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INDUSTRY REPORT EQUITY  RESEARCH 12 Nov 09 VANADIUM: THE SUPERCHARGER Limited Supply • • • • Vanadium is a metal that strengthens and hardens alloys like steel, but that we believe has a bright future in energy storage. Both lithium ion batteries to be used in the automotive industry and redox batteries to be used in grid-level electricity storage benefit greatly from the use of vanadium, and this use is costeffective. Vanadium is produced in limited quantity as a by-product of other processes. In 2007, only about 59,100 tonnes of contained vanadium was produced globally, with this coming largely from South Africa, China and Russia. There is a threat that Chinese supply may be declared strategic and export curtailed, further constraining global supply. Rapidly Rising Demand • • Ferrovanadium is used to strengthen steel. Both China and Japan are mandating stronger rebar in construction, likely increasing vanadium demand. We also foresee at least three new demand channels for vanadium in the alternative energy and clean technology arenas. At least two of these could result in significant vanadium shortages. Stable Prices are the Catalyst • • • A major issue in the past has been vanadium price volatility. Prices have oscillated between levels of $11 per kg. for the metal to as high as $50 per kg. While there are some opportunities for substitution in steel production, the same is not true for other markets, including our projected new markets. In order to make end prices of products predictable, the price of vanadium must stabilize. This provides pull for new producers of vanadium to enter the market. There Just Isn’t Enough • Jon Hykawy, Ph.D., MBA Clean Technologies & Materials 647.426.1656 Arun Thomas, MBA Associate Please see back page for disclaimers Please see back page for disclaimers. Without doubt, vanadium is growing into one of the most important metals about which no one has ever heard. Soon, everyone is likely to become a lot more knowledgeable about vanadium, and investors can benefit by staying ahead of the curve and owning companies that can benefit from rapidly increasing vanadium demand.

Vanadium Report Final

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