Kazakh Vanadium Developer Plans Dual-Play Attack on $20B Carbon Black Market

• Ferro Alloy Resources is developing a large, low-cost vanadium project in Kazakhstan
• Vanadium demand is expected to rise driven by steel and vanadium redox flow batteries
• The company plans to produce a carbon black substitute as a co-product, diversifying revenue
• A feasibility study is targeted for completion by June 2025
• The company aims to be the lowest cost vanadium producer with a long mine life potential

Vanadium, a critical metal used primarily in steel production and emerging energy storage technologies, is gaining attention as a strategic resource in the global transition to renewable energy and sustainable infrastructure. Ferro Alloy Resources, a company developing one of the largest and lowest-cost vanadium deposits. Led by CEO Nicholas Bridgen, the company is progressing its project towards a feasibility study, targeting low-cost production of vanadium with the added benefit of a potentially significant carbon black substitute co-product.

The Vanadium Market: Volatility & Growth Potential

Vanadium is a small but essential market, characterised by significant price volatility due to its limited trading volume and stockholding. As Nicholas Bridgen, CEO of Ferro Alloy Resources, explains: "The vanadium market is extremely volatile... it's because it's a small market and there's not much stockholding to average out the peaks and troughs."

Prices have fluctuated from over $30 per pound in recent years to around $5 per pound currently, driven by factors such as China's economic slowdown and reduced construction activity.

Despite this volatility, the long-term outlook for vanadium is positive. The metal is a critical component in high-strength steel, which is increasingly used in construction and infrastructure projects worldwide. Additionally, vanadium redox flow batteries (VRFBs) are emerging as a key technology for grid-scale energy storage, particularly in renewable energy systems. Bridgen notes,

"Batteries will have a big impact... if you add up all the projects [China] has announced, they're going to need 100,000 tons of vanadium to feed those batteries."

This represents a significant increase from the current global vanadium market size of approximately 125,000 tons annually.

Steel: The Primary Demand Driver

Steel production remains the dominant driver of vanadium demand, accounting for 85-90% of global consumption. Vanadium is used to strengthen steel, allowing for lighter and more durable structures. This is particularly important in reducing CO2 emissions, as steel production accounts for approximately 10% of global emissions. Bridgen highlights this point:

"Steel that contains vanadium is stronger, and therefore you use less of it... anything that drives down the amount of steel used is going to be beneficial."

The intensity of vanadium use in steel is expected to increase as global infrastructure projects expand and sustainability regulations tighten. This trend is particularly evident in China, which consumes a significant portion of the world's vanadium for construction rebars. While the current slowdown in China's construction sector has dampened demand, the long-term growth trajectory remains intact.

Interview with CEO Nicholas Bridgen

The Carbon Black Market & Ferro Alloy’s Innovation

Carbon black, a critical reinforcing agent in rubber and tire manufacturing, is a $20–30 billion global market dominated by traditional producers that rely on energy-intensive processes. Approximately 70% of carbon black is used in tire production, where it enhances durability and performance. However, conventional carbon black production involves burning hydrocarbons, emitting ~2 tons of CO₂ per ton of product, and is heavily dependent on volatile oil prices.

Ferro Alloy Resources is pioneering a sustainable alternative: a carbon black substitute (CBS) derived from naturally occurring carbon in its vanadium-rich ore. The ore contains 8–14% carbon, which the company concentrates to ~40% purity through a low-energy process. This material, already validated by independent rubber consultants, matches the reinforcing properties of traditional carbon black while slashing costs and emissions. As CEO Nicholas Bridgen explains:

“Our cost of production is tiny… we’re recovering it from tailings, concentrating it, and milling it—all low-carbon processes.”

Competitive Advantages & Market Entry Strategy

The CBS product offers three key advantages:

• Cost Efficiency: Priced at ~$500/ton (half the cost of traditional carbon black), CBS provides significant savings for tire and rubber manufacturers.
• Sustainability: Production emits minimal CO₂ compared to conventional carbon black, aligning with global decarbonisation goals.
• Performance: Testing shows CBS can replace up to 10% of traditional carbon black in tire sidewalls without performance loss, with potential for higher substitution rates in non-critical applications.

Ferro Alloy is advancing a pilot plant to produce commercial-scale samples and engage with off-takers. Initial targets include agricultural and industrial tire markets, where performance requirements are less stringent. Bridgen notes,

“The industry has been looking for this… there’s huge interest in a product that cuts costs and emissions.”

The company’s Phase 1 project aims to produce 220,000 tons of CBS annually, generating ~ $110 million in revenue at $500/ton.

Strategic Implications for Investors

The CBS opportunity diversifies Ferro Alloy’s revenue streams, reducing reliance on vanadium’s price volatility. With carbon black demand growing at ~4% annually (driven by tire production and industrial rubber), CBS could capture a meaningful share of this market. The product’s scalability—leveraging tailings from vanadium processing—adds marginal cost to operations, enhancing margins.

Critically, CBS aligns with EU and U.S. initiatives to secure sustainable supply chains for critical materials. As Bridgen highlights:

“We could give away the vanadium, and the project would still be economic… half our revenue is expected to come from carbon.”

This positions Ferro Alloy as a dual-play investment: a low-cost vanadium producer and a disruptor in the carbon black market.

The Investment Thesis for Ferro Alloy Resources

• Exposure to the compelling long-term demand growth outlook for vanadium, driven by requirements for stronger, greener steels and rising penetration of VRFBs for stationary energy storage
• Potential to develop the world's largest and lowest cost vanadium producing asset with a decades long mine life
• Opportunity to produce a low-emissions carbon black substitute product, diversifying the company's commodity exposure and providing a hedge to vanadium price volatility
• Feasibility study expected in the near-term will provide a clear picture of the economics of Phase 1 and the broader potential of the larger resource
• Downside risk mitigated by strategic importance of the project and likelihood of securing government-backed financing

Macro Thematic Analysis

The global transition to renewable energy and sustainable infrastructure is driving demand for critical metals like vanadium. As Nicholas Bridgen notes:

"The world has taken the low-hanging fruit in terms of going renewables... once you're getting to 60-70% renewable, you need energy storage."

Vanadium redox flow batteries (VRFBs) are emerging as a key technology for long-duration energy storage, particularly in renewable energy systems. This trend, combined with the growing use of vanadium in high-strength steel, creates a compelling investment opportunity.

Ferro Alloy Resources is uniquely positioned to capitalise on this trend, with its low-cost vanadium production and innovative carbon black substitute. The company's strategic location in Kazakhstan and its focus on diversifying vanadium supply away from China and Russia further enhance its appeal. As Bridgen summarises:

"This is an extraordinary project financially... it transforms the vanadium industry because our cost is so low."