- Vanadium demand depends on US infrastructure investment and the US is way behind on updating it’s infrastructure.
- The cost to bring manganese in Brazil from the mines to the port area is expensive and not reliable.
- Payment receipts are uncertain from Latin America including Columbia who is in total shutdown, including banks.
- Europe was already near recession and China’s recovery has been slow so Tichauer doesn’t expect a v-shaped recovery.
- Small manganese producers in Brazil are experiencing problems with production, logistics, grading, and financial problems, so big investors are uninterested despite huge quantities in Brazil.
- Vanadium demand depends on US infrastructure investment and the US is way behind on updating it’s infrastructure.
Renato Tichauer, President and CEO at Tremond Metals Corp., brings over 40 years experience in the mining and ferroalloys industries including several executive positions. He Joins Lara Smith, Founder of Core Consultants to discuss the the different markets they work in including Manganese, ferrosilicon, noble alloys, including trade with China, Brazil, Colombia, South Africa and India. The following is a transcript of the video:
Lara Smith: Hello, my name is Lara Smith, I’m here in my home in Tel Aviv and my next guest is Renato Trichauer from Tremond Metals. He’s sitting at home in the US in?
Renato Tichauer: New York city,
Lara Smith: under lockdown?
Renato Tichauer: Yeah, exactly yeah, I’m home for I think 13 or 14 days now. So yesterday I went for a few minutes walk around the block, but otherwise I’m staying home and walking the corridor in my building and the hallway back and forth a few times besides exercising at home.
Lara Smith: Okay.
Renato Tichauer: Can’t play tennis in the meantime.
Lara Smith: So, yeah. So you’re going to be waiting to play tennis, I’m sure.
Renato Tichauer: Yeah, I miss that.
Lara Smith: So how’s work been for you? What’s happening at Tremond Metals? What is Tremond Metals?
Let’s start there.
Renato Tichauer: Well, basically we do mostly ferroalloys and manganese ore is our main businesses. Among the ferroalloys, ferrosilicon, mostly from Brazil to the US in other times we need China from between to the U S and noble alloys, everywhere in Europe, in the US in Europe, in Latin America, and ferrosilicon also to Latin America.
Lara Smith: You were doing niobium and tantalite, no?
Renato Tichauer: Niobium as well, columbite, tantalite, yeah, well, we do a lot of other things. And then Eduardo, my son, is in charge of carbon products, like coal, met coke, nut coke, anthracite, electrodes and so on. So that’s, the core of our business.
Lara Smith: And how’s the markets been during this time?
Renato Tichauer: Bad. Thank you. [laughs]
Lara Smith: Well, are we closing deals? Are we managing to get cargo out? Is cargo coming in?
Renato Tichauer: Yeah, the ferroalloy business, actually, the ferrosilicon business in the US has been pretty good until last week, almost I could say until Monday. I don’t know what time, but, all of a sudden everything stopped. This is when the steel mill started to announce shutdowns and cancellations, and I believe that some cancellations spooked the traders, and so all of a sudden has been very, very quiet. Prices went up until now. Now I actually don’t even know exactly where prices are at this moment. And so that’s the situation of ferrosilicon in the US. Manganese ore on the other hand, because of the shutdown of South Africa, has been very interesting.
I source mainly or almost only from Brazil, which has their own problems, but it has been good that in the last three weeks or two weeks, I finalized a few contracts with China and India.
Lara Smith: The price in China has increased for ores recently because they’ve been running down their inventory, right?
Renato Tichauer: Yes.
Lara Smith: There’s been a lot of panic buying there.
Renato Tichauer: Yeah. There has not been the shipments from South Africa at least. There are still some shipments from South Africa, but not from the mines to the port. So material that was at the port apparently are still being shipped out, but no new material for the time being is going from the mines to the port. So the inventories in China has been going down from about 4.7-4.8 million to about 4.3 million. And so the Chinese all of a sudden came to the market and however, I’m selling small quantities because it’s also very difficult to coordinate reliable supplies, of bigger quantities from Brazil. So right now I made shipments of 2000 tonnes, 3000 tonnes, 1000 tonnes. And as I said, I did two business with China and one with India, last week. And so the biggest problem in Brazil is to source, find material from reliable sources.
