725 per ton, while the cost of landfilling the catalyst 
was $240 per ton; low vanadium prices were cited as one potential 
reason for the difference in cost.
---------------------------------------------------------------------------

    \156\ 63 FR 42110.
    \157\ https://archive.epa.gov/epawaste/hazard/web/pdf/backdoc.pdf.
---------------------------------------------------------------------------

    Safe processing of refinery byproducts is essential for continued 
oil refining in the United States. With valuable minerals contained in 
these waste products and human health and environmental risks stemming 
from their improper disposal, encouraging safe full value extraction 
will support the long term economic health and competitiveness of the 
country. However, solutions to the recycling of refinery byproducts in 
the United States attractive to current producers, especially while 
vanadium prices

[[Page 64784]]

remain below levels that allow for profitable production, are 
essential.

C. Displacement of Domestically-Produced Vanadium by Imports Affects 
Our Internal Economy, but Is Mitigated by Ongoing Actions

1. U.S. Production of Vanadium Is Well Below Domestic Demand
    Between 2016 and 2019, the United States produced an annual average 
of 3.4 million kilograms of contained vanadium from primary or 
secondary production while importing 7.8 million kilograms of contained 
vanadium in the form of ferrovanadium, vanadium pentoxide, and 
carbides. Production capacity in 2020 remained insufficient to meet 
domestic demand, with non-conversion production capacity totaling [TEXT 
REDACTED] of contained vanadium.
    Domestic production capacity will greatly expand in the near future 
with AMG Vanadium's expansion in Ohio planned to open in 2021 with 
capacity to produce ferrovanadium with [TEXT REDACTED] from spent 
catalyst, and Gladieux's overhaul of their Texas facility expected to 
be completed [TEXT REDACTED].\158\ These additions will raise U.S. 
production capacity [TEXT REDACTED]. Additionally, should vanadium 
prices increase sufficiently, Nevada Vanadium's Gibellini mine could 
begin production in 2023 with an estimated annual production level of 
2.4 million kilograms of contained vanadium.\159\
---------------------------------------------------------------------------

    \158\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
    \159\ Silver Elephant Mining Corporate Presentation: Gibellini 
Vanadium, https://www.silverelephantmining.com/projects/gibellini-vanadium/.
---------------------------------------------------------------------------

2. Domestic Production Is Highly Concentrated and Limits Capacity 
Available for a National Emergency
    There were just three companies that carried out vanadium 
production in 2019--AMG Vanadium, US Vanadium, and Energy Fuels--with 
one additional company--Gladieux--idle for renovation. [TEXT REDACTED] 
Several companies have undertaken major investments in vanadium 
production capacity in anticipation of higher prices, but should prices 
not increase, one or more secondary producers may face challenges to 
continue production and additional mine capacity is unlikely to come on 
line.
    Producers of high purity vanadium pentoxide face particular 
challenges because the primary destination of their product is the 
titanium industry, which has been significantly impacted by the COVID-
19-related drops in air travel and, accordingly, aerospace industry 
production. There is no clear marker for when domestic aerospace 
production will begin to recover. Additionally, other than the 
approximately 10% of industry demand from titanium and non-
metallurgical uses, domestic producers of vanadium pentoxide are 
reliant on toll converter Bear to supply product to the steel industry. 
[TEXT REDACTED]
    Reactivation of idle capacity is not a quick process. [TEXT 
REDACTED]
    However, adding new capacity would take significantly longer than 
reactivating existing facilities. While AMG Vanadium's new facility is 
projected to take about two years to complete, this is a relatively 
short time period that reflects the company's experience and the fact 
that the facility under construction is similar to its existing 
facility. The exploration and construction of primary production 
facilities in the United States takes significantly longer than the 
secondary production facility construction illustrated by AMG Vanadium. 
A more typical timeline may be Nevada Vanadium's Gibellini mine--the 
new project most likely to receive a permit--which carried out its PEA 
in 2018, is expected to receive permitting from BLM in 2021, and hopes 
to begin production in 2023, more than five years after its PEA.
    These limitations represent a threat to the continued availability 
of domestically produced vanadium pentoxide, as needed to support 
national defense and critical infrastructure needs.
3. Domestic Vanadium Production Currently Requires Significant Imports 
of Vanadium Feedstock, Limiting Capacity Available for a National 
Emergency
    Vanadium production in the United States is reliant on imports of 
vanadium feedstock to produce all vanadium products. The only vanadium 
producer in recent years to use entirely U.S. origin material is 
primary producer Energy Fuels, which has produced 460,000 kilograms of 
contained vanadium since 2016, accounting for 1.4% of U.S. apparent 
consumption.
    Secondary producers AMG Vanadium, U.S. Vanadium, and Gladieux have 
all historically used foreign sources of vanadium-bearing wastes to 
provide portions of their feedstock. [TEXT REDACTED]
    Current sourcing practices leave the United States unable to meet 
domestic demand with U.S.-sourced material; [TEXT REDACTED]. Although 
Energy Fuels' 2019 production of high purity vanadium pentoxide with 
460,000 kilograms of vanadium content [TEXT REDACTED] is likely 
sufficient to meet defense system requirements (which are estimated 
above at less than 300,000 kilograms of contained vanadium per year), 
other national security requirements cannot currently be met using only 
U.S.-origin vanadium.
4. Trade Actions Have Been Successful in Mitigating Artificially Low-
Priced Imports of Vanadium
    Of the four countries with significant primary production of 
vanadium, three (Russia, China, and South Africa) have been subject to 
the imposition of antidumping duties on ferrovanadium by the Department 
and the USITC. Although not a primary producer, Korea has also been 
subject to antidumping duties. In all cases, after the duties were 
imposed, imports of ferrovanadium decreased significantly.
    These cases show the longstanding and repeated success of 
antidumping duties in countering imports of ferrovanadium products sold 
in the United States at less than fair value.
5. Critical Minerals Agreements Will Help Ensure Reliable Supplies of 
Vanadium
    In June 2019 the Department issued a report, A Federal Strategy to 
Ensure a Reliable Supply of Critical Minerals. This report ``outlines a 
coordinated approach by the Federal Government in response to Executive 
Order 13817 to reduce the Nation's vulnerability to disruptions in the 
supply of critical minerals.'' The Federal Strategy includes six calls 
to action, covering 24 goals and 61 recommendations, to achieve the 
goals put forth in E.O. 13817. One of these calls to action is 
``Enhance International Trade and Cooperation Related to Critical 
Minerals,'' and recommends working with allies to ensure access to 
critical minerals as well as ``robust enforcement of U.S. trade laws 
and international agreements.'' \160\
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    \160\ https://www.commerce.gov/sites/default/files/2020-01/Critical_Minerals_Strategy_Final.pdf.
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    To achieve this goal, the Federal Strategy proposes that the USG 
establish intergovernmental agreements with partner countries, focused 
on ensuring continued access to critical minerals. The Federal Strategy 
recommends that the USG continue to expand cooperation and 
collaboration with interested parties on critical minerals issues 
related to:
    (1) Resource identification and exploration;

