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Failure to do so could lead to other problems for the vanadium industry, such as substitution but worse still the second scenario kicks in and the VRFB industry becomes crippled by its inability to source enough material. Thus, the door is left open for poorer performing but more readily available battery solutions to take their market share.

At this point it is important to appreciate that BMN as a fully integrated vanadium producer, has decoupled itself from that set of scenarios, from those statistics, because it is now very close to being in charge of its own future. By being in control of the full process, all BMN has needed is the chance to establish itself by demonstrating that it can produce large scale mandates for a price or by employing a method that enables or encourages the market to accept VRFBs, not just as a viable alternative to lithium-ion, but as the most appropriate battery technology at utility scale. Now it won’t really matter if the rest of the world is slow on the uptake, nor if other VRFB manufacturers fail to gain the market penetration that is described in the above slides. Nor will it matter if the world cannot find those new mines, be it 8 or 17.

The BMN investment case is not about the VRFB market realising its potential on the world stage, nor is it even really about the steel market delivering the minimal growth that is required to increase overall vanadium demand and support prices. This is about BMN and their ability to carve out a market for their fully integrated model that is scalable, thus allowing BMN scope to further exploit its own vanadium resources, to service its own VRFB development needs. That is what being fully integrated does, that is the true advantage that a market that still hasn’t even understood the global potential for VRFBs, has no chance of ever understanding at this stage.

The world can hold back VRFBs through its inability to supply the market with vanadium, but it shouldn’t ever really matter to BMN. Such a scenario will mean robust vanadium pricing driven by a lack of new vanadium supplies, thus driving BMN’s core business forward and supporting its profitability. However, with a fully integrated model, BMN can drive its own VRFB business by choosing to dedicate vanadium production to its electrolyte manufacturing and VRFB development business, as appropriate. Doing that, gives BMN the security to introduce expansion that can be pushed either into a robust vanadium pricing market or into an ever expanding VRFB business, with or without global market support. All BMN needs is its own customer base, which given that it can control its own pricing mechanisms through control of the entire value chain, means they has every chance of realising.

Slides 20 to 24 deal with the technology of the VRFB and include many of the slides that I discussed in my last piece entitled ‘BE Your Time is Now.’ However, they are well worth your time to review because they make it abundantly clear that the global VRFB has everything it needs to usurp its lithium-ion competitor, never mind an SA based VRFB that is seeking SA based projects, it’s just the chance to shine that it has been waiting for.

Slide 25 is interesting because it demonstrates much of what I have been talking about and reinforces the message in slides 20-24, that VRFBs aren’t just a fad. They have real worth, when as I have already said they are given the chance to prove themselves.

Slide 27 demonstrates the potential uplift in vanadium demand when VRFBs are in play. Roskill offer a number of scenarios based on their own research, with their base case coming in at 8,000 mtv and their best case scenario coming in at circa 16,000 mtv by 2027. Under the VRFB 25% market share rule, there would be over 50,000 mtv required for the VRFB market alone.

Slide 28 demonstrates that even using the Roskill base case scenario, coupled with the expanding steel market, by 2027 world vanadium demand will be at circa 129,000 mtv. That compares to total consumption of 85,800 mtv in 2017. Thus as a minimum the market needs to find over 43,000 mtv of new material in the next 9 years. If the 25% market share scenario comes to pass, then that figure jumps to over 86,000 mtv, so more than double the 2017 output for the industry.

If we assume that the energy storage market growth rate is real, be it that the battery technology share is still to be decided, then what that all points to is one of two scenarios happening. Either price will remain elevated to a point that sufficient new mines have the ability to secure the finance to be built, or VRFB uptake will be curtailed by the vanadium market’s inability to supply sufficient material.

If it is the former, then as a minimum, the world has got to find the equivalent of more than 8 fully expanded Vametcos in the next 9 years, just to meet the Roskill base case scenario. If not then VRFB uptake remains muted but vanadium prices to a certain extent should remain, at the very least, elevated above their long term average. If they don’t then it will be because steel demand has reduced, which in turn should free up more material for VRFBs, thus further supporting future prices.

But if VRFBs are going to truly express themselves in this early growth cycle (and that is what it is after all, 10 years does not save the world from its problems), then the world has got to go out and find more than 17 new Vametcos in the same 9 year period.

A reminder of the Bushveld Minerals business model courtesy of BigBiteNow.

BMN Fully Integrated Fully Charged

BMN the miner is a great story which is still to be fully appreciated by the market, but some of that appreciation can at least now be felt. Continuing strength in vanadium prices coupled with a successful expansion of Vametco, will help establish Bushveld Minerals (BMN) as a significant dividend paying vanadium producer. However, the energy arm of this story is still to be realised and at present has no demonstrable worth showing in the company’s valuation. Given the size of the opportunity and the fact it dwarfs that of the mining arm, it is well worth taking the time to understand BMN’s true place and therefore opportunity within this once in a lifetime sector.

Over the last few weeks I have spent a great deal of my time investigating and communicating where and how I feel Bushveld Energy (BE) will make its initial mark on the energy storage sector. The Eskom BESS project offers BE and its partners the very best opportunity to establish itself as a serious player in VRFBs, but as big a project as it is in the still fledgling VRFB industry, it is but a key that can open a door to much greater things.

In May 2018 BMN presented their vanadium 101 webinar, which gave a detailed assessment of the two key markets (steel and energy storage) for vanadium moving forward. Slide 18 onwards deals with the energy storage and that is where I will direct my thoughts.

