The vanadium market, which has been in a state of oversupply for the past decade, may be transitioning towards an extended period of potential undersupply.

Vanadium’s requirement in steel, the stationary energy market and in the electric vehicle industry appears destined to grow over time.

In 2010, more than 95% of the 56 000 t of vanadium produced was mined in South Africa, China and Russia.

Among the companies looking to expand that geographical supply base is American Vanadium, the TSX venture-exchange company that is developing the Gibellini vanadium project in Nevada, US.

Once in production, Gibellini will become America’s only vanadium mine, producing 25% of America’s needs and 4% to 5% of the world’s current vanadium supply.

American Vanadium executive chairperson Ron MacDonald believes that vanadium is also set to play a key role in energy storage, in addition to its traditional role as a steel strengthener.

MacDonald bases his hypothesis on developments taking place in China, where his interfaces with the country’s renewable-energy figure, Dr Weidong Gu, have indicated significant potential future demand for vanadium, a soft silver-grey ductile transition metal that is the twenty-third element on the periodic table.

MacDonald tells Mining Weekly that vanadium flow batteries are one of the three different battery banks that China commissioned in December as part of a $2-billion initial phase facility that is putting energy storage to the test.

Vanadium flow batteries are tanks of vanadium in dilute sulphuric acid, which allow continuous storing and discharging of energy on to electricity grids.

“China has started a new industry and it’s in energy storage, and vanadium flow batteries are going to play a major role in providing that storage,” MacDonald forecasts.

The batteries allow intermittent energy supplies to be regulated from moment to moment, helping countries to deliver on clean energy and carbon reduction targets.

China is said to be aiming for 10% of all its power to be held in energy-storage facilities in the next eight years.

“We knew the numbers were high, but what we didn’t realise was that they’re not just talking storage for renewable energy, but for all the power that will be produced by 2020.

“This is an enormous move forward, considering that, globally, right now you probably only have about 1 000 MW of storage capacity. You’re talking here about an exponential number,” MacDonald says.

The other interesting aspect is the level of investment that would be required to reach the target.

The global investment in a variety of storage solutions is expected to be more than a trillion dollars in the next seven years.

Meanwhile, the market for vanadium in steel is also poised to increase. Again, one of the reasons for that on the steel side is that China has changed its building codes and number three and number four rebar, which needs vanadium in it, has to be used for all new construction

In a market study, consultancy group Roskill, in June last year, estimated that the global vanadium market would have a 2012 surplus that would begin to reduce in size over years.

American Vanadium CEO Bill Radvak expects steel demand alone to drive the vanadium pentoxide price towards $15 a pound in five to eight years.

Currently, vanadium pentoxide is selling at $6.50 a pound, with forecasts that it is unlikely to change dramatically for a couple of years.

“The building code will take two or three years to implement fully and that’s when consumption should start happening,” says Radvak.

When steel has just a fraction of a per cent of vanadium in it, the overall strength can be increased by up to 100%.

It is estimated that China’s new regulation for steel rebar grade will result in an estimated additional 27 000 t of vanadium being consumed a year, which represents a 40% increase in the yearly global demand for vanadium.

Multiple energy-storage technologies and methodologies would be required to satisfy demand and, for vanadium, the competing demand from the steel sector is likely to be an issue.

While virtually all other forms of battery have two competing metals, the vanadium flow battery is more like a capacitor, with the vanadium occurring in multiple states in sulphuric acid solution and separated by a membrane.

Two of the main advantages are that the batteries are scalable and are able to hold and dispatch large charges as needed.

The Chinese and Japanese have vanadium batteries that have achieved 10 000 charges and discharges, which is a great part of the value proposition.

Vanadium flow batteries in large fields have the ability to take an unprofitable wind farm and turn it into a commercially viable operation, because the power produced when the wind blows at night can be held, and when it is required, it can be dispatched immediately on to the grid economically.

Much energy storage will be through what South Africans call pumped-storage schemes and which are referred to elsewhere as hydro pumping.

South Africa energy utility Eskom has the Drakensberg pumped-storage scheme, built the Palmiet scheme in joint venture with the Department of Water Affairs and is looking to the Ingula scheme.

But there are a huge number of instances where hydro pumping is simply not economically available and observers see energy storage being made up of a mixed bag of possibilities.

What is important is a major US multi- national, Cellstrom, which is owned by Gildemeister, of Germany, has already started commercialising these batteries.

“By the end of this year, people will understand that this is a real business,” Radvak tells Mining Weekly.

The US government has listed vanadium as an element to watch and recognises that it needs to take a serious look at obtaining a secure supply of vanadium.

The US Department of Energy describes the country’s electricity grid as the world’s largest supply chain without “a warehouse”, a place of mass storage.

In the electric vehicle market, lithium- vanadium batteries are said to produce greater power and range and Subaru has reportedly chosen a lithium-vanadium battery for its prototype G4e all-electric vehicle to more than double the range on electric power alone.

Lithium-vanadium batteries can also be recharged faster.

Vanadium flow batteries are distinguished from fuel cells by their chemical reaction being reversible – they can be recharged without replacing the active chemicals.

Because the same metal is on both the positive side and the negative side, they require a lot of vanadium.

High capacity is attainable by using larger and larger storage tanks, which can be left completely charged or discharged for long periods.

The University of New South Wales, in Australia, patented the sulphuric acid electrolyte vanadium flow battery in 1986.

An earlier German patent on a titanium chloride flow battery was registered and granted in July 1954 to Dr Walter Kango, but most of the development of flow batteries was carried out by US researchers in the 1970s.

Several large corporations, including Sumitomo, of Japan, have been working on vanadium flow batteries for years and, in China, the two that are scaling up their production are Dalian Rongke Power and Prudent Energy.

In addition to developing the Gibellini project, the five-year-old American Vanadium intends to pursue joint ventures and partnerships with international leaders in the vanadium flow battery sector and offtake agreements with steel producers for its early production.

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