[[Page 64785]]

    (2) processing and recycling;
    (3) mitigating supply risk and preventing supply chain disruptions;
    (4) research and development related to critical mineral materials 
and manufacturing and;
    (5) tracking and sharing information on foreign investment and 
acquisitions of mineral rights, property, and development.

Among the achievements resulting from this call to action to date are:
U.S.-Canada Joint Action Plan on Critical Minerals
    In January 2020, the United States and Canada announced the 
finalization of the U.S.-Canada Joint Action Plan on Critical Minerals 
Collaboration.\161\ The plan aims to facilitate development of secure 
supply chains for critical minerals that are key to strategic 
industries. This bilateral initiative addresses concerns about reliance 
on other countries for the supply of minerals critical to defense, 
aerospace, communications, and other strategic industries.
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    \161\ https://www.state.gov/united-states-and-canada-finalize-action-plan-on-critical-minerals-cooperation/.
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    As part of the joint action plan, Canada and the United States have 
identified areas for cooperation, including: (i) Securing critical 
mineral supply chains for strategic industries and defense; (ii) 
improving information sharing on mineral resources and potential; (iii) 
engaging with the private sector; (iv) collaborating in multilateral 
fora and with other countries; (v) undertaking research and development 
initiatives; (vi) engaging in supply chain modeling; and (vii) 
increasing support for the metals and mining industry.
    As a result of its strong political and economic ties to the United 
States, the shared border, its stable regulatory environment, and an 
abundance of mineral resources, collaboration with Canada provides the 
United States a path to expanded secure supplies of critical minerals, 
including vanadium. Although not a current producer of vanadium, Canada 
has several projects underway, including BlackRock Metals' Chibougamou 
mine, which may begin production in 2021 with planned annual production 
of more than 4,000 tons of vanadium, close to half the U.S.'s average 
annual consumption from 2016 to 2019 of 8,590 tons.
U.S.-Australia Critical Minerals Plan of Action
    In November 2019, the United States and Australia formalized a 
partnership to collaborate on research and increase critical minerals 
capacity.\162\ The activities under the Plan of Action include focusing 
on resource mapping and quantitative assessments, determining 
geological controls on critical minerals distribution, and improving 
understanding of supply and demand scenarios for shared critical 
minerals trade between the United States and Australia.
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    \162\ https://www.doi.gov/pressreleases/united-states-and-australia-formalize-partnership-critical-minerals.
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    As Australia is one of six countries in the world with USGS-
recognized vanadium reserves, and has five exploration projects in 
advanced stages, this partnership holds significant promise to support 
U.S. access to reliable sources of vanadium.

