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Leasing models for the win
One way to do this is through a vertically integrated model, utilised by producer Bushveld Minerals and its battery subsidiary Bushveld Energy. Australian Vanadium has a similar strategy with its battery subsidiary, VSUN Energy.
This vertical integration means certainty around vanadium supply and consumption once AVL’s flagship vanadium project is in production.
AVL managing director Vince Algar says if battery producers can lease vanadium, or secure its supply at “reasonable” prices, then it makes for very low costs per kWh over the asset life compared to lithium-ion.
The important thing about the leasing model is that it is unaffected by fluctuating vanadium prices. And it allows the producer, battery maker, and financier all to benefit, says Algar.
“The producer receives market prices. The battery maker is then able to sell units with vanadium only as a regular opex lease cost, hence offering a much lower cost of installing the unit,” he told Stockhead.
“The bank [or financier] has a long-life productive asset that generates revenue. This three-way structure will suit installation and financing of very large systems.”
VRFB installations are cracking on regardless
There are more than 100 operational vanadium redox flow battery installations globally, and this number is increasing by the day, according to industry group Vanitec.
There have been a number of big announcements on May alone.
In the US, California has launched a four-year pilot project testing the performance of vanadium flow batteries in the commercial wholesale market.
The pilot will provide 2MW/8MWH of storage – enough to power 1000 homes for four hours. A successful outcome could lead to the development of grid-level vanadium storage on a large scale.
In South Africa, vanadium producer Bushveld Minerals’ energy subsidiary, Bushveld Energy, is testing its first utility-scale vanadium redox flow battery (VRFB).
Bushveld Energy reckons VFRB tech is a front-runner to meet South Africa growing need for energy storage. It’s preparing to tender for the massive 360MW/1440MwH battery energy storage systems (BESS) project launched by Eskom, the countries biggest electricity provider.
Most recently, Canadian company Cellcube Energy Storage Systems signed a letter of intent with Pangea Energy to build a grid-level 50MW/200MWh energy storage system in Port Augusta, South Australia.
This is a step change development for the VRFB sector in Australia.
“The Pangea storage project is a wonderful example on how renewable power generation and a safe, reliable and sustainable energy storage technology such as the VRFB are a perfect symbiosis to provide renewable baseload today,” says CellCube chief executive Stefan Schauss.
“Our new high performing CellCube is three times more efficient than any Power-2-X or Hydrogen technology, which will not be available at this scale in the next 3 years.
“CellCube also offers a li
Good info for those looking in YTSS
Part1
Stationary storage is going to be big business.
By 2040, BNEF reckons the global energy storage market will grow to a cumulative 942GW worth about $US620 billion in investment.
Vanadium redox flow batteries (or VRFBs) are expected to grab a big piece of this pie, because they are a perfect fit for large scale stationary storage — even better than lithium-ion in a number of ways.
How much vanadium could these batteries potentially soak up? A lot.
Last year, consultancy Mastermines worked out that the proposed Dalian battery in China (which is the size of a city block) would use roughly 80 per cent of Australian Vanadium’s (ASX:AVL) production for a year.
Now vanadium prices have retreated well off last year’s peak of $US38/lb, VRFBs could kick off in a big way.
But industry analyst Terry Perles says vanadium production – 90 per cent of which is used to strengthen steel — continues to lag demand. This means volatile pricing is set to continue for several years.
“We do believe that once the mills have exhausted the inventories built in late 2018, we’re going to see a significant increase in buying from the Chinese steel mills,” Perles says.
“We do believe that we’re going to see the price very soon move back above this $US15 per pound of V2O5 support level. And we do think that there’s going to be a very turbulent environment.”
China’s steel industry uses over 90 per cent of vanadium production. Pic: Getty
Jeremy Read, managing director of explorer Pursuit Minerals (ASX:PUR) says the small-but-growing VRFB market threatens to push the vanadium market further into deficit.
