Niobium: CBMM announces major expansion in ferroniobium production capacity

CBMM Ferroniobium, Araxã, Brazil.

The privately controlled global ferroniobium giant CBMM has announced that it will greatly expand capacity for ferroniobium production at Araxã, Brazil. The expansion will see capacity rise from its current level of about 100ktpy FeNb (gross weight) to 150ktpy by the end of 2020, with production anticipated at 110kt in 2019 and 120kt in 2020. The company is reportedly investing US$200M in the expansion (some of which might be for niobium products other than ferroniobium).

Roskill view

At first sight, this is not major news. Most of the infrastructure required for the expansion was already in place. There would not appear to be a pressing need for expansion. Combined capacity utilisation at the three major producers (CBMM and CMOC in Brazil, and Magris in Canada) has been running at 50-60% in recent years.

Several factors could have prompted CBMM’s decision to proceed fully with the expansion. One might be CBMM’s long-maintained policy of ensuring that there cannot be a deficit of supply for ferroniobium. Another is that ferroniobium competes with ferrovanadium in some steel applications. The ferrovanadium market has entered a period of structural deficit and prices reached thirteen-year highs in late 2018. These factors have prompted substitution of ferrovanadium for ferroniobium at some Chinese steel mills. Unlike ferrovanadium, ferroniobium does not have a history of price volatility. CBMM’s expansion may be timed to highlight the relative stability of the ferroniobium market.

The level of Brazil’s exports to China, the largest market, more than doubled from 2016 to 2018. That material can really only have come from CBMM. Trade statistics indicate that CMOC is operating at full capacity, as is Magris in Canada.

An interesting side note is that, while spot market prices for ferroniobium have jumped since October last year, unit values of bulk exports from Brazil and Canada have changed little. Only time will tell if the underlying price increases.