D. Increased Global Capacity and Production of Vanadium Will Further 
Impact the Long-Term Viability of U.S. Vanadium Production

1. China Possesses an Outsized Role in the Global Price of Vanadium
    China accounts for an estimated 50 to 60% of global vanadium 
production, with a similar level of demand. This concentration of 
production and consumption means that policy changes in China can have 
large effects on the global vanadium market. As Energy Fuels' vice 
president Curtis Moore said in 2019, ``the biggest driver of vanadium 
prices is economic and industrial policy in China, which is opaque to 
say the least.'' \163\
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    \163\ Barrera, Priscili. Vanadium Outlook 2020: Is Vanadium Due 
for a Comeback? December 31, 2019. https://investingnews.com/daily/resource-investing/battery-metals-investing/vanadium-investing/vanadium-outlook.
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    The spike in vanadium prices from 2017 into 2018 was largely 
attributed to a change in Chinese steel rebar standards to require the 
addition of more vanadium.\164\ Similarly, the precipitous fall in 
prices following the implementation of the standard on November 1, 2018 
has been linked to ``enforcement of the standards not being as 
stringent as previously expected,'' as well as the substitution of 
niobium for vanadium due to price increases.\165\ Finally, Chinese 
vanadium pentoxide production in the first half of 2019 was 30% higher 
than in the first half of 2018, increasing supply more than anticipated 
and further driving prices down.\166\ China's ability to influence 
vanadium markets through supply, demand, and policy changes has a 
significant impact on the ability of companies in the United States to 
plan investments and production decisions.
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    \164\ Vanadium: Prices soar as new rebar regulations take 
effect. November 1, 2018. https://roskill.com/news/vanadium-prices-soar-as-new-rebar-regulations-take-effect/.
    \165\ Radford, Charlotte and Lv, Amy. Focus: Why China's 
implementation of new rebar policy is failing to support vanadium 
prices. December 20, 2018. https://www.metalbulletin.com/Article/3850389/FOCUS-Why-Chinas-implementation-of-new-rebar-policy-is-failing-to-support-vanadium-prices.html.
    \166\ Lv, Amy. Oversupply to persist for China V market. August 
16, 2019. https://www.amm.com/Article/3889693/Oversupply-to-persist-for-China-V-market.html.
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2. Expansion of Low-Cost Production in Several Countries Will Place 
Downward Pressure on Global Vanadium Prices
    In 2019, total production of primary- and co-produced (mine) 
vanadium was 73,000 metric tons. However, there are mines in 
development or exploration in Kazakhstan, Canada, and Australia which 
have the estimated capacity to add 12,408 tons of production in 2021, 
and 57,000 additional metric tons in future years, should all projects 
enter production.\167\ The owners of the Kazakh mine have claimed it 
can operate ``at the world's lowest cash cost of production.'' By 
contrast, mine facilities in the United States are expected to have the 
capacity to produce 3,100 tons of vanadium in 2021, with an additional 
2,900 tons per year in exploration.\168\ This amount would satisfy the 
majority of current domestic demand, but is not likely to be produced 
without higher vanadium prices.
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    \167\ Data from USGS, Government of Australia, BlackRock Metals, 
VanadiumCorp Resources, Vanadium One Iron Corporation, and Ferro-
Alloy Resources Group.
    \168\ Data from Energy Fuels Resources (USA), First Vanadium 
Corporation, and Silver Elephant Mining.
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    In addition to primary vanadium, AMG Vanadium plans to open its new 
Ohio facility in 2021, with the capacity to [TEXT REDACTED].\169\ The 
company is also exploring the construction of similar facilities in 
Saudi Arabia and China, and has noted that their recycling operations 
have little dependence on the cost of vanadium, with recycling fees 
driving profits.\170\ The ability to generate cash flow independent of 
vanadium costs could result in the introduction of new capacity even at 
low vanadium prices. Barring significant new demand for vanadium, the 
addition of new sources

