Ferro-Alloy Resources announces update on carbon black substitute

LONDON: Ferro-Alloy Resources Limited (LSE: FAR), a vanadium producer and developer of the Balasausqandiq vanadium deposit in Southern Kazakhstan, has provided an update on its carbon black substitute (CBS) product following a new marketing study.

The study, conducted by Smithers, estimates the price of Ferro-Alloy’s CBS product at $500 per tonne for the tyre market and between $550 and $600 per tonne for the non-tyre market, excluding any sustainability value.

The study follows successful testing that demonstrated the CBS product can be used in vehicle tyre sidewalls and other rubber applications. Previous tests by SGS Canada Inc indicated that the CBS product can be recovered from vanadium process plant tailings using simple flotation methods. This could generate approximately 220,000 tonnes of CBS product per year, potentially resulting in over $110 million in annual revenue for Phase 1 of the Balasausqandiq project.

The company believes the CBS product can be shipped economically to Western Europe or China, with closer markets also under investigation. Preliminary research suggests the CBS product’s combined Scope 1 and Scope 2 emissions will be significantly lower than those of standard carbon black, providing a strong marketing advantage and potential future savings in carbon credits.

Nick Bridgen, CEO of Ferro-Alloy Resources, commented, “This marketing study confirms the enormous value of the Company’s CBS revenue stream, now expected to be comparable in size with our main vanadium product. With relatively low production costs, it adds hugely to the anticipated project NPV.”

The Balasausqandiq deposit contains over 8% carbon in a form similar to carbon black, used predominantly as a reinforcing filler in rubber manufacturing, especially for vehicle tyres. The CBS product is created by concentrating the carbon in the vanadium circuit tailings, followed by drying and milling.

The successful test program in the UK by Smithers’ materials science and engineering division substituted standard carbon black with the CBS product in rubber formulations for passenger vehicle tyre sidewalls, showing no significant performance reduction and some advantages. Higher substitution levels are possible in agricultural and truck tyres.

Ferro-Alloy Resources estimates the production process will involve low capital and operating costs, and the CBS product can be shipped economically based on current logistics rates. The company is investigating closer markets and believes that the significantly lower emissions associated with its CBS product will facilitate favorable marketing and potentially lower CBAM costs if the European Union includes carbon black in the Carbon Border Adjustment Mechanism.

The global carbon black market is valued at approximately $20 billion per annum, with around 70% used in tyre manufacturing. The push for lower CO2 emissions has led some manufacturers to explore alternatives like recovered carbon black from used tyres, although this process is energy-intensive. Ferro-Alloy’s CBS product offers a low-carbon alternative, aligning with industry goals to reduce emissions.

The company has begun marketing activities and is assessing opportunities to secure an offtake agreement for future CBS production, aiming to enhance its competitive position as a low-cost producer of vanadium and its co-products.