“That component is 3 to 4 per cent of the market and growing at about 60 per cent per year,” Read says.
“That small component can pretty rapidly grow to 10-15 per cent of the market; that represents a new mine’s worth of output.”
So, what can the VRFB sector do to hedge against volatility going forward?
Pricing certainty is key
Ian Prentice, managing director of advanced vanadium player Technology Metals Australia (ASX:TMT) says VRFB uptake relies on two key things.
“One is getting the price to a level where the economics are viable again, and we are now at that point,” says Prentice.
“Two, VRFB companies must be engaging with suppliers — including advanced explorers — around volume and price.”
These batteries can be huge, which is why it’s important to get certainty around supply and pricing.
“If you look at some of the large battery projects over the last few years – they didn’t do this, and that caused those projects to be delayed when the vanadium price ran up,” he says.
“That will be a big driver — the relationships between suppliers and VRFB groups.”
Leasing models for the win
One way to do this is through a vertically integrated model, utilised by producer Bushveld Minerals and its battery subsidiary Bushveld Energy. Australian Vanadium has a similar strategy with
Agree BBN, the Brits resource is driven to ultimately feed into Vametco or Vanchem to drive costs even lower. BMN is already one of the lowest cost producers in the world and they have a serious ambition to drive lower. Which is fantastic business model for business and shareholders. But what if they have another goal of processing from Brits also or certainly expansion at or between Vametco and Brits? Vanchem has 3 Kilns and Vametco 1. Maybe Vametco/Brits will expand to 2 or 3 over coming years as the resource there is now immense!
The BMN vanadium resources are quite incredible. 2 plants producing with massive resources to go at for not years, not decades but literally into hundreds of years!! The fundamentals get better and better.
Your on the money deanosbooty, deals will intensify, its inevitable... https://youtu.be/kIbEj1CIpuU
We see VRFB news growing now all over the world. There are some hot spots obviously. I'm hoping for a sneaky BE contract deal in Saudi. With there wealth and ambitions I think that would set the cat among the pigeons. Deals are happening behind the scenes with BE and the delivery of those deals will intensify over the coming weeks and months. And I don't think as we've just had RNSd that those deals will be all within SA. US, SA, Saudi...its coming together.
Haha was just thinking the same. I suppose we have researched BMN to the far end if a f....! But the great thing about BMN is that the BOD seem to throw in a curve ball (positive) when we are all sleeping! Another BE deal anyone? Eskom tender by middle of 2019...erm where are we at now? Mokopane curve ball...
That's certainly interesting Bella...not seen that info Just shows what potential deals will be waiting in the wings. Think some of them are going to get fired up fairly swiftly now. I did suspect a BE deal before any Eskom news, even more pleasing that it is in the US. Highly probable that BE will release more before Eskom. Made total sense to me this way round as previously posted.
It was very nice to see the BE news as BMN now have Leasing model for USA. What are thoughts on Eskom contracts...as its fully funded for initial phase, will it be upfront payments from Eskom or leasing model again. I'm siding towards upfront payments as its fully funded?
Another milestone reached today with BE news, all comimg together very nicely. Agree with Loudspeaker that the short isn't going to plan. They have looked at V prices alone and considered nothing else with BMN....poor move imo. We've had Vanchem deal announced and now BE electrolyte deal. All looking incredibly positive. More deals to come with BE I expect. They're going to have problems buying all those shares back now with the news flow as it is.
Kev, I to haven't got my head around why that particular company announced what they did regarding that deal. BE were quick to put it to bed, but it still intrigues me as to why they went public on that announcement. I cant find the details of it now, but it still puzzles me. It's like you say, that they maybe got a little carried away in publishing something ahead of firm deals. What we did learn is that BE are in 'discussions with hundreds of companies'; so law of averages suggests that there are some significant projects getting lined up! We just need one to light the touch paper here. And by one not necessarily Eskom first.