[[Page 64786]]

of supply will continue to impact vanadium prices.
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    \169\ U.S. Department of Commerce, Bureau of Industry and 
Security, Section 232 Investigation into Imports of Vanadium Survey.
    \170\ Bushveld Minerals Limited. Comment in response to Notice 
of Request for Public Comments on Section 232 National Security 
Investigation of Imports of Vanadium, July 20, 2020. https://www.regulations.gov/document?D=BIS-2020-0002-0013.
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3. Downward Price Pressure May Be Mitigated by Increased Demand for 
Steel, Titanium, and Energy Storage
    With the steel industry consuming approximately 90% of vanadium 
demand, changes in vanadium consumption are largely tied to that 
industry. Global steel production in 2020 was affected by the COVID-19 
pandemic, and had a forecasted decline of 2.4%.\171\ Steel production 
in the United States saw a much larger decrease of approximately 18% 
from 2019.\172\ The declines in steel production impact vanadium 
prices, which had not recovered since falling from a peak of nearly $34 
per pound vanadium pentoxide in November 2018 to $6 per pound in 
December 2019.\173\ While steel demand, and accordingly vanadium 
demand, is projected to bounce back in 2021 to 4.1% growth, longer 
range forecasts estimate global steel demand growing at an annual rate 
of 1.4% through 2035.\174\ Increased vanadium use within the steel 
industry, such as that resulting from implementation of the 2018 
regulation in China requiring the addition of vanadium to steel rebar 
and increased demand for high strength and tool steel, may provide 
additional growth in vanadium demand, with Vanitec (a global vanadium 
industry association) forecasting a 30% increase in vanadium demand by 
2025.\175\
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    \171\ Worldsteel Short Range Outlook October 2020. October 15, 
2020. Available at https://www.worldsteel.org/media-centre/press-releases/2020/worldsteel-Short-Range-Outlook-October-2020.html.
    \172\ Data as of December 16, 2020. https://www.steel.org/industry-data/.
    \173\ Vanadium pentoxide flake 98% purity, China price. 
Vanadiumprice.com.
    \174\ Steel Demand Beyond 2030: Forecast Scenarios. Presented to 
OECD, Paris, September 28, 2017. Available at https://www.oecd.org/industry/ind/Item_4b_Accenture_Timothy_van_Audenaerde.pdf.
    \175\ 7th Vanitec Energy Storage Meeting, June 29, 2020. https://www.vanitec.org/vanadium/ESC-Meetings.
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    The titanium industry, with approximately 55% of demand coming from 
the aerospace sector, has been even more significantly affected by 
COVID-19 than the steel industry. Global titanium sponge production was 
projected to decline [TEXT REDACTED] from 2019 to 2020, with titanium 
shipments falling [TEXT REDACTED].\176\ Prior to the pandemic, titanium 
alloy growth rates were forecasted in the 3 to 5% per year range, and 
expected to track closely with aircraft demand.\177\ To the extent that 
the end of the pandemic spurs air travel to return to previous levels 
and growth rates, longer term titanium demand could provide support for 
vanadium prices.
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    \176\ Information presented to U.S. Government Titanium Sponge 
Working Group.
    \177\ Fior Markets Titanium Alloys Markets, Published May 2019; 
Research and Markets Titanium Alloys And Ultrafine Titanium Dioxide 
Global Market Opportunities And Strategies To 2023, May 2019; 
Titanium USA 2018 Conference, October 7-10, 2018.
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    The energy storage sector is another potential area for growth in 
vanadium demand. While the demand for vanadium redox flow batteries 
have not yet seen massive growth, Growth estimates vary wildly, from 
Roskill's 13% per annum growth to Bushveld Mineral's ``aggressive 
forecast'' of 42% annual growth.\178\ The relatively conservative 
Roskill estimate would account for added demand by 2027 of 5,000 tons 
of vanadium, while Bushveld's forecast would have vanadium redox flow 
battery demand increasing by 93,000 tons by 2027, exceeding 2017 total 
vanadium production.
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    \178\ Bushveld Minerals, Energy Storage & Vanadium Redox Flow 
Batteries 101. November 13, 2018. https://www.bushveldminerals.com/wp-content/uploads/2018/11/Energy-Storage-Vanadium-Redox-Flow-Batteries-101.pdf.
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4. Significant Price Swings Impair the Ability of Domestic Producers To 
Plan and Carry Out Capital Expenditures
    The historic volatility of vanadium prices make it difficult for 
producers to plan and follow through on investments in new 
capabilities. Although many industry projects take four or more years 
to complete, it is likely that vanadium market conditions and prices 
will change significantly between the beginning and the end of a 
project, impacting the project's viability and access to financing.
    For example, when Gulf filed for bankruptcy in June 2016, vanadium 
pentoxide prices had recent lows of $3 per pound. At the time of 
Gladieux's purchase of Gulf's facility, prices had risen to close to $6 
per pound. While Gladieux has been updating the facility, prices have 
spiked to $30 per pound in November 2018, but fell back to $6 a year 
later. [TEXT REDACTED]
    The most advanced primary vanadium exploration project underway in 
the United States has had a similar experience. Nevada Vanadium 
completed the PEA for the Gibellini project in June 2018, when vanadium 
pentoxide prices were $15 per pound. The PEA used a forecast price of 
$12.73, and reflects a 14-year breakeven price of $7.76 per pound.\179\ 
With current prices below the breakeven level and an estimated [TEXT 
REDACTED] required to construct and open the mine, completion of the 
project may be postponed or cancelled unless vanadium prices have risen 
before the expected BLM permit decision in August 2021. [TEXT REDACTED]
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    \179\ https://www.silverelef.com/files/Gibellini_2018_PEA_Technical_Report.pdf.
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    Similar price challenges exist at other domestic mining projects, 
with limited investment expected absent a rise in vanadium prices. 
[TEXT REDACTED] In summary, while significant domestic resources of 
vanadium exist, the long project lead times and volatile vanadium 
prices often create challenges in obtaining the investments necessary 
to bring the projects to completion.

