Member Info for LionelGreen

FYI, reply received within the hour.
Cordially
Lionel

Thank you, Libero.

I tried to email BMN this morning, and the mail to the standard www email address (info@) bounced with the very unhelpful message below. I used both a gmail and another major email server. Anyone else had the same problem, and can anyone help in providing an alternative contact address? Tnx

Your message to info@bushveldminerals.com couldn't be delivered.
The group info only accepts messages from people in its organization or on its allowed senders list, and your email address isn't on the list.

Q. Is there a risk that if the price of vanadium rises excessively, substitutes (notably niobium) could take their place?

This is a question which re-surfaces from time to time, and which merits a considered reply.

I will consider the following topics:
(1) what is Bushveld Minerals' position?
(2) what does the addition of vanadium do to steel, and are there alternatives?
(3) could a manufacturer of steel simply or economically switch from vanadium to, say, niobium?
(4) would niobium represent a more secure, less risky, or more economically motivated additive?
(5) conclusions

(1) Bushveld Minerals position: the company's position on the possible use of niobium (Nb) has been mentioned on various occasions but (at least to my knowledge) without much substantive detail. For example, in their webinar Vanadium 101 (which aired on 3 May 2018, and was until recently at least still linked from the front page of the Bushveld Minerals www site), they considered explicitly the substitution threat from Niobium (slide 57): which they stated as being "present as a risk, but perhaps not too significant and risk considered manageable." This is, by itself, of course, not particularly convincing.

Use of Nb in place of V (2a/5)

(2) What does the addition of vanadium do to steel, and are there alternatives?

(a) The basics of steel
We need to step back, and look at the nature and properties of steel, and understand the role of additives in general. I will take some of this introduction from the wiki article on steel, but emphasise that this is only an outline of a vast and complex field, resting on the twin pillars of theoretical physics and chemistry, and empirical measurements. To illustrate this complexity, one of the 83 Max Planck (research) Institutes in Germany, the Max Planck Institute for Iron Research in Dusseldorf, conducts basic research on advanced materials, specifically steels and related metallic alloys, and employs 300 people.

Steel is an alloy of iron and carbon, and sometimes other elements. Because of its high tensile strength and low cost, it is a major component used in buildings, infrastructure, tools, ships, automobiles, machines, appliances, and weapons (see wiki/steel).

Iron is the base metal of steel. Iron is able to take on two crystalline forms (allotropes), body centred cubic (BCC) and face centred cubic (FCC), depending on its temperature. In the body-centred cubic arrangement, there is an iron atom in the centre and eight atoms at the vertices of each cubic unit cell; in the face-centred cubic, there is one atom at the centre of each of the six faces of the cubic unit cell and eight atoms at its vertices. It is the interaction of the allotropes of iron with the alloying elements, primarily carbon, that gives steel and cast iron their range of unique properties.

In pure iron, the crystal structure has relatively little resistance to the iron atoms slipping past one another. As a result, pure iron is quite ductile, or soft and easily formed. In steel, small amounts of carbon, other elements, and inclusions within the iron act as hardening agents that prevent the movement of dislocations that are common in the crystal lattices of iron atoms.

The carbon in typical steel alloys may contribute up to 2.14% of its weight. Varying the amount of carbon and many other alloying elements, as well as controlling their chemical and physical makeup in the final steel (either as solute elements, or as precipitated phases), slows the movement of those dislocations that make pure iron ductile, and thus controls and enhances its qualities. These qualities include such things as the hardness, quenching behaviour, need for annealing, tempering behaviour, yield strength, and tensile strength of the resulting steel. The increase in steel's strength compared to pure iron is possible only by reducing iron's ductility.

Another term useful to introduce here is austenite, also known as gamma-phase iron, which is a metallic, non-magnetic allotrope of iron or a solid solution of iron, with an alloying element.