And the cost to bring the material in Brazil from the mines to the port area is expensive and not reliable. And so the people in Brazil don’t have the money to finance that. And so basically that’s the situation.
Lara Smith: Where do you see the situation turning in the US; cause that that’s your main business? The Brazil US route, right?
Renato Tichauer: Well, for manganese or ferro silicon, yes. Noble alloys I do in Europe and also in Latin America, also you have Silicon in Latin America. We have shipments to Latin America that we don’t know when we are going to be paid. Columbia, for instance, is in total shutdown, including banks.
And, so this situation is unclear what’s going to happen. And in the US, as I said, since end of last week, early this week, the situation changed because many steel mills shut down operations or reduced production and including not cancelling withdrawal of inventory or postponing at least, and so traders that have inventory don’t know exactly what to do. So that’s basically how it is here.
Lara Smith: And they’ve given no indication as to how long the lockdown period will be, or when they will restart in South America?
Renato Tichauer: In South America, no. Well, everybody is talking about April 30, April 30 as a target. It will depend on how the situation will evolve. In the states, the president is targeting April 30, but it was April 15, now it’s April 30, but it will really depends on how the situation evolves. In the US, the growth of people that are contaminated and death has been reduced. The growth has been reduced.
Lara Smith: This is positive okay.
Renato Tichauer: Yeah, optimists sees this as a positive, and so it’s like a celebration. “Yesterday only thousand people died, great.” So, but unfortunately, that’s how the situation is. So I believe that so if it is plateauing and today’s still April 9th, hopefully by the end of the month, business will be starting to get into activity again, or more activity.
And so far as you know, and many other places in the world, New York is totally shut down except for stores that sell food and pharmacies, like probably everywhere else in the world almost. Streets are totally empty and unemployment is huge, and so everyone is really making an effort to have things corrected as soon as possible.
Lara Smith: Yeah. And where do you see prices going? Let’s assume a post-covid world. Where do you see prices for noble metals, ferroalloys? Do you see demand picking up immediately? Do you think it’s going to be a delay?
Renato Tichauer: Well, I don’t think it will be v-turn, because remember that Europe was in recession anyway, or going into a recession or close to recession levels. And so this is a factor that will not change. On the contrary, it will get worse and the recovery, no matter how much money the governments are putting in to the market, I think the recovery cannot be that quick, including, because also because many people get money from the government, individuals, even companies, in the first moment, they will save, they are not going to go on a spending spree. For instance in the US was the case, and not so much in Europe as a different mentality. So nobody is going on a spending spree right away and people who used to go almost every day to restaurants, are not going everyday, they learn to stay home and [get] delivery. The delivery business has been growing, has been great, Zoom business has been great, and so there are certain businesses that are benefiting, but in general, I don’t think that the recovery would be quick in the US much less in Europe. And actually even in China, the recovery has been slow.
We have to take China as a parameter because they were the first ones. So, with all the probable lies that we heard about how many people were contaminated, or how many died, but the fact is that the pace of back to normal has been relatively slow and after about one month, I think that business is still not normal and only now I read that only yesterday, or two days ago, that Wuhan was definitely open to people to come in and out. So I don’t think that we will see a V-recovery. Of course there will be a recovery, but it will be a little slow.
Lara Smith: Right, right, okay. And then what’s going to happen with Tremond Metals, with your business? What do you predict for it, what do you have planned? Is it just going to continue the way you’ve been doing, existing customers, growing the customer base?
Renato Tichauer: Well, right now I’m focusing on manganese ore, this has been 90% of my time. It’s very, very time consuming, very, very exhausting. It’s not like selling ferro vanadium back and forth, which is a quick inter-trade business if it’s inter-trade, even to consumers.