E. Unilaterally Increasing Domestic Prices of Vanadium Would Harm 
Critical U.S. Industries

1. Domestic Vanadium Prices Significantly Exceeding World Prices Would 
Disadvantage the U.S. Steel Industry
    Imports of steel products are currently subject to adjustment based 
on the finding of a threat to national security in the Secretary's 2018 
Steel Report. That report found that the domestic steel industry was 
threatened by low-cost imports and recommended enhancing the industry's 
viability through the imposition of tariffs. In imposing a 25% tariff 
on imports, the President also authorized the creation of an exclusions 
process, whereby companies could request an exclusion from the tariff. 
Since the start of the exclusions process in March 2018, more than 
250,000 requests for exclusion from the steel tariff have been filed, 
reflecting significant interest in avoiding additional costs related to 
the domestic sale of steel products.
    With annual production in the U.S. worth $92 billion, the estimated 
$300 million in vanadium demand attributable to the steel industry 
represents less than 1% of total cost. However, in an industry with 
small profit margins and under threat from low-cost imports, additional 
costs for U.S. companies that foreign companies do not bear can be 
determinative on the company's survival.
    While not all steel products contain vanadium, some parts of the 
steel industry require it. Analysis of exclusion request data showed 
that 24% of the requests for exclusion from the Section 232 steel 
tariff involved a product with at least some vanadium,

[[Page 64787]]

and 9% of requests required at least 1% vanadium.
    Vanadium accounts for a significant percentage of the cost of the 
steel products in which it is an ingredient, with the result that small 
changes in the price of vanadium can have a major effect on the overall 
steel product cost. The cost per ton of vanadium is some 20 to 30 times 
that of steel products, meaning a 50% rise in vanadium prices would 
result in a more than 1% increase in the cost of rebar with 0.1% 
vanadium by weight.\180\ For products such as high speed steel with 
significantly higher vanadium content, the impact can be significantly 
higher. In an industry such as the steel industry that is already 
threatened by low-cost imports, imposing additional costs could have a 
major impact. An increase in the domestic cost of vanadium, while 
beneficial in the short term to the domestic vanadium industry, would 
be harmful to the steel industry and encourage the import of steel 
products that contain vanadium, to the detriment of both the domestic 
steel and vanadium industries.
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    \180\ Average 2016-2019 vanadium pentoxide prices of $9.80 per 
pound, equivalent to $21,560 per ton. Rebar cost estimated at $1000 
per ton.
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2. Domestic Vanadium Prices Significantly Exceeding World Prices Would 
Harm the U.S. Titanium Industry, to the Benefit of Russian and Chinese 
Titanium Producers
    Although the titanium industry uses far less vanadium than the 
steel industry, it is much more dependent on vanadium. For most steel 
uses of vanadium, substitution of niobium or molybdenum is possible, 
but vanadium is essential to most aerospace applications using 
titanium. The most common titanium alloy, Ti-6Al-4V, contains 4% 
vanadium by weight, but represents between 12 and 14% by cost. Further, 
nearly all vanadium-containing titanium products are used in the 
aerospace and military sectors, both essential to national security.
    Titanium, like vanadium and steel, is critical to national 
security, and was also subject to a Section 232 investigation, based on 
imports of titanium sponge. One significant concern for the titanium 
industry is the expansion of low-cost, vertically integrated Russian 
and Chinese titanium producers. One of the findings of the titanium 
sponge investigation was that increases in the Chinese and Russian 
premium quality sponge production threatens the viability of domestic 
U.S. titanium suppliers to the aerospace industry. The report found 
that Chinese and Russian sponge producers, underwritten by government 
support, have or are moving toward creating vertically integrated 
titanium supply chains that undercut U.S. producers. Because it is able 
to provide the necessary quality of titanium at lower prices than U.S. 
producers, Russian titanium producer VSMPO-Avisma provides 35% of 
Boeing's titanium products, and 50% of Airbus's titanium products.
    The threat to U.S. titanium producers from low-cost imports has 
increased since the titanium sponge investigation ended, as a result of 
the impact that COVID-19 has had on global titanium demand. Titanium 
shipments fell [TEXT REDACTED] from 2019 to 2020. Further, demand [TEXT 
REDACTED]. As a result of these factors, the U.S. titanium industry is 
facing severe hardship, and any product cost increases in the United 
States will likely to further disadvantage the industry relative to 
Chinese and Russian suppliers.

