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Thankyou all for your thoughts on the tender yesterday: they broadly support my take on how Fortune has positioned BMN. It feels as though he has been building towards this for a very long time. Even the long-term ramp up of processing seems to have been timed to coincide with SA's battery storage 'revolution.'
Can a clever person please confirm or refute the following: phase 1's 840MWh will require c. 4000 MtV @ $30,000. How much will we charge for converting that into electrolyte? If the value of vanadium is about half the battery's cost, the capital value of phase 1 will be c. $30,000x4000x2= a very big number + 5 years of maintenance. Can BMN work this from cashflow or will they need to borrow or raise to implement it? The numbers make Invinity and Enerox look like chicken feed. I expect Fortune will keep all his cards very close to his chest until it is a done deal but the potential just in phase 1 is mind-boggling.
@Snott - all the answers to amounts needed are regularly posted and calculations are on The Bushveld Perspective.
As for the electrolyte value add - who knows, but there was a discussion a few weeks ago that suggested a vanadium price of $30 and an equivalent electrolyte cost of $50, but who knows. I personally would not expect large installations to buy the electrolyte but to lease it. For smaller applications (I am guessing the small container 50-100kw variety) then full sale will be the order of the day as leasing admin costs may well be high proportionally, but for larger installations then leasing is surely the majority way to go.
And just line the automotive world, the OEM sells the product on to a leasing entity. Bushveld Minerals and Busheveld Energy will not be financing and carrying the risk (would make no sense to me). The third party 'Bushveld leasing' entity raises the capital to purchase the electrolyte, and charges a leasing cost. I would expect an element of the profit to find its way into BE ultimately.
It is the way more than half the automotive world operates - anything other than this way the cashflow and risks would bankrupt most OEMs very fast.
There is a great BE upside, but unless (as I don't expect) BE actually raises the finance and does it all, then best stop thinking of a pyramid of exponentially growing cash flows .. just solid growing cashflows and profits with limited risk.... it is a dig stuff up, sell to BE, add value by making electrolyte and sell on business (with a future kickback of shared profit)
I could be wrong, but the astronomic sums in 3-5 years would give a real problem raising in a junk-status SA.. and why take the risk ?
Thanks faramog. I read this: https://www.thebushveldperspective.com/blog/public-articles-1/post/bushveld-energy-your-time-has-now-arrived-355
The leasing of electrolyte means the big number on the tender is flexible and depends on the 5 year maintenance and leasing cost. Whichever way I crunch the numbers, the potential value to BMN of the Eskom tender makes my eyes water. If the leasing company buys c. 4000 MtV-worth of electrolyte from BE @ $50,000 per tonne that would create $200 million revenue to BMN. Add the (presumably Eskom) battery hardware and maintenance. I don't think I can count that high. Faramog, would you like to hazard a guess as to the total capex?
Lots !!!!! ... is as far as I get.
Just remember, only a slice of it is really Bushveld revenue .... but it is the incremental growth over the years that tots up the company NAV ... whatever way you look at it, 8,400 MTV just sold into steel alone at $30 is over $100M NET profit. Sell some (a lot) of that into BE and the added values tick right up. Not very hard to see $200M NET profits with incremental revenue streams in 5 years time.
And that is just the baseline of it. Whatever way you look, our NET profit will likely exceed current MCAP in 3-4 years time. It is not outlandish, ramping or naive to see the SP being 10x plus in 3-5 years (or less if markets get on board)
One thing about TBP calcs, things have moved on a tad and stack efficiencies are better. Not sure how much that alters the amount of Vanadium required for a given system size. I vaguely recall Alfa mentioning about it a few days ago, but efficiencies will increase capacity and decrease the capex and opex as systems deploy
ZA-ESKOM-144797-CW-RFB / Package 1 - Design, Engineering, Supply, Construction, Installation, testing and Commissioning of Battery Energy Storage System (BESS) including 5 Years Plant Operation and Maintenance Services at Eskom Skaapvlei Sub-station
Estimated Amount (US$)
169,960,000
http://documents1.worldbank.org/curated/en/820951593281194298/pdf/South-Africa-AFRICA-P116410-Eskom-Investment-Support-Project-Procurement-Plan.pdf
Good find Floyd81.
Based on MWh, that makes phase 1 worth a total of $434m.
Sorry Floyd, I clicked on the link and it took me to an historic list of costs for transmission line installation unless I missed something. $170 million seems too cheap for 840MWh of storage let alone 5 years of maintenance aswell. Any other offers?
Snott - see line 16 of the procurement plan.
mogwhy, thanks: I'd missed it amongst the chaff. Found it now.
@ Snott,
The Estimated amount of US$ 169,960,000 is referring just to Package 1 @ the Eskom Skaapvlei Sub-station only.
Package 1 – Skaapvlei (Western Cape Vredendal) Substation. ?Design Supply and Installation (DS&I) and commissioning of Battery Energy Storage Systems (BESS) for a minimum of 80MW/320 MWh usable capacity at Skaapvlei Substation, including 5 years of operations & maintenance (O&M).
Package 2 – Melkhout (Eastern Cape) and Pongola and Elandskop (KwaZulu Natal) Substations. ?Design Supply and Installation (DS&I) and commissioning of Battery Energy Storage Systems (BESS) for a minimum of 35MW/140MWh at Melkhout, 40MW/160MWh at Pongola and 8MW/32MWh at Elandskop including 5 years of operations & maintenance (O&M). ?
Package 3 – Paleisheuwel, Graafwater and Hex (Western Cape) Substations. ?Design Supply and Installation (DS&I) and commissioning of Battery Energy Storage Systems (BESS) for a minimum of 10MW/40MWh at Paleisheuwel, 4.5MW/25MWh at Graafwater, and 20MW/100MWh at Hex including 5 years of operations & maintenance (O&M).
Floyd81, Thankyou for the detail. You would almost imagine that the tender packages are being drip-fed to the market in portions that BMN can manage as their capacity increases: 1440 MtV for package 1; 1386 for package 2; 743 for package 3. As mogwhy estimated, $434 million for all three packages that can be extrapolated from the World Bank's estimate of $170 million for package 1. It's clear that Fortune has been gearing up for this moment. Fly my beauty!