Sure BBN wont mind showing the current situation again. Very interesting bit of sleuthing! Over the last 6 months or so I have been following the Chinese consumption/production figures as closely as I can. What has been clear during that time is that whilst Ferro-vanadium and Nitrogen stocks have been fairly good due to customer demand falling in the first part of this year, the supply of V205 has remained fairly tight and there has always been more V205 used than produced in China. Each month (nearly) Ferroalloynet produce a report on Vanadium consumption and to date this year it has produced the following known details. Jan 2019 - 1,330 ton deficit. Feb - 200 ton deficit March - Approx 1,000 ton deficit April - 100 tons surplus May - 1,478 ton deficit. Here is the May update for clarity. I should note that from the above data only May includes export quantities, the other are all calculated by myself from the formula used by Fewrroallynet in their reports. So the reality is the deficit is likely higher. https://www.vanadiumprice.com/vanadium-consumption-analysis-in-may-2019/ According to the latest report the Chinese market was short a whopping 1,458 tons of V205 in May alone. That is a significant amount of V205 but for the first 5 months of this year we are talking minimum 3,900 tons of V205 that downstream producers in China have had to find. For me the supply has come from inventory run up during the latter part of 2018. There could be some importing going on but that should reflect itself in the European V205 price which it doesn't. Whatever is the true source what I can say is that the stocks of Chinese Ferro-vanadium are still lower than the YOY position and that position allowed prices of over $70 per kg to exist. So it won't take very much demand to wipe out those stocks and push the downstream producers to demand even more V205. China may be resilient but even it cannot continuously withstand a circa 9,400 ton deficit in V205 over the course of 2019. Something has to give at some point and I whilst i don't wish to see high prices again, there is no getting away from the realities of the market, and that market in China at least, is pointing to a significant shortage of V205.
Great set of posts BBN. BMN is on track to set alight the market with BE. Those Eskom tenders are getting very close now, and think it's going to catch a few out. I still feel we may well get other news on BE before the main event though. BE is now that close it is no longer a long term investment, it is fast becoming short to medium term play with much bigger potential longer term.
Like I've posted previously, I think an early announcement on a BE contract is highly likely. I say early in respect of the ESKOM tenders. Its hard to imagine that, by MN own words "we have had talks with hundreds of companies" that BE wont be very close to signing off on one or two!!
Indeed, what a couple of days that has been. Don't think I've seen anything quite like that in BMN, have seen in other stocks though. Very very difficult to keep hold in testing days like that, so we'll done if you did. It was a ferocious short attack that most LTH's were prepared for, as best could be obviously! What was it just posted about iron ore prices at $100 US tonne. I believe we have in excess of 1 billion tonnes in ground. Maybe we'll get shorted on Iron ore prices one day when were mining that as well. Point been that the assets BMN has is phenomenal, don't just think about short term V prices. As FM said medium and long term the outlook is very strong.
Have a think about what your BMN shares give you access to in the markets!
WORLDS LARGEST AND HIGHEST GRADE VANADIUM RESOURCE
VANADIUM MINING
VANADIUM PROCESSING
ELECTROLYTE MANUFACTURE
VRFB ASSEMBLY
VRFB PROJECTS
ENERGY PROJECT INVESTMENTS SOLAR AND WIND
IRON ORE
PHOSPHATE
TITANIUM
TIN WITH AFRITIN
LITHIUM WITH AFRITIN
COAL WITH LEMUR
POWER PLANT WITH LEMUR
owt else?
I would say PI's are getting robbed at these prices if selling now. The drop from the 30's after Vanchem announced was crazy. Giving them away now. BMN is doing everything right to be a major player in Vanadium and Energy with VFFB business. I have no doubt at all that we won't be sold in the billions, and yet people get spooked out of shares for a pittance of what will be true value. Hold or buy on the dips as they say. This will reverse very soon imo. Seriously undervalued with broker targets between 45p and 90p just on Vanadium side.