The rapid rise of Bushveld Minerals in the global mineral development space has