BMN - Fully Integrated Fully Charged - 46 Sep 2020 11:09
The majority of the vanadium market is talking about the pending VRFB market growth driving and expanding future vanadium demand, but it doesn’t yet appreciate how that will all work. Some are discussing the merits of the VRFB industry supporting long term prices by increasing demand at times when demand in the steel sector falls away through cycular changes in the market. The theory being that lower vanadium prices will drive greater VRFB take up, thus increasing demand for vanadium and pushing up prices once more. Great.
What BMN are implementing and they are currently the only ones outside of China really doing so, is they are fundamentally protecting themselves and their assets, from that market. With a fully integrated model they are effectively the producer and the customer all in one basket. They can tailor their production to whichever need is greatest, be it for profit or for greater market share. They can bring on new production through their early mover status, which right now is delivering market advantage and thus significant cash flows anyway, but is supported by BMN’s geographical location and thus their ability to tap available local brown field processing capacity. For a company with access to over 55 million tons of vanadium reserves with a sizeable increase due to come from Vametco’s neighbour, the Brits project, their ability to expand their horizons is as good as assured.
What I have discussed here may not be directly communicated by the company but it is the reality of the situation. BMN have been visionary beyond their ability to see a deficit in the vanadium market, with the fully integrated model offering an investment play that is, in my opinion, as good as it gets. The fact that it is based in SA is actually, believe it or not, all the better, because it enables the company to fast track its plans and realise its dominant position in the market through those brown field opportunities, an advantage no other vanadium region can currently boast and it allows localised access to the largest utility in Africa. Furthermore, the driver of this energy storage market is not money that will be curtailed by cyclical trends because it is sourced from world bodies dedicated to answering the pressures brought about by climate change. The World Bank’s recent $1 billion targeted commitment towards battery storage is a fine example of this, and it certainly won’t be the last.
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