TORONTO (miningweekly.com) – The developer of North America’s most significant vanadium project, American Vanadium, is considering repositioning itself from originally only being a primary high-purity vanadium producer, to being a supplier of electrolyte for use in energy storage systems, and to marketing such systems in conjunction with a technology partner, executive president Ronald MacDonald says.
Speaking to Mining Weekly Online from Vancouver, MacDonald on Friday said that while the company was focused on the permitting of its flagship Gibellini project, in central Nevada (which was about halfway complete), the firm would within months take a decision on whether to construct a vanadium ore processing facility on site, which would produce electrolyte for vanadium-redox flow batteries by the first quarter of 2014.
He said the move could secure initial cash flow for the company, by processing imported vanadium ores, adding that the construction of such a plant would be relatively uncomplicated, quick to assemble and would not be capital intensive.
The firm in February entered into a strategic association with German toolmaker and energy storage specialist Gildemeister’s subsidiary Cellstrom, to explore various joint venture (JV) and partnership arrangements focused on energy storage and micro-grid solutions in North America.
By producing reusable vanadium-redox flow battery electrolyte for use in these batteries, MacDonald said he believed the company would ensure a positive synergy between itself and the German technology partner, making it a first mover in the North American energy storage market.
The company’s electrolyte production would add a significant premium to the project’s primary product, which would potentially be used to supply its technology partner with low-cost battery fuel, in exchange for energy-storage technology marketing rights.
American Vanadium also planned to supplement its electrolyte production with ore from its Gibellini project, once it was fully permitted. The project’s ‘precious’ high-quality vanadium ore would be processed using a patented method that would result in low production costs.
The company was currently working on various business models that would be most suitable for Gildemeister and itself to formalise a working partnership, owing to German JV legislation being strict.
NEW MARKET
MacDonald said in the wake of devastating hurricane Sandy, New York was ready to hear about grid energy storage systems. He said both companies were doing work in New York to meet with senior state, municipal and transit officials to test the market.
“New York understands the growing importance for energy storage. Early indications are the city could invest in a 1.3 MW+ vanadium-redox flow battery energy storage facility,” he said.
MacDonald pointed out both companies were enthusiastic about investigating a redox-flow battery manufacturing facility in the US, which would give American Vanadium even more margin to leverage its primary vanadium product.
Cost had been identified as the single most critical barrier to adoption of this critical technology of the future. One of the business models the two cooperating companies were working on was to lease redox-flow batteries to clients, which would help to significantly reduce the cost of deploying the technology.
“Utilising Gildemeister’s fully developed and commercialised CellCube energy storage system and American Vanadium's stably priced supply of high-purity vanadium electrolyte, the companies together present a unique opportunity to cooperate in the US to rapidly supply the growing energy storage and renewable-energy market,” MacDonald said.
CHINESE LEADER
The West was only now catching up to a technology that had already – unexpectedly – been aggressively adopted by China.
China had started the new energy storage industry. China’s “soft target” was for 10% of all its power to be held in storage facilities in the next eight years, and MacDonald said it had to date achieved about 8%. What was significant about this was that it was not only storage for renewable energy, but for all the power that would be produced by 2020.
“What we in the West still think of as a future technology, has already been proven in China,” he said, adding that Cellstrom had also already commissioned 28 large-scale batteries.
MARKET DRIVER
American Vanadium CEO Bill Radvak last year told Mining Weekly Online he expected steel demand alone to drive the vanadium price towards $15/lb in five to eight years.
Currently, vanadium pentoxide is selling at about $6.50/lb, with forecasts that it was unlikely to change dramatically for a couple of years.
Mining Weekly Online previously reported the demand for the increasingly stronger steel prescribed by modern building standards and codes, as well as that its burgeoning use in new battery technologies had increased the demand for vanadium.
The transition metal, which is mainly produced as a by-product of iron-ore mining has, in recent years, seen a steady rise in demand from the steel construction industry as building regulations, especially in China, increasingly call for improved-strength and lighter construction materials.
More recently, however, the development of large-scale vanadium-redox flow batteries for use in energy grid storage applications is opening up a new demand stream for the transition metal.
Traditionally, the metal was used to strengthen steel products. In fact, about 85% of vanadium is used in the high-performance steel industry, that is, steel containing between 0.05% and 4% vanadium.
The other important use is in titanium alloys, where about 10% of vanadium, in the form of high-purity pentoxide, is converted into master alloys that are consumed in titanium alloy production.
Vanadium pentoxide is increasingly proving itself a versatile new player in the field of 'green' energy solutions.
American Vanadium’s flagship Gibellini project had a National Instrument 43-101-compliant resource of 131.36-million pounds of measured and indicated vanadium pentoxide grading 0.28%, and 48.96-million pounds of inferred vanadium pentoxide grading 0.17%.
American Vanadium’s TSX-V-listed stock on Friday closed at 88 Canadian cents apiece.