When a winning strategy is executed by talented, passionate professionals in favorable conditions, the results can be spectacular. Last year, Largo Resources experienced just that. With headquarters in Toronto, Largo Resources is a strategic mineral company focused on the production of vanadium flake, high purity vanadium flake and high purity vanadium powder at the Maracás Menchen Mine in Bahia State, Brazil. In 2018, the company reported revenues of CA$521.4mn – a 211% increase year on year – and four consecutive quarters of production growth. Starting in 2014, Largo has successfully ramped up its vanadium operations over the past five years, building a strong team and incorporating state of the art technologies into its operations. “We’ve had great results from a great performance in 2018. It's down to having a great deposit, effective technology and an excellent team,” says Paulo Misk, Chief Operating Officer (COO) and Corporate President of Largo Resources. Misk discusses Largo’s record breaking best year to date, and why vanadium promises a bright future for Largo Resources and the planet.
“We call vanadium the green metal, because it increases the strength of steel. When you put just one pound of it in a ton of steel it increases its strength by 40% or more, which means you don't need to use as much steel when making a car, for example,” explains Misk. “You can make the car lighter, which saves fuel, shipping costs, etc... Vanadium means there’s less environmental impact along the whole steel chain. The whole world should use vanadium to have a more environmental situation in the future.” The added strength that vanadium provides to manufactured steel had significant benefits for Largo Resources in 2018 when, in November, China introduced new quality standards for rebar production. “There was higher demand, low supply and a very low global inventory,” Misk says. “That's the perfect situation for increased price and that's what happened with vanadium.” Last year, according to Vanadium Price, the Chinese market price of V2O5 Vanadium Pentoxide Flake rose from $24.5/lb in August, to $45.1/lb in November. The combination of soaring prices and the high quality of the Maracás Menchen Mine resulted in the operation reporting record production figures of 9,830 tonnes of V2O5 in 2018 (2,595 of which were mined in Q4), a 6% increase over 2017, which led to the company entering 2019 with a cash balance of $206.2mn.
In addition to vanadium’s natural propensity for sustainably enhancing the steel supply chain, Largo Resources is determined to marry its profitability with a sustainable approach that benefits both the environment and the communities surrounding the Maracás Menchen Mine. “We value and take very seriously the ways in which we contribute to our community,” says Misk. “We must do our best to improve and have a positive impact on the community. Largo Resources has very robust social programs, which focus on professional vocations and providing support to local entrepreneurs. We also have other programs that support local education, sports, culture and entertainment. We help our workers’ families have a better place to live.”
Largo Resources is also committed to limiting its environmental impact. The company, through the Maracás Menchen Mine, owns and oversees the San Conrado legal reserve, “an area 25 times larger than the footprint of the mine itself”, according to Misk, where native species are preserved on over 2,000 hectares of natural forest. Wild animals found in the project area are captured and released onto the reserve. A native plant greenhouse with the capacity to produce 20,000 trees is also being cultivated to reforest the surrounding area. “I think mining has a lot of very good options to contribute to the planet’s future,” says Misk. “Not only by providing materials for new technologies, which reduce environmental impact overall, but by ensuring that our actions are creating the smallest environmental impact possible, and even improving the environmental situation if we can. We are here to do our best and to make our world better. That's our responsibility.”
With regard to its business ventures, Largo Resources is undoubtedly doing its best, utilising tier-one technology in order to create a product that is superior to the company’s competition. “Largo has the best ore grade vanadium deposits in the world. It's a fantastic deposit. World class. Also, we have very good technology, and an innovative, learning based approach,” Misk says. “Add that to our amazing team, and success is just a matter of time. When you look at plant performance, our recovery from the ore to flake to final product is 77%, which we’re looking to raise to around 80% in 2019. We have a very good ore grade; it’s always 1.2% V2O5, which is much higher than any of our competitors around the world. Also, after mining and ore treatment, the concentrate that’s generated is about 3.2%, more than 50% higher than any other competitor.” The high quality and efficiency of production ensure that Largo Resources is able to achieve increasingly lower costs. “We have been constantly changing and improving our process,” says Misk. “High recovery is a big factor and we adapted our process to yield the lowest amounts of raw materials like ammonia sulfate. This way we get a very low cost and still have the best quality product in the world.”
Misk is optimistic about the future of Largo Resources. In November, the company announced a planned expansion to the Maracás Menchen Mine. Scheduled for completion in June 2019, the project will focus on the milling, fusion, leaching and filtering capabilities of the facility, and is expected to deliver an additional 200 tonnes of V2O5 per month. “We expect to keep increasing our production. Considering the current supply and demand, we should see a very strong market for vanadium over the next three to four years,” says Misk. “We are ready to break new records in 2019 as well.”