(b) The effect of alloying elements on steel properties
see http://www.substech.com/dokuwiki/doku.php?id=effect_of_alloying_elements_on_steel_properties
Alloying is changing chemical composition of steel by adding elements with the purpose of improving its properties as compared to the plane carbon steel.

There are six principle properties of steel which can be modified by the addition of specific alloys:
* Stabilizing austenite: increasing the temperature range, in which austenite exists. Elements relevant: Ni, Mn, Co, Cu
* Stabilizing ferrite: decreasing the temperature range in which austenite exists. Elements relevant: Cr, W, Mo, V, Al, Si
* Carbide forming: elements forming hard/complex carbides, increasing steel hardness and strength. Elements relevant: Cr, W, Mo, V, Ti, Nb, Ta, Zr
* Graphitizing: decreasing stability of carbides, promoting their breaking and formation of free graphite. Elements relevant: Si, Ni, Co, Al
* Decrease of the eutectoid concentration. Elements relevant: Ti, Mo, W, Si, Cr, Ni
* Increase of corrosion resistance: elements form thin a strong oxide film on the steel surface, protecting it from chemical attacks. Elements relevant: Al, Si, and Cr

(c) Alternatively, we can summarise the characteristics of alloying elements:
Manganese (Mn): improves hardenability, ductility and wear resistance.
Nickel (Ni): increases strength, impact strength and toughness, impart corrosion resistance in combination with other elements.
Chromium (Cr): improves hardenability, strength and wear resistance, sharply increases corrosion resistance at high concentrations.
Tungsten (W): increases hardness particularly at elevated temperatures due to stable carbides, refines grain size.
Vanadium (V): increases strength, hardness, creep resistance and impact resistance due to formation of hard vanadium carbides, limits grain size.
Molybdenum (Mo): increases hardenability and strength particularly at high temperatures and under dynamic conditions.
Silicon (Si): improves strength, elasticity, acid resistance and promotes large grain sizes, which cause increasing magnetic permeability.
Titanium (Ti): improves strength and corrosion resistance, limits austenite grain size.
Cobalt Co: improves strength at high temperatures and magnetic permeability.
Zirconium (Zr): increases strength and limits grain sizes.
Boron (B): highly effective hardenability agent, improves deformability and machinability.
Copper Cu: improves corrosion resistance.
Aluminium (Al): deoxidizer, limits austenite grains growth.

In summary, while niobium (as well as tantalum) is a recognised carbide-forming element, and therefore contributes to steel's hardness and strength, the properties of steel are complex, and no simple substitution of one element by another can guarantee that the resulting properties of steel will meet the various and stringent requirements imposed by the construction industry.

(3) Could a manufacturer of steel simply or economically switch from vanadium to, say, niobium?
In a post by Alfacomp on 16 January 2019, he quotes from a reputable industry insider as follows:

"Vanadium and niobium impart higher strength in carbon steels through very different metallurgical processes. Vanadium has high solubility in carbon steel and stays in solution while the steel is being rolled, only precipitating as a carbide or carbonitride after the steel is rolled and on the cooling table. The precipitation results in increased strength primarily through precipitation hardening but also as a result of grain refinement that occurs due the presence of the precipitates. Increased strength is not process related but rather linear to the vanadium content of the steel Niobium has low solubility in carbon steel and this feature is used to produce fine grain steel where the majority of the increased strength is due to grain refinement. Nb precipitate during the TMCP rolling process causing fine grain steel to be produced. The strengthening effect is primarily due to grain refinement and is process dependent.

The mill processing requirements for Niobium are much higher - you need a reheat furnace that goes up to 1200 deg C. Most bar mills have a reheat furnace that only goes to 1050 deg C. Also for the Niobium process you need a high power rolling mill that can produce a minimum of 50: reduction in cross section on each pass through the rollers (this is a big difference from Vanadium)."

(4) Would niobium represent a more secure, less risky, or more economically motivated additive?

