Bushveld Minerals (LON:BMN) have reported a promising set of half year results that highlights the positive impact of Vanadium prices on the company’s earnings.
A rising Vanadium prices in combination with a number of acquisitions have helped Bushveld Minerals’ revenue jump to £62m in the six months to June 2018, up from just £2.2m in the corresponding period a year prior.
Bushveld’s Vametco sells its Vanadium and Nitrogen product, Nitrovan, to steel mills for the production steel alloys on a global basis. A considerable increase in Nitrovan sales alongside a rise in underlying prices has helped Bushveld Minerals register EBITDA of £31.7m and a net profit of £21.1m.
The reported bottom-line means the firm is producing and selling Vanadium at a very respectable 34% net margin which can be largely attributed to the fact Bushveld are currently one of the worlds cheapest producers of Vanadium.
In addition to steel alloys, Bushveld Minerals is developing battery applications for Vanadium. Bushveld’s business unit Bushveld Energy recently received a $500,000 grant from the United States government for the research and development of their Vanadium Redox Flow Battery (VRFB). VRFB has the potential to revolutionise an energy market currently dominated by Lithium batteries struggling to meet today’s increasing demand for greener energies.
VRFB is a potentially safer and more efficient alternative to Lithium as it stores electrolytes in separate storage tanks as opposed to being held in the power cell itself.
Bushveld are not the only ones preparing for wider Vanadium battery adoption. The CEO of Australian Vanadium Ltd recently said at a mining conference that the technology awaits its ‘Elon Musk’ moment – something Bushveld is doing well in positioning for.
However, the prospect of such wide adoption for the use of Vanadium in power is driving up prices meaning those developing VRFB technology are being also being faced with the challenge of cost efficiencies.
So, the recent leap higher in Vanadium prices is proving to be a doubled edged sword for Bushveld. The group is benefiting in the short term from higher achieved sales prices for alloy applications but being hindered in arguably the most exciting area of their business, the Vanadium Battery.
Commenting on Bushvelds progress, CEO Fortune Mojapelo said:
“Key to the success of our efforts at Vametco is a healthy cooperative relationship with all of our stakeholders, not least the local communities in which we operate and the workers. The recent unprotected strike action at the mine, while unfortunate only underscores the importance of us succeeding in this objective. We are pleased that we were able to reach a resolution with the workers and delighted that they will participate in the success of the Company through an Employee Share Options Scheme Structure.
“Meanwhile our efforts in building a leading energy storage company through Bushveld Energy are progressing well on all fronts, the construction of the electrolyte manufacturing plant in South Africa, the deployment of a VRFB at Eskom, securing mandates for large scale VRFB deployments as well as the development of vanadium electrolyte leasing products to promote the adoption of VRFBs in the global energy storage industry. The grant of US$500,000 received from the Government of the United States of America will go a long way to fund the implementation and enhancement of the Eskom Vanadium Redox Flow Batteries project. The commissioning delay experienced with the Eskom Vanadium Redox Flow Batteries project has meant the new battery is now expected to be commissioned during the Q4 2018.”
“The signing of a 30-year Project Concession Agreement between Lemur Holdings and the Government of Madagascar is a critical milestone in the development of Lemur’s integrated coal-to-power project, bringing it even closer to implementation.
“As we continue to steadily execute our firm strategy to grow into a significant, low-cost vertically integrated vanadium platform, we have a busy pipeline of corporate and operational activities ahead. I look forward to providing further updates on the operations in the second half of the year.”
