London investors eye Bushveld Minerals as vanadium soars

EDINBURGH — Bushveld Minerals has failed to make a pre-tax profit over the past five years, but that's not deterring investors in the South African company listed in London. The BMN share price has been bounding steadily upwards over the past year, reflecting the rising price of vanadium. Bushveld Minerals describes itself as "a low cost, vertically integrated primary vanadium producer, with ownership of high-grade assets, supplying over three per cent of the global vanadium market". Vanadium is the latest beneficiary of the battery craze, says The Economist of the metal. – Jackie Cameron.By Thulasizwe Sithole.Surging prices for vanadium, a niche metal used to harden steel, have been a boon for London-listed Bushveld Minerals this year, helping fuel a share price rally amid a broader industry pullback. Now the South African company wants to target vanadium's growing use in another industry: batteries, with an ambitious target to manufacture the technology as the country's electricity grid moves away from coal-powered generation, says the Financial Times. ."But Bushveld faces a conundrum: while higher vanadium prices are good for miners, they are detrimental to battery makers, who need to further reduce their costs to make them economic for use on electricity grids. To solve this Bushveld hopes to lease the metal to battery companies as well as assemble the batteries in South Africa. It wants to build a $10m plant to produce battery electrolyte, backed by the state-owned Industrial Development Corporation..___STEADY_PAYWALL___."Under this model Bushveld guarantees a supply of vanadium at a fixed price in return for an annual fee and smaller upfront payment. When the battery comes to the end of its life after about 20 years, Bushveld receives the vanadium back, which it can then re-sell. The vanadium is completely re-usable, it says."."We think this concept is going to revolutionise the industry since it will take out arguably the single largest risk factor, which is the price," the newspaper quotes Fortune Mojapelo, Bushveld's chief executive as saying..The Financial Times notes that Vanadium has been one of the best-performing commodities this year, rising 166% to $128 per kg, thanks largely to a broad-sweeping environmental crackdown in China that has curbed some production. That has made vanadium miners some of the best-performing stocks this year, with shares in Bushveld up 415% and its larger rival Largo Resources up by 204 per cent. ."Bushveld reported profits after tax of £21.1m in the first half, up from £1.1m a year earlier. While more than 90% of vanadium is used in the steel industry, it is quickly finding another use in large so-called flow batteries. They work by storing energy in large separate tanks of liquid vanadium electrolyte that is then pumped through a stack of cells, causing an electrochemical reaction that generates electricity.".The pink paper underscores that the batteries have the advantage of being long-lasting and durable, which allows utilities to constantly use them for large amounts of energy. "As a result vanadium batteries have become an alternative to lithium-ion batteries produced by companies such as Tesla for the storage of intermittent renewable sources of energy.".The newspaper predicts that changing the cost from a capital expenditure to an operational expenditure will help the producer and the battery maker share some of the risk of the price fluctuations. However, analysts said there remained uncertainty about the future of vanadium batteries and their sensitivity to vanadium prices, even with a leasing model..Still, says the Financial Times, even if vanadium batteries make up 10-20% of the energy storage market by 2030, demand for vanadium could increase by between 30-50% from today's levels, according to CRU. "This is a critical time and we need to make sure as vanadium suppliers that we do support the industry," Mark Smith, chief executive of Largo Resources is quoted as saying. "But we do have to face the music here. The price of vanadium is so high it really complicates things." .Africa presents a huge opportunity for vanadium batteries, since many countries lack adequate grid infrastructure, says the FT. .Last month the World Bank pledged to lend $1bn to bring about a fourfold increase in developing countries' battery storage capacity. ."Bushveld, which heads the country's Energy Storage Association, is working with US manufacturer UniEnergy Technologies to deliver a battery to the country's main utility, Eskom. But it faces a highly competitive field if it wants to start manufacturing its own batteries. ."In July VRB Energy, a Chinese vanadium battery company backed by Canadian miner Robert Friedland, signed an agreement with the country's biggest vanadium producer Pangang Group to lease vanadium electrolyte," continues the newspaper.."Making vanadium electrolyte is a complicated process as the material needs to be free of any contamination," it quotes Philip Comberg, chairman of Boston-based vanadium battery maker Vionx Energy, as saying. "It's another step in the value chain," he said. "But some people know how to do it better than others."

London investors eye Bushveld Minerals as vanadium soars

Related Stories

Meet Tshepo Mahloele – Big Capitec shareholder, ABSIP’s “CEO of the Decade” now accused by Holomisa as kingpin of corrupt network

PREMIUM: Making of a great editor – the George Palmer playbook

Premium – BizNews global portfolio: ASML joins – so does Adobe as Bull takes hold again

Alec Hogg: Helen Zille predicts SA choice will be DA or EFF