Now before I go any further it is important to appreciate that we are dealing with forecasts in a market that has never been seen before. Comparisons are made with solar uptake, which I do believe is as close as anyone could likely get, but in my opinion we are dealing with an industry that has the potential to completely disrupt the energy sector, removing control from the established sources of power; an industry that has a place not only on the existing and ever expanding renewable stage but also within the heart of future energy transmission and distribution. Once battery storage technology is established as a market, once they are able to apply true scale to reduce their costs, the forecasts may well all be torn up and placed in the recycling because they simply won’t be bold enough. However, we have to start somewhere, so lets.

Slide 19 presents the expected rates of energy storage demand with average annual deployment expected to reach 15GWh by 2025 of which VRFBs are expected to capture between 15- 25%. That means that by 2025 VRFBs deployment could average (20%) around 3GWh per year (possibly rising to 3.75GWh if the 25% uptake is realised). In terms of vanadium, according to BMN, that would mean an average of 16,500 mtv per annum by 2025, so more than 3 fully expanded (phase 3 at 5,073 mtv) Vametcos.

So BMN could be participating in 2 major contracts before the end of the year.
The Eskom BESS and the RMIPPP.
Plus anything else in the Bushveld Energy 250 MWh project pipeline.

The actual technology specific requirements for VRFBs to comply with NFPA 855 are listed in table 9.2 and include exhaust ventilation, spill control, neutralization (of spills) and size and seperation.

The threshold for NFPA 855 to apply to VRFB's is 20kWh.
This standard is an Eskom requirement.

If anyone wants to read NFPA 855, it's free to view at the NFPA website.

https://www.nfpa.org/Codes-and-Standards/All-Codes-and-Standards/Free-access

Alphacomp - no, the NFPA stuff is not only for lithium ion batteries.

"Scope, purpose, and application

The importance of the scope, purpose, and application statements in the front of the standard is frequently overlooked. Users often assume they know what the standard applies to simply by reading the title, but that is not always the case. An assumption with NFPA 855 is that it applies only to lithium-ion battery ESS, but that is incorrect—the scope is much broader than that.

The scope of NFPA 855 applies to several technologies and to energy storage systems of a certain size or capacity. The threshold when NFPA 855 applies is different for each technology. For example, the standard applies to lead acid battery ESS with a combined capacity of 70 KWh (kilowatt-hour) or more, while ESS using lithium-ion batteries requires a threshold of 20 KWh for NFPA 855 to apply."

And from the World Bank Procurement Regulations.

5.38 Firms participating in Bank-financed contracts may form joint ventures with domestic and/or foreign firms to enhance their qualifications and capabilities. A joint venture may be for the long term (independent of any particular procurement), or for a specific procurement. All the partners in a joint venture shall be jointly and severally liable for the entire contract. The Bank does not accept conditions of participation in a procurement process that require mandatory joint ventures or other forms of mandatory association between firms.

Four more potential bidders.

https://tinyurl.com/y4bfz2l9
https://scatecsolar.com/
https://home.kepco.co.kr/kepco/EN/main.do
https://www.grupocobra.com/en/south-africa/

From what I've read in the responses to queries document, neither Bushveld Minerals or Bushveld Energy will be elegible to be a bidder due to the previous experience criteria and minimum revenue requirement.
They will need to form a joint partnership with someone who has.

DaddyBigBucks - that's not the definitive standard.
It's a presentation/overview on the intention of NFPA 855 before it was updated.

"The fire prevention and mitigation strategy for the BESS installation must be in accordance with NFPA 855."

Anyone got access to this standard ?

https://tinyurl.com/y429vhkt

Is this what you wanted Daisydog ?

https://tinyurl.com/y2v7rzyq

faramog - the Skaapvlei contract could be issued in November according to the responses to clarifications on 26 Aug.

"The contract will be awarded 10 business days after issuing notification of intention to award the contract during November or December 2020"

Typo fixed.
The 3 packages for phase 1 are 320 MWh, 332 MWh and 165 MWh.
As I understand it, there will only be 3 contracts, one for each package.
So it will be a case of which one can BMN get.

The 3 packages for phase 1 are 320 MWh, 332 MWh and 165 MWh.
As I understand it, there will only be 3 contracts, one for each phase.
So it will be a case of which one can BMN get.

The Skaapvlei contract could be issued in November.

"The contract will be awarded 10 business days after issuing notification of intention to award the contract during November or December 2020"

It's interesting to note that the BESS must have a minimum operational life of 20 years at the full 320 MWh of capacity.

ITB 17.5 Battery Energy Storage Augmentation refers to equipment, material and services required to ensure the BESS meets the functional guarantees and specifications listed for 20 year life cycle.

"Does it mean that after 20 years, the usable energy is still at least 320MWh or more? So the Energy at the end of life is the same as the energy we had at the begining of life.Battery Energy Storage Augmentation refers to equipment, material and services required to ensure the BESS meets the functional guarantees and specifications listed for 20 year life cycle."

Response - That is correct. If applicable, augmentation may be required over the battery life to maintain the 320MWh capacity.

LionelGreen - I've looked at this database before and it's nowhere near up to date. It's still saying that the Dalian vrfb will be fully operational in 2018.

I agree jogj99, but the economic benefit of a South African resource and manufacturing biased tender bid is weighted in vrfb's favour. Let's be optimistic!