So it’s a very, very time consuming business. But so far is the only thing that’s really working. Ferro vanadium in Europe is doing a little better, mostly because the shut down of ferro vanadium production in South Africa, and apparently EVRAZ are not selling, kind of forcing higher prices. So ferro vanadium has been doing well in the last week, but nobody knows how long. Moly is kind of stable, quiet, and manganese metal is very, very low level. I don’t think that increase in manganese ore prices will influence manganese metal prices. And what else? We offer tungsten if it’s small batteries.
Lara Smith: What do you think about Manganese for batteries? Do you think that’s a growing market? …and Brazil could play into that because it’s got a high grade.
Renato Tichauer: Yeah, Brazil has high grades, it has all kinds of grades; low grades, high grades, grades range from 30% to 50%. So Brazil has all kinds of manganese ore, but there are many other problems because most, except for two big producers, which is Vale and Buritirama, all other producers have a lot of problems, financial problems, some of the small mines, the guys are really producing empirically and meticulously, and they just taking where they expect the manganese content to be the highest. And then when it comes to the port, not necessarily it is the highest as they expect. So it’s a lot of problems, production problems, logistic problems, and so on. Documents, most of the producers don’t have documents, in other words, they’re not legal, so they use documents from other mines. So you know, it’s a different situation, but yeah, there is huge quantities of manganese available in Brazil. But none of the big investors has been interested in investing and moving with that to explore these interesting quantities of manganese ore that is in Brazil.
Lara Smith: Right. What do you think the potential is for manganese, for batteries? Do you think batteries could be the driver of manganese prices in the future?
Renato Tichauer: Well, I don’t think the quantities that will be used in batteries will be so big. And we also need to remember that the composition of the batteries has changed from more cobalt, less cobalt, manganese, lithium and nickel. So the compositional batteries to produce batteries has changed. So right now, I mean, I’m talking about short term. If I talk in short term I’m talking about let’s say, two, three, four years, I don’t think that you will be growing that much enough to influence prices. The biggest manganese production will still go for the steel industry, for carbon steel industry per production.
Lara Smith: And your outlook for vanadium and ferro vanadium?
Renato Tichauer: Again, it would depend on steel production. I mean, again, vanadium goes mostly on constructions and your rebars and pipelines, so infrastructure. I hope, not because of ferro vanadium, but in general, I hope that governments will start quickly investing in infrastructure, especially in the U S because we are so much delayed compared, to Europe, for instance, not talking about China. Even compared to Europe the United States is very late in updating its infrastructure. So I hope in the United States, after this package is distributed, that investment will be done for infrastructure. Since Obama administration, this has been the goal that Obama administration hasn’t been able to pass an infrastructure package. And the Trump administration didn’t do anything about infrastructure as well. So this is really the most important things because it generates a lot of employment and it generates a lot of growth.
Lara Smith: Yeah, and we would expect some kind of infrastructure package. Restart the economy, to kick the economy off after this whole Covid 19. You’ve got monetary, and you’ve got low interest rates, that’s one of the tools in monetary policies armour, and then government can do their bit by boosting infrastructure development.
Renato Tichauer: Yeah. So I think that’s the best solution it would have been. I mean, government had to give money to people right away. And of course infrastructure takes some time for planning and development. So it takes time. It’s not an immediate effect, but it should start right away. And there are a lot of projects that have been stalled, in the US for instance the speed train from San Francisco to Los Angeles.
This is, the project is there, but a lot of environmental, obstacles and the Trump administration, for reasons that I don’t know, possibly because Californians vote democratic and then he stopped that project. So, you know, there are a lot of projects that could start right away and there, but it needs the federal government to take the initiative.
Lara Smith: Yeah. Alright. Are there any other last comments?
Renato Tichauer: Lara, great talking to you. Take care and thank you for putting this together.
