Fortunes comments30 Jan 2020 09:30
"The final quarter of 2019 was a very important one for Bushveld. The acquisition of Vanchem was transformational as it gives us the diversification and operational base to achieve our near and medium term growth plans. I am delighted that Bushveld is in the strong position of owning two of the four operating primary processing facilities globally.
Just as important, our improved organisational structure meant we were able to retain our strong focus at Vametco, growing output and reducing costs. Vametco finished 2019 in a solid position, with an 11 per cent production increase, underlying production cash costs down 5 per cent to U$18/kgV, and generating an underlying EBITDA of US$42 million despite the realised price falling 35 per cent year on year. All of this was achieved through the implementation of productivity initiatives identified as part of the Transformational Programme. We expect to see additional benefits realised and improved operational stability at Vametco during the course of 2020.
That said, we are not resting on our laurels and are focused on disciplined cost control across the whole Group to ensure that all operations are run on a sustainable basis in the current price environment.
Elevated production from Vametco, inaugural production from Vanchem and the execution of the Mokopane mining right is to be welcomed, however, one cannot just grow for growth's sake. We will make sure that we will continue to be conservative in how we invest capital and ensure that any production increase is profitable, especially while the current price environment prevails. In FY2020, we will continue to ensure that Vametco maintains its competitive edge by continuing to innovate, invest for the future and optimise margins, while at the same time providing the team at Vanchem with the resources necessary to replicate Vametco's achievements. This will allow us to build a business that is resilient throughout the commodity cycle and ready to capture the benefits of a price recovery.
By doing so, we aim to become an even lower cost producer of vanadium, with an increasingly diversified product range, allowing us to see through short term weakness, make decisions with the longer term in mind and provide a stable environment for the development of new downstream demand sources, such as energy storage.
During 2020, we anticipate synergies accruing from both Vanchem and Vametco as we bring the businesses together while we carry on operating in a prudent manner and keep our focus on what we can control: safety, volumes and costs.
Continued...
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