Hot Springs, AR (June 17, 2020) — U.S. Vanadium LLC (“USV”) and AMG Vanadium (“AMG”) issued the following joint statement regarding the recent decision by the U.S. Department of Commerce (“DOC”) to initiate a Section 232 tariff investigation into potential unfair trade practices in vanadium, a critical and strategic material for multiple defense and essential civilian applications. USV and AMG had previously filed a petition with DOC urging such an investigation be launched:
We are pleased that the Commerce Department is launching this investigation, as we believe the facts are clear that certain vanadium import practices threaten the national security of the United States. Vanadium is a strategic and critical material used in many different national defense and infrastructure applications, from aerospace to energy storage to defense systems to large infrastructure projects. U.S.-based producers of vanadium are working hard to increase production and meet a greater portion of U.S. demand for vanadium. However, these practices by foreign vanadium producers seriously threaten U.S. national and economic security.
A statement by U.S. Secretary of Commerce Wilbur Ross on the Commerce Department’s initiation of the Section 232 investigation into vanadium imports can be seen here.
VANADIUM SECTION 232 INVESTIGATION – QUESTIONS AND ANSWERS
What is a Section 232 investigation?
An investigation under Section 232 of the Trade Expansion Act of 1962 allows the U.S. Government to investigate and determine if an article is being imported into the United States in such quantities or under such circumstances as to threaten or impair the national security. If the investigation concludes that section 232 has been violated, the President may impose a variety of remedies, including tariffs and tariff rate quotas.
Why did AMG and USV file the petition?
- Imports of vanadium have devastated the domestic industry. For example, over the past 25 years, U.S. producers of ferrovanadium have been injured repeatedly by unfairly traded/dumped imports.
- Many domestic companies that historically had the production capacity to serve as suppliers to U.S. industries that support the national defense have experienced import-related difficulties that caused bankruptcies, plant closures, layoffs, and idled operations.
- Some domestic vanadium producers attempting to restart or expand operations will be unable to do so absent relief under Section 232.
- Global vanadium prices are extremely volatile and have weakened the domestic vanadium industry. China is the largest global supplier and consumer of vanadium, and abrupt changes in Chinese industrial policies have caused substantial international market distortions.
What products are subject to the investigation?
- The petition requested an investigation of imports of vanadium oxides, vanadium carbonitrides, ferrovanadium, and vanadates.
What is the timeline for the investigation?
- Within 270 days of initiating an investigation, the Secretary of Commerce must submit to the President a report and recommendations for relief, if appropriate. We estimate this date to be February 22, 2021.
- Within 90 days of receipt of the Secretary’s report, the President must determine whether to take action regarding the imports in question and must implement any action within 15 days of the determination. We estimate these dates to be May 23, 2021 and June 7, 2021, respectively.
What is AMG requesting be done? What will be the outcome of the investigation?
- Petitioners, AMG Vanadium and U.S. Vanadium, requested that the Secretary of Commerce investigate imports of vanadium including ferrovanadium, vanadium oxides, and vanadium carbides, and recommend that the President provide relief in the form of additional tariffs and/or tariff-rate quotas.
How will this investigation benefit the domestic vanadium industry and/or AMG? How will it benefit the U.S. national defense?
- The requested relief would provide a significant level of price predictability and, accordingly, additional market certainty for buyers, sellers, and producers of vanadium, including those who use vanadium in defense industry applications.
- Such market stability would aid industry decision-making regarding investment in physical assets, research and development expenditures, and other long-term planning.
Why is vanadium important?
- Vanadium is a natural element found as a component of various minerals and is essential to the national economy and national security.
- Vanadium is a vital input in critical infrastructure sectors identified by the U.S. Department of Homeland Security, including the Critical Manufacturing Sector (including primary metals, machinery, and transportation) and the Defense Industrial Base Sector (including aircraft, combat vehicles, and armor).
- Both the Executive and Legislative Branches of the U.S. Government have designated vanadium as a critical mineral that is essential to U.S. national security.
- Vanadium is a critical input in high-strength steel and other metal alloys used in vehicles, infrastructure, and aerospace as well as in chemical reactions and energy storage.
How will this case impact consumers of vanadium?
- The case should have minimal impact on consumers of vanadium. Steel manufacturing accounts for approximately 90 percent of the vanadium consumed, and vanadium costs represent a very small percentage of steel costs.
- The U.S. International Trade Commission, an independent agency of the U.S. government, concluded that the cost of vanadium in steel production represented, “a very small share (1-5 percent) of the cost of steel production.” See USITC Pub. 4683 (May 2017) at Page II-8.
- Our own calculations indicate that the cost of vanadium in a metric ton of steel represents 1 to 2 percent, even at today’s very low steel prices.
Are there any other reasons to promote the development of the U.S. vanadium industry over its foreign competitors?
- Yes. Most of the vanadium manufactured in the United States is derived from waste products that would otherwise be destined for a landfill.
- By contrast, most foreign vanadium production is the result of mining or steel production in countries with limited or no effective environmental controls.
- Vanadium produced from recycling has a carbon footprint of about one-fifth compared to mined vanadium.
Where do AMG Vanadium and U.S. Vanadium have their manufacturing operations?
- AMG Vanadium has production facilities in Cambridge, Ohio and is building additional capacity in Muskingum County, Ohio.
- U.S. Vanadium has production facilities in Hot Springs, Arkansas.
Do the other domestic vanadium producers support the petition?
Now that the investigation has been initiated, we expect that other domestic producers and other parties with an interest in this important segment of the industrial supply chain will voice support for the petition.
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About U.S. Vanadium
U.S. Vanadium produces and sells a range of specialty vanadium chemicals, including the highest-purity Vanadium Pentoxide (“V205“) in the world, from its flagship facility in Hot Springs, Arkansas USA. The company is comprised of global leaders and investors in specialty chemicals and strategic materials, including in the mining, processing, purification, and sales and distribution of vanadium specialty chemicals. For more information, please go here: USVanadium.com