Bushveld Minerals pegs hopes on energy to drive vanadium demand

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Fortune Mojapelo, CEO, Bushveld Minerals

AS local vanadium producer Bushveld Mineral rides the wave of increased vanadium demand from China, the London-listed junior is also pegging its hopes on massive upside for the metal in the energy sector.

With a high strength-to-weight ratio, vanadium is a favoured input in steel, particularly in China, which has seen recent revisions to its high-strength rebar standard. While China accounted for 42% of overall vanadium demand in 2017, the tighter construction legislation is expected to lift vanadium demand in the country by 30% over the next ten years.

Considering the price of vanadium price grew 72% in 2016, with another 55% price climb in 2018 to date, Bushveld may well have something to crow about.

But vanadium’s – and Bushveld’s – prospects lie not only in Shanghai’s skyscrapers. Bushveld Minerals CEO, Fortune Mojapelo, said in a webinar on Thursday that the group is also pegging its ambitions on Vanadium Redox Flow Battery (VRFB) technology.

Touted as the most developed flow battery currently used in mass commercial operations, VRFB uses a liquid vanadium electrolyte to store energy in separated storage tanks. This differs from conventional batteries, which store energy in the power cell of the battery. VRFB is expected to account for 20% of overall global vanadium consumption by 2030.

According to Bushveld, several features of VRFB makes the technology ideal for utility-scale, long-duration stationary energy storage applications, particularly across Africa: it has long lifespan cycles, offers the lowest cost per kWh when fully used at least once a day and offers 100% depth of discharge.

Vanadium input costs contribute between 30% and 40% of the cost of the VRFB systems which is convenient if, like Bushveld Minerals, you own a vanadium-producing operation.

Bushveld Minerals’ 84%-owned subsidiary Bushveld Energy is “exclusively” focusing on VRFB technology, said Mojapelo, including marketing the technology and assisting with related project development across Africa.

Its primary objective is to establish a global VRFB supply chain in South Africa, starting with vanadium electrolyte, and it plans to deliver a 450kWh VRFB into Eskom’s Research, Testing and Development facility by the end of this month.

Bushveld Energy CEO and chairperson of the South Africa Energy Storage Association, Mikhail Nikomarov, said a philanthropic angle to Bushveld Energy’s plans for continental penetration of the technology: “We want to unlock the opportunity for the entire industry. We want to be equivalent to open-source IT companies… and whatever business model we create [will] not about trying to give one company an edge over another,” he said.

SUBSTITUTION THREAT

Mojapelo dismissed current threats of vanadium substitution, saying short-term switches between vanadium and niobium – the metal’s nearest replacement – in steelmaking was not practical, given the required technical adjustments required in steel plants

“The price elasticity of vanadium in steel suggests some capacity to absorb significant upswings in vanadium prices. At current prices, substitution risks, while real, are not considered large, although sustained higher vanadium prices will magnify these risks.”

South African vanadium producers are also poised to benefit from a current global supply deficit and the fact that South Africa has primary high-grade vanadium operations as opposed to operationally costly co-production operations seen elsewhere in the world.

The market agrees with the company’s strategy. Following the release of robust first-quarter results last week, Bushveld Minerals’ share price hit a 52-week high of 23.03p on Tuesday, putting its market capitalisation at a stout £248m.

Bushveld is currently in the second phase of an expansion project at its Vametco vanadium mine, which will boost the project’s output capacity from 3,035 t/y to 3,750 t/y.

The company is currently also in talks with the Department of Mineral Resources over the awarding of a new order mining right for the 300 million-ton Mokopane vanadium project, in Limpopo.

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