VIII. Conclusion

A. Determination

    Based on the findings in this Report, the Secretary concludes that 
the present quantities and circumstance of vanadium imports do not 
threaten to impair the national security as defined in Section 232. 
Although vanadium is critical to national security and the United 
States is dependent on imported sources of vanadium, several 
significant factors, including the health of the U.S. industry, the 
availability of idle domestic resources, ongoing USG actions, and the 
importance of vanadium to maintaining competitive steel and titanium 
industries, indicate that imports of vanadium do not threaten to impair 
national security.
    The United States is reliant on imports to satisfy demand for 
vanadium products and is not producing significant amounts of vanadium 
from U.S.-origin material, but these conditions are not expected to 
deteriorate further. A number of U.S. vanadium producers are increasing 
their production capacity and/or modernizing currently idled facilities 
and mines. These initiatives will improve domestic capabilities 
specific to ferrovanadium and vanadium pentoxide, as well as in primary 
production. Even if primary production is not feasible are current 
vanadium prices, the availability of the resources allows for 
production potential in the event of national emergency. The increased 
availability of domestic primary vanadium, expansion of secondary 
production, and addition of domestic feedstock for secondary production 
should mitigate current abnormal levels of reliance in imports.
    However, the Department recognizes that rising capacity does not 
necessarily mean the domestic vanadium industry is healthy. In addition 
to the long history of volatility of vanadium prices, the main users of 
vanadium--the steel and titanium industries--experienced major declines 
in demand in 2020 as a result of COVID-19, with the titanium industry 
particularly challenged due to its reliance on aerospace demand. If 
vanadium prices fail to rise, some of the capacity under development or 
exploration may not turn into production, and one or more secondary 
producers is likely face financial difficulty or challenges in sourcing 
affordable vanadium-bearing feedstock.
    Further, the Department's lack of a finding of an immediate threat 
to national security does not indicate that a healthy domestic vanadium 
industry is not of vital importance to the United States. While the 
Secretary does not believe that imports of vanadium need to be adjusted 
at this time, there are steps that should be taken to support the 
domestic vanadium industry and related sectors, to ensure safe and 
reliable sources of vanadium in the event of a national emergency and 
to enhance and protect U.S. national security.

B. Recommendations

    The Department has identified several actions that would help to 
ensure reliable domestic sources of vanadium and lessen the potential 
for imports to threaten national security. These actions are not 
intended to be exhaustive or exclusive; the Secretary recommends 
pursuing all proposed actions.
Recommendation 1--Expansion of the National Defense Stockpile To 
Include High Purity Vanadium Pentoxide
    The USG should support domestic vanadium production and ensure a 
source of vanadium in the event of national emergency by re-adding 
vanadium pentoxide to the National Defense Stockpile. Vanadium 
pentoxide was part of the stockpile until 1997; the stockpile held 
6,200 tons of contained vanadium \181\ in 1965 and had a goal of 7,000 
tons though it held just 651 tons prior to the decision to reduce the 
target level to zero in 1993, following the end of the cold war.\182\ 
Using high purity

[[Page 64788]]

