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Cal. That post is a brilliant insight. Thankyou for the genius of your contribution. Rather like saying if you changed your avatar to Richard Head, you'd become a............
It's hard to believe BE would go to all the trouble of building an Electrolyte Plant for $10m if the sale of their product is restricted by volatile, uncontrollable fluctuations in vanadium prices. That's why increasing their capacity and other competitors coming into production are not the enemy as they can help deal with supply/demand and help peg the price.
Calamari going back to the niobium issue in case you are in any doubt I did not ask if there are other types of flow battery than VRFBs. I specifically asked if Niobium could be substituted for vanadium in a Vanadium Redox Flow Battery. The answer is no because only vanadium can be used where both sides of the flow battery use the same electrolyte. Alfa gave a specific and very simply explained answer.
I hope that draws a line under this strand.
Calamari you really do have to read Alfa’s post carefully. It is self explanatory.
As for leasing models and their effectiveness we have a very simple difference of opinion. What we have in common is that we are both just punters making an investment. Neither of us are experts nor work in the industry.
I would point out that those who are experts and or work in the industry seem to view leasing models as one promising way forward to overcome volatile vanadium prices. That is good enough for me.
I respect your opinion Calamari but time will tell. As we are both invested in BMN (?) you better hope I am right as V prices look set to increase.
Little bit of memory lane here. I noticed this comment on Shares Magazine re best performing shares of 2018 and briefly analysing the reasons:
“BUSHVELD MINERALS +394%
Talk about a radical transformation. For years Bushveld Minerals (BMN:AIM) was a bewildered multi-commodity business dabbling in vanadium, titanium, tin and coal. Investors weren’t really interested as many of the relevant commodity prices were in the doldrums and exploration projects were completely out of fashion.
Fast forward to the end of 2017 and everything changed. Bushveld went from being a minority shareholder in the Vametco vanadium mining operation to a 59.1% owner (since increased to 74%). That meant Bushveld was seen as a proper operating business rather than an explorer and investor.
All this happened against a backdrop of soaring vanadium prices, helping to explain why its share price has done so well.
Bushveld believes it can improve productivity to further enhance earmings.”
I wonder whether a similar comment may be required at the end of 2021 and what it’s content would be? H2 certainly has the potential to be a very exciting time for Bushveld shareholders.
Calamari when you wrote the following I think you are misquoting Alfa:
“Alfa, however, is wrong to say that there is no competition for VRFBs. And regardless of the leasing model, much higher V prices will risk impacting VRFB demand.”
He did not say there is no competition for VRFBs. He was responding firstly to a question from me about whether Niobium could be substituted for Vanadium in a VRFB. I thought not and he confirmed, adding that only vanadium can be used to make the same electrolyte both sides of the battery. At no point did he suggest there is no competition for VRFBs. Here is the exact quote:
“nothing is a substitute for Vanadium in flow batteries. Only Vanadium exists in 4 different valence states in aqueous solution so only Vanadium ions can be used to make a flow battery in which both sides of the flow battery are the same electrolyte.”
Alfa’s only other comment today was a direct response to cryogenic energy storage. Nothing to do with the point you made.
I think you owe Alfa an apology for that misquote.
You are correct to suggest that excessively high Vanadium prices may risk slowing down the uptake of VRFBs (by the way that would be somewhat higher than today!!). However the very point of the leasing model is to offset that risk by spreading the electrolyte cost over the lifetime of the VRFB rather than an upfront cost and also being able to take into account the residual value of the electrolyte at the end. This will greatly affect the commercial viability of VRFBS in a very high Vanadium price scenario. I believe this model will be widely adopted throughout the industry but BMN are already one step ahead. I think you are underestimating the effectiveness of this strategy but time will tell.
BMN only need a proportion of the global VRFB industry to do very nicely thank you very much.
don't forget the iron ore that's worth a fortune on it's own!
When you think that the market cap stayed around £210m throughout the first quarter of 2021 at more or less breakeven FeV prices and I think I read previously that it would cost something like $600m to set up an operation like Bushveld has...
It really emphasises how undervalued the company is at a piddly £180m.
