Bushveld Minerals (LON:BMN) is poised to enter the Vanadium Battery market as the miner prepares to diversify the business away from an extraction and processing play.
In a recent operation update, the group who operates primarily in Africa, announced they were on-track to commission the first Eskom vanadium redox flow battery (VRFB) in December 2018.
Bushveld Minerals’ Vanadium has largely been used in the strengthening of steel as an alloy but the metal’s properties makes it an excellent alternative to Lithium in the battery market.
The company awaits results of an Environment Impact Assessment (EIA) for an electrolyte production facility crucial to the production of Vanadium Redox Flow Batteries.
A VRFB creates electricity by storing power in tanks of Vanadium electrolyte then firing the electrolytes through specialist cells to create energy.
The electrolyte production facility is expected to be up and running in the first half of 2019 after facing delays in early 2018.
Another key element for the long-term success of Bushveld’s expansion into the battery market is the input price of Vanadium.
Bushveld Minerals recorded an average Ferrovanadium price of $85.8 per KgV in Q3 2018, up 24% compared to Q2.
In the nine months to September 2018 the ferrovanadium price averaged $72.3 per KgV, a rise of 137% compared to the same period in 2017.
Bushveld have this year reaped the benefits of a higher Vanadium price which has helped drive Bushvelds share price up over 100% from 52-week lows.
However, a rising Vanadium price will reduce the profitability of VRFBs so management will need to ensure a large proportion of the raw Vanadium used in their VRFBs is produced by Bushveld to keep costs in check and capture the valuation creation in the processing of ore.
One would be reassured the board is preparing for this with the recent acquisition of a further interest in the Vametco production plant. Bushveld Minerals now has a 74% interest in the facility. Vametco produces Nitrovan for use in alloys and highlights the group’s willingness to take control of the supply chain.
Mikhail Nikomarov, CEO of Bushveld Energy, said of the recent developments:
“The third quarter of this year and events following immediately afterwards, have proven beyond doubt that the market for battery storage in both South Africa and Africa overall is significant and immediate. Bushveld Energy has long maintained the attractiveness of this market, especially for the long-duration and high-volume daily utilisation applications that are ideal for VRFBs.”
“The knowledge gained by our team in deploying a system with Eskom and designing and building an electrolyte facility will continue to give Bushveld Energy a competitive advantage in supplying into this growing market. Our business plan, anchored in a low cost scalable primary production platform, will allow us to maximise value for Bushveld and its shareholders along the VRFB value chain, and therefore realise the Company’s vision of a deeply vertically integrated vanadium platform.”