Two earlier posts on the LSE BMN board have considered this question, and the following is based on the posts of PatientVulture on 28 September 2018, and Alfacomp on 16 January 2019. Some further background is given in the following March 2017 Roskill market report:
https://roskill.com/news/niobium-continues-attract-investment/

For niobium, there are currently three main suppliers:
* CBMM in Brazil, which now has a 30% ownership by Japanese/Chinese/Korean investors (possibly an investment/off-take arrangement)
* CMOC in Brazil, in which China Molybdenum bought out Anglo American's interest in this mine in 2016.
* The private equity firm Magris, who bought out a niobium mine Niobec in Quebec that the gold miner IAMGOLD had picked up in another transaction and wasn't interested in keeping as it didn't fit its gold portfolio.

The market shares (according to Roskill) are CBMM 73%, Magris 15% and CMOC 13%. So this represents a tight little oligopoly with CBMM being the swing producer. The Roskill article suggests that the niobium tap could be opened up in terms of production. The big question is whether CBMM will allow niobium to follow vanadium up in price and so make supernormal profits, or whether they will push more niobium into the market and so take market share from vanadium.

As stated by Alfacomp on 16 January 2019: "90% of the world's Niobium comes from a single mine in Brazil. If I was a steel mill owner I would be very wary about going to lots of trouble to introduce a new process and spend money on new processing equipment if that relied entirely on a single mine outside of my control. Fine maybe I'd consider it if I already had the equipment sitting around and staff that knew how to run these different processes, but if not, then no chance; I and every other mill owner will just have to just suck up the extra cost of Vanadium, like we would if it was an increase in the price of iron ore, or energy."

(5) Conclusions
We may conclude from the above that:
1. it is not necessarily obvious that substituting Nb for V will result in steel with the required properties
2. the steel manufacturing process would require (possibly substantial and costly) changes to accommodate any switch to niobium
3. it is not evident that a switch to niobium would represent any advantages in terms of security of supply or handle on cost

“The most important thing [is] trying to find a business with a wide and long-lasting moat around it … protecting a terrific economic castle with an honest lord in charge of the castle,” Buffett said.

I was thinking.

I reckon we got ourselves a moat. And I reckon we got ourselves an honest lord in charge of the castle.

So, Berkshire Hathaway... are you in?

Anyone here know Warren? Just in case he's not yet caught up with BMN, I mean.

cordially
Lionel

Warren Buffet quote 1: Warren Buffett believes the “most important” factor to pick a successful investment is judging the durability of a company’s competitive advantage or so-called “moat.” “The most important thing [is] trying to find a business with a wide and long-lasting moat around it … protecting a terrific economic castle with an honest lord in charge of the castle,” Buffett said.

My thoughts concerning BMN and the present status:
1. I am very impressed with both Fortune's and Mikhail's abilities, vision, achievements, connections, and (as far as I can judge) integrity.
2. This board has many really excellent contributors, who are truly helping all serious investors. Let's all continue to use it as such.
3. I believe that BMN is a VERY STRONG buy on some indeterminate timescale, and I am as frustrated as the next concerning the current SP.
4. I try to ignore comments which refer to a predicted SP today, tomorrow, next month, or next year. Can we really have any idea how far or how fast this will move?
5. I ignore all references to "coiled springs" and the like, to suggestions that this will jump once X happens or when Y happens, and to technical analysis (sure, it has its place, but not in my long-term investment strategy). They are comments that often lead to disappointment (even when sometimes true).

So, can I be simultaneously deeply impressed by Fortune, and at the same time argue that he should be doing much better with obvious things like comms, or by selling off Lemur, or by trying to follow FAR or Largo with their own style of PR strategy? Perhaps he's not thought of selling Lemur? Or getting moving with JSE? Come on!

For what it's worth, and it's probably not worth much, I believe that Fortune has a big agenda which is in the processing of unfolding. It must embrace Vanchem, Mokopane, ESKOM and South African politics, Chinese demand, electrolyte manufacturing and leasing, offtake agreements, AIM and JSE listing, and probably loads of other things as well.