What’s happening now is so reminiscent of 2018. Strategic seller overhang. V prices rising. Absence of institutional investor support. We need to get through the 2020 accounts/p&l which will look a little ugly and get some clarity on operational execution this year and beyond. Once the market is convinced, the Largo comparison shows you what can happen to the valuation
Probably just waiting for production confirmation IMO
Some major investor or ii will jump in and squeeze the shorters out and this will rocket.
Some decent buying this morning. Looks like the 1.3 million sell yesterday afternoon was bought up in first 40 minutes or so of trading today (if that overhang was even still present)
To V or not to V, that is the question….
From SP Angel Note 11th June 21
‘Media coverage of the wobbly skyscraper at SEG Plaza in Shenzhen serves to highlight the importance of using good quality structural steel with the proper vanadium content as ‘quench & tempered’ steel is brittle and might have failed by now. Experts believe China’s very rapid building techniques are partly to blame for the wobble in the structure’
Panic: Massive China Shenzhen SEG Plaza Skyscraper Starts To Shake
https://youtu.be/fotXoJCEja8
https://youtu.be/_1SCdu2oB8Q
Utterly bizarre that price rises, which convert almost entirely to profit for BMN, are not serving to increase the SP.
Thanks for that confirmation Alfa
Thanks Alfa.
I think the leasing model ('electrolyte as a serviice') is a master stroke for BMN, but not just because of the Vanadium price uncertainty. Having read this and that, capital expenditure (and interest on borrowing) is a biggee in terms of not only installing new renewables installations, but also refurbishing/modernising pre-existing ones. And surely this relatively new model will start to look ever more attractive as costs of competing systems are weighed-up.
I believe a lot of the Niobium substitution did not change back to Vanadium, certainly for a while anyway I think I read from Roskill somewhere, plus the tests are being more vigorously enforced by China now so where v is needed it must be used. Coupled with suspicions that coproduction is at full capacity China we are unlikely to see the price tamed by factors other than demand and or China price setting somehow.
Pdub,
nothing is a substitute for Vanadium in flow batteries. Only Vanadium exists in 4 different valence states in aqueous solution so only Vanadium ions can be used to make a flow battery in which both sides of the flow battery are the same electrolyte.
The leasing model is specifically designed to offset volatile Vanadium prices. Fortune and Mikhail were very aware of the potentially damaging effect of very high V prices on VRFB development. That is why they developed the leasing model with Avalon. Expect to see others developing similar strategies to maintain the forward progress of the VRFB industry.
BMN have positioned themselves perfectly to benefit whatever the V price, either through selling direct to steel industry which at present is looking very profitable and increasingly so, or through energy storage.
As for Niobium substitution it’s price is also high so unless V prices go ballistic like in 2018 I don’t see this as a problem in the near term, and unless I am mistaken niobium is not a substitute for vanadium in flow batteries (Alfa or anyone can you confirm?)
I believe we are beginning to see the result of the excellent strategic planning of FM and MN, who seem to be a step or two ahead of many in the industry. External events (COVID and 2019 V price collapse have slowed things down but with Governments looking at infrastructure projects to lead COVID recovery, increasing demand for steel, greater interest in renewable energy and battery storage to help combat climate change and strong upward pressure on Vanadium price due to increasing demand but slow response on the supply side …. Well we seem to have the ingredients of a perfect storm for those companies well placed to take advantage.
And BMN must be right at the top of that list.
Again just my opinion.
HC, just trying to understand a bit more than I do at present.
Was wanting to know if the substitution was still allowed? If so the v price spike maybe subdued compared to last time. This wouldn’t be a bad thing as would lead to more sustainable prices, more sustainable profits and SP price.
If BMN are going to be in a position of sustainable profits in the near future I will be increasing my investment here!
An average V price of $46.5 should lead to a net profit in excess of $100m in 2022. Good times ahead.
Until BE actually sees some action the price rises are very welcome as there is nothing BE related o affect high prices yet. This is the great hedge of the concept and if VRFB do take off then the leasing model should help.
Monkey you're getting rather ahead of yourself, right now we are at the V sweet spot, it's a bit premature to be speaking of niobium substitution.
BMN SP will follow v price at some point, maybe a coiled spring affect due to seller.
Pdub, last time the v price wasn’t sustained due to replacement in China steel production of the inferior nobibium ( hope I have that right?), will this be the case this time around?