vanadium pentoxide--suitable for use in titanium alloys or chemical 
uses as well as conversion into ferrovanadium for use in the steel 
industry--would ensure vanadium held in the stockpile could be used for 
any necessary product in the event of national security.
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    \181\ Vanadium is generally reported in terms of ``contained 
vanadium'', or the weight of only the vanadium portion of a vanadium 
compound. Vanadium represents 56% of the weight of vanadium 
pentoxide.
    \182\ USGS Vanadium Mineral Commodity Summaries. https://www.usgs.gov/centers/nmic/vanadium-statistics-and-information.
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    National Defense Stockpile goals were initially set to ensure 
sufficient product to support one year's demand for the entire country 
but were later narrowed to focus on defense-specific needs, primarily 
due to funding constraints. Given the importance of vanadium and other 
critical minerals to the economy, the economic and national security of 
the United States would be better served by pursuing stockpile goals 
that support national security beyond defense-specific requirements. 
The re-addition of vanadium to the stockpile would require 
authorization and funding from Congress.
    The Department recommends that the size of the proposed vanadium 
addition to the stockpile should be based on three benchmarks: Defense 
system requirements, broader national security requirements, and total 
domestic demand. As discussed above, defense system requirements may 
conservatively amount to 273 metric tons of vanadium content per year; 
this inventory level would be worth approximately $10.5 million based 
on average vanadium pentoxide prices since 2016.\183\ Critical 
infrastructure requirements add an estimated 4,527 tons per year, 
resulting in a minimum stockpile goal based on total national security 
requirements of 4,800 tons of contained vanadium, at a cost of $184.8 
million. Finally, total domestic apparent consumption (including 
defense and critical infrastructure needs) averaged 8,590 tons of 
contained vanadium annually from 2016 to 2019. Establishing a stockpile 
goal at this level, sufficient to meet all domestic demand would, would 
be valued at $330.6 million.
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    \183\ Average price per pound vanadium pentoxide from 2016-2019 
of $9.80, based on data from USGS: https://pubs.usgs.gov/periodicals/mcs2020/mcs2020-vanadium.pdf.
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    Beyond the minimum stockpile level, the Secretary further 
recommends that the stockpile of vanadium pentoxide be authorized to 
expand in size during periods of unusually low prices (with purchases 
made from domestic producers), while remaining unchanged or shrinking 
during periods of higher-than-average prices. This policy would help 
mitigate the large historic price swings that have caused significant 
financial distress and impeded capital investment in the domestic 
vanadium industry while helping to regulate domestic prices.
    Implementing this policy would require legislative changes to the 
Strategic and Critical Materials Stockpiling Act (50 U.S.C. 98, et 
seq.) (Stockpiling Act). While the mitigation of critical mineral price 
swings and the purchase of critical minerals from domestic producers at 
a premium when prices are unusually low serves the interest of national 
defense, the Stockpiling Act requires that the stockpile ``not be used 
for economic or budgetary purposes,'' which may present a challenge in 
allowing the stockpile to exceed minimum defense needs based on prices. 
Allowing the stockpile to be used for economic purposes if such actions 
support the health and competitiveness of affected industries would 
help enhance U.S. national security.
    As an additional potential benefit, once the vanadium holdings in 
the National Defense Stockpile are established, they could--with the 
authorization of Congress and in cooperation with the Department of 
Energy--be used without cost to support another sector: Large scale 
energy storage. As noted above, a potential new use for vanadium is in 
vanadium redox flow batteries, which have the advantage of using 
vanadium in both parts of the electrolyte, eliminating the risk of 
cross-contamination and allowing for the vanadium to be re-claimed from 
the batteries at a low cost with minimal yield loss.\184\
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    \184\ Vanitec estimates cost of conversion from leachate to 
vanadium pentoxide at $1 per pound vanadium pentoxide with a 95% 
yield. https://www.vanitec.org/vanadium/ESC-Meetings.
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    With vanadium accounting for approximately 30% of the cost of a 
vanadium redox flow battery and initial battery cost reductions needed 
to enable larger scale use, the USG could reduce the costs of the 
stockpile and support the energy storage sector by leasing a portion of 
the stockpile to be managed by vanadium redox flow battery companies, 
on condition of the leased vanadium being immediately reclaimable in 
the event of a national emergency. Given restrictions on transfers to 
and from the stockpile, this use of material in the stockpile would 
require either a legislative change to the Stockpiling Act or the 
designation of the leased material as still being part of the stockpile 
despite being used for energy storage.
Recommendation 2--Recycling Promotion
    The Federal Strategy to Ensure Secure and Reliable Supplies of 
Critical Minerals (Federal Strategy) identifies an available, on-demand 
supply of critical minerals as ``essential to the economic prosperity 
and national defense of the United States.'' \185\ The Federal Strategy 
recommends the support of recycling and reprocessing of critical 
minerals, including vanadium. Given that nearly all vanadium production 
in the United States is performed through recycling, the USG should 
support the vanadium industry through USG-wide actions to promote the 
recycling of materials containing critical minerals.
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    \185\ https://www.commerce.gov/sites/default/files/2020-01/Critical_Minerals_Strategy_Final.pdf.
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    A 2002 EPA analysis, carried out in support of the May 8, 2002 
final rule on the identification and listing of spent catalysts as 
hazardous waste, showed that in 1999, just 55% of spent catalyst was 
recycled, in large part because the cost of recycling was estimated to 
be three times that of landfill disposal.\186\ Bringing the recycling 
of vanadium-bearing wastes generated in the United States to or near 
100% has the potential to greatly expand the availability of vanadium 
products of domestic origin. Such recycling will occur naturally with 
higher vanadium prices, as refiners typically receive a metals credit 
from vanadium producers based on vanadium sale price, but can also be 
encouraged through the consideration of recycling tax deductions or 
credits as well as EPA review of their regulatory authority governing 
disposal of hazardous waste.
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    \186\ 67 FR 30811 and https://archive.epa.gov/epawaste/hazard/web/pdf/backdoc.pdf.
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    For example, additional information submitted by industry to the 
Department reported that the 2020 International Maritime Organization's 
(IMO) regulation requiring the reduction of allowable levels of sulfur 
in maritime fuels from 3.5% to 0.5% has increased refinery catalyst 
use, which is expected to result in increased availability of spent 
catalyst used to produce vanadium.\187\ Similar regulations in the 
United States would support both the EPA mission to protect human 
health and the environment and domestic production of critical 
minerals.
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    \187\ https://ig9we1q348z124x3t10meupc-wpengine.netdna-ssl.com/wp-content/uploads/AMG-Annual-Report-Web-FINAL.pdf.
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Recommendation 3--Continue USG Actions to Support Critical Minerals
    Many of the challenges domestic vanadium producers face are not 
unique to vanadium; with this investigation the Department has 
completed Section 232 investigations on four of the 35 critical 
minerals. While the specific challenges of each critical mineral are 
distinct,

