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
<![CDATA[
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
-----------------------------------------------------------------------
Bureau of Industry and Security
-----------------------------------------------------------------------
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]]
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\1\ See Figure 1 in Section IV, ``Product Scope of the
Investigation,'' for the vanadium products addressed by this report.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\4\ 19 U.S.C. 1862(b)(3)(A).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\5\ https://www.usgs.gov/news/interior-releases-2018-s-final-list-35-minerals-deemed-critical-us-national-security-and.
---------------------------------------------------------------------------
(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.
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
[[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.
---------------------------------------------------------------------------
BILLING CODE 3510-33-P
[[Page 64763]]
[GRAPHIC] [TIFF OMITTED] TN18NO21.084
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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
[[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).
BILLING CODE 3510-33-P
[[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.
---------------------------------------------------------------------------
BILLING CODE 3510-33-P
[[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]
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
[TEXT [TEXT REDACTED] [TEXT [TEXT [TEXT
REDACTED] REDACTED] REDACTED] REDACTED]
----------------------------------------------------------------------------------------------------------------
[TEXT REDACTED] [TEXT [TEXT [TEXT
REDACTED] REDACTED] REDACTED]
----------------------------------------------------------------------------------------------------------------
[TEXT [TEXT REDACTED] [TEXT [TEXT
REDACTED] REDACTED] REDACTED]
----------------------------------------------------------------------------------------------------------------
[TEXT [TEXT REDACTED] [TEXT [TEXT [TEXT
REDACTED] REDACTED] REDACTED] REDACTED]
---------------------------------------------------------------------
[TEXT REDACTED] [TEXT [TEXT
REDACTED] REDACTED]
----------------------------------------------------------------------------------------------------------------
[TEXT [TEXT REDACTED] [TEXT [TEXT [TEXT
REDACTED] REDACTED] REDACTED] REDACTED]
----------------------------------------------------------------------------------------------------------------
[TEXT [TEXT REDACTED] [TEXT [TEXT [TEXT
REDACTED] REDACTED] REDACTED] REDACTED]
----------------------------------------------------------------------------------------------------------------
[[Page 64780]]
[TEXT [TEXT REDACTED] [TEXT [TEXT [TEXT
REDACTED] REDACTED] REDACTED] REDACTED]
----------------------------------------------------------------------------------------------------------------
[TEXT [TEXT REDACTED] [TEXT [TEXT [TEXT
REDACTED] REDACTED] REDACTED] REDACTED]
----------------------------------------------------------------------------------------------------------------
[TEXT [TEXT REDACTED] [TEXT [TEXT [TEXT
REDACTED] REDACTED] REDACTED] 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.
[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\
---------------------------------------------------------------------------
\160\ https://www.commerce.gov/sites/default/files/2020-01/Critical_Minerals_Strategy_Final.pdf.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\161\ https://www.state.gov/united-states-and-canada-finalize-action-plan-on-critical-minerals-cooperation/.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\162\ https://www.doi.gov/pressreleases/united-states-and-australia-formalize-partnership-critical-minerals.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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]
---------------------------------------------------------------------------
\179\ https://www.silverelef.com/files/Gibellini_2018_PEA_Technical_Report.pdf.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\185\ 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.\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.
---------------------------------------------------------------------------
\186\ 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.\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.
---------------------------------------------------------------------------
\187\ 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,
[[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
