JOHANNESBURG (miningweekly.com) – There is favourable demand for vanadium redox flow batteries (VRFBs), particularly in the utility and offgrid, as well as minigrid markets, with demand to peak in 2025 to 2030.
This is according to recently concluded market studies, commissioned by Aim-listed Bushveld Minerals’ energy subsidiary Bushveld Energy, in conjunction with the Industrial Development Corporation (IDC), in the second half of 2016, to assess African VRFB demand and opportunities and global vanadium electrolyte demand and requirements.
Bushveld Minerals on Wednesday said the studies had shown that the size of the VRFB market, and the speed at which it grows, will depend on how quickly regulations evolve in Africa. If similar to developments in the US, Europe, Australia, India and China, expectations are that the market will be multiples larger than current forecasts.
The studies further indicate that global electrolyte demand is likely to peak at 1 200 MWh/y to 1 800 MWh/y, or 40 Mℓ to 60 Mℓ a year, between 2025 and 2030.
There is potential for Bushveld to conservatively supply an initial 5 Mℓ to 10 Mℓ of this demand and, thereby, support the supply of an initial 200 MWh/y in energy storage.
Currently, the electrolyte market is dominated by China, which has about 90% of global production capacity, with smaller facilities in Europe, and batch production in other regions.
According to the market studies, this market concentration creates an opportunity for supply in other regions, such as the markets prioritised by Bushveld Energy.
To be able to cater to this growing demand for vanadium, Bushveld Energy and the IDC are advancing a technoeconomic study into the potential development of a vanadium electrolyte production plant in South Africa.
Study results have so far indicated that Bushveld can manufacture electrolyte on a cost-competitive basis that will allow it to compete regionally and globally.
Further, a scalable plant can be configured with an initial yearly production capacity of 200 MWh/y that can be increased to 400 MWh/y. The estimated initial capital expenditure (capex) for the proposed plant is R130-million, or about $9.7-million, of which more than 75% comprises the balance of plant, rather than production-specific equipment.
However, there is scope to reduce the capex further through colocating the electrolyte plant with Vametco Alloys, Bushveld’s primary vanadium mine and plant in Brits, in the North West province.
According to the studies, the main driver of the costs is the vanadium feedstock, which makes locally available, low-cost supply a critical success factor and a natural competitive advantage for South Africa.
Efforts are now under way to include the identification of potential sites for the electrolyte manufacturing plant, including the Vametco plant, as well as finalising the project costs before starting implementation of the production plant.
"There is no longer any doubt about the growth of energy storage globally to gigawatts of annual capacity and billions of dollars in market opportunity,” Bushveld Minerals CEO Fortune Mojapelo noted in a statement issued on Wednesday.
He added that, similarly, favourable factors in this industry, such as the move toward longer duration storage, are increasing the demand and competitiveness of VRFBs.
“We are seeing this, with massive systems deployed in 2015, 2016 and under construction in 2017. Through our energy platform, Bushveld remains in a leadership position to participate in this market, cemented by the results of our work with the IDC and now Vanitec,” he said.
Mojapelo reiterated that the largest threat to the success of VRFB technology remains the supply of low-cost vanadium feedstock, but noted that Bushveld, as an integrated mining-to-energy minerals company with an interest in an operating, scalable, low-cost mine, as well as its participation in the acquisition of Vametco by Bushveld Vametco, is uniquely positioned to address this challenge.
Bushveld further highlighted that its participation in global energy storage platforms, such as the Energy Storage Committee of global vanadium producers industry body Vanitec, will continue to support the emerging leading role for the company in the energy storage market.
Priorities for the company include the completion, jointly with the IDC, of a bankable business case for electrolyte production and to determine the costs per kilowatt-hour of production; to study site locations for the electrolyte plant; and to evaluate the potential quality of electrolyte production at Vametco, by performing laboratory testwork with the Vametco team.
Bushveld will also continue developing the existing backlog of possible projects, with a focus on Southern Africa, engage proactively with power utilities in progressive countries, where the business for energy storage on both pilot and wide roll-out basis is already being developed, as well as create relationships with top-tier renewable-energy project developers to create hybrid generation and storage independent power producer solutions.
Bushveld Minerals this week also released its results for the year ended February 28, posting an operating loss of £1.55-million.
Key achievements for the year at the company’s flagship vanadium platform included the company’s vanadium subsidiary’s completion of the acquisition, in partnership with Yellow Dragon Holdings, of a 78.8% interest in Strategic Minerals Corporation, which owns Vametco Alloys in South Africa, as well as the completion of the acquisition of the Brits vanadium project, in North-West from Sable Metals.
Bushveld subsidiary Greenhills Resources further completed the acquisition of a 49.5% interest in Dawnmin Africa, which holds an 85% interest in the Uis tin project, in Namibia.
Efforts to list Greenhills separately are now under way and expected to be completed during the next financial year, Bushveld nonexecutive chairperson Ian Watson noted.
Bushveld subsidiary Lemur Resources has, meanwhile, signed a memorandum of understanding with Chinese State-owned hydropower engineering and construction company Sinohydro Corporation, a subsidiary of PowerChina, to codevelop an initial 60 MW independent power producer coal-fired power plant based at Lemur’s Imaloto project, in Madagascar.
Mojapelo noted that the economic environment for mining and South Africa, in particular, remains challenging, with uncertainty relating to the new Mining Charter, as well as the overall prevailing political uncertainty in South Africa that present risks to Bushveld’s South African operations.
“However, . . . political uncertainty is as much a global phenomenon as it is South African. Our assets are of a high quality and their export proposition, coupled with a local cost base, present a natural hedge against any adverse developments in the local economy,” Mojapelo said.