[[Page 64789]]

many industrial trends are similar and broad solutions may be more 
effective than individual targeting. There are several ongoing and 
proposed U.S. government actions that support the domestic supply of 
critical minerals. Continuing to pursue these actions will provide 
necessary support to the domestic vanadium industry as well as to the 
broader critical minerals sector.
    Among the key actions that will enable strong domestic critical 
minerals industries are Executive Order 13817 and the resulting Federal 
Strategy, Executive Order 13953 (Addressing the Threat to the Domestic 
Supply Chain From Reliance on Critical Minerals From Foreign 
Adversaries and Supporting the Domestic Mining and Processing 
Industries), proposals from the USG Nuclear Fuel Working Group, work 
being carried out by the Titanium Sponge Working Group, and legislative 
action to support domestic production of critical minerals. Since the 
list of suitable substitutions for vanadium in steel and certain 
chemical processes includes other minerals on the critical minerals 
list (including manganese, niobium, titanium, tungsten, and platinum), 
actions to support production of critical minerals as a whole would 
also help to address domestic vanadium supply challenges.
    The Federal Strategy, developed pursuant to Executive Order 13817, 
was announced in June 2019, with six calls to action containing 24 
goals and 61 recommended actions that federal agencies should pursue to 
improve the availability of critical minerals and their downstream 
supply chains in the United States to help reduce the country's 
vulnerability to supply chain disruptions. Many of the identified goals 
of the Federal Strategy are consistent with the findings and 
recommendations of this investigation, including:
    (a) Support for downstream materials production capacity;
    (b) enhancing the National Defense Stockpile's ability to meet 
military as well as civilian requirements;
    (c) securing access to critical minerals through trade and 
investment with allies;
    (d) identifying methods to encourage secondary use of critical 
minerals; and
    (e) streamlining permit processes for critical mineral projects.
    The President issued Executive Order 13953, ``Addressing the Threat 
to the Domestic Supply Chain From Reliance on Critical Minerals From 
Foreign Adversaries and Supporting the Domestic Mining and Processing 
Industries,'' (E.O. 13953), in September 2020. The Order identifies the 
need to ensure a consistent supply of critical minerals and declares a 
national emergency to reduce the threat posed by the country's undue 
reliance on critical minerals from foreign adversaries. Many of the 
actions taken pursuant to E.O. 13953 will support the domestic vanadium 
industry, particularly vanadium mining.
    In addition to Executive actions, there have recently been several 
legislative proposals that would provide support for vanadium and other 
critical minerals. Examples include H.R. 8143 (also known as the 
Reclaiming American Rare Earths (RARE) Act) and S. 3694 (the Onshoring 
Rare Earths (ORE) Act of 2020). Both bills as written restrict the 
definition of critical minerals to a subset of those identified by the 
Department of Interior in response to E.O. 13817, and need to be 
expanded to include vanadium and other critical minerals, but otherwise 
have features of significant value to the domestic vanadium industry. 
In addition to allowing a tax deduction for investments in property 
used for mining, reclaiming, or recycling critical materials, these 
bills would support the function of critical minerals in the broader 
economy by providing grants or allowing tax deductions for critical 
minerals extracted in the United States. In addition to expanding the 
bills to include vanadium (as noted above), in order to provide the 
most value to the country, the Department recommends that any 
legislation should ensure that extraction incentives include recycling 
and reclamation.
    Finally, the Department's Section 232 investigations into imports 
of Uranium and Titanium sponge resulted in the creation of USG working 
groups tasked with developing recommendations additional to those made 
in each report. Given the significant intersections between the 
vanadium industry and the uranium and titanium industries, the 
implementation of the working groups' recommendations will support the 
vanadium industry as well.

Matthew S. Borman,
Deputy Assistant Secretary for Export Administration.
[FR Doc. 2021-24957 Filed 11-17-21; 8:45 am]
BILLING CODE 3510-33-P