So, I am working on the assumption that he is playing a long game, working on deals, agreements, and plans, and that it is not in BMN's (and therefore our) current interest to lay all his cards on the table at this time. Of course if there are developments with financial implications, he has to report them. But why would he signal his plans?

My trust in anyone is not infinite, my patience (mainly because of my age) is not indefinite. But everything I have seen of Fortune, everything that I can see in this company, tells me that I am invested in a winner. I'm not going to try to tell Fortune how to run this company (I doubt he'd listen!). But I'll continue to read the excellent posters here, watch how the global renewable agenda is unfolding rapidly in front of us, confident that we'll do well here, but with no idea of the timescale.

Warren Buffet quote 2:
"The stock market is a device for transferring money from the impatient to the patient"

Thank you both.
Lionel

Lynx175: correlation looks interesting. Where do you get this historic record of short positions? Can we extend it back to 2018?
Cordially
Lionel

In the link to the UK Government's "Proposal for the Longer Duration Energy Storage Demonstration innovation competition" (see link just posted by Floyd81) it says at the end:
"We encourage any comments on the proposed competition approach.
Please provide responses by midnight Friday 12 March 2021."

@ls: always appreciate your views and expertise on this important aspect of vanadium prices.
Cordially
Lionel

Tnx Alfa, please update the date in your top-level banner to 1 February.

Lionel

Alfa: LBP update sent to website@TBP, cordially LG

Its worth recalling that there are other companies out there intending to capitalise on grid-scale energy storage through the use of vanadium-based flow batteries.

This is from the Armchair Trader from September 2020 on Pineapple Power
https://www.thearmchairtrader.com/new-spac-to-target-vanadium-flow-battery-opportunities/
and this is from PNPL's own www site
https://www.pineapple-powercorp.com/overview/

They make useful re-reading in the context of BMN's ongoing plans.

And its SP hasn't done too badly since the start of the year either!

The recent thread (Setcentric/BBN) on South Africa's DMRE RMIPPPP (2GW) contract refers to just one of a number of relevant contract announcements and related developments that we are expecting to hear news of in the near future:

* 26-11-20: Closing date for Glencore's green energy/storage tender for its chrome and vanadium operations in South Africa
https://www.miningweekly.com/article/glencore-tests-market-for-self-generation-solutions-at-chrome-vanadium-operations-2020-11-12

* 22-12-20: Closing date for South Africa's Department of Mineral Resources and Energy (DMRE) RMIPPPP (2GW) contract (moved from 24-11-20)
https://www.miningweekly.com/article/ipp-office-extends-bid-deadline-for-r40bn-risk-mitigation-programme-2020-11-02/rep_id:3650
Preferred Bidder announcement was estimated as Jan-Feb 2021

* 30-12-20: Original target contract award date for Eskom Package 1

* 31-12-20: Dalian stage 1 - confirmation of commissioning [approx date]

* 31-12-20 (approx): Gresham House Energy Storage: target acquisition agreement for an operating facility to expand its portfolio of utility-scale (storage) assets
https://renewablesnow.com/news/gresham-house-sells-power-bonds-to-fund-new-energy-storage-buy-717304/

* 25-01-21: Target contract award date for Eskom Package 2 (Melkhout 35MW/140MWh, Pongola 40MW/160MWh, Elandskop 8MW/32MWh)

* 25-01-21: Target contract award date for Eskom Package 3 (Hex 20MW/100MWh, Graafwater 4.5MW/25MWh, Paleisheuwel 10MW/40MWh)

* 22-02-21: Possession of ELDIZ site due to be given, with construction starting the following day (see post by Libero 01-01-21, as given in the Eskom Tender Bulletin website)

Libero: great that you are frequently pointing to the Big Picture, but it would be best from now on to make the link directly to:
https://www.thebushveldperspective.com/blog/public-articles-1/post/lionels-big-picture-428
where it is easier to read, and where it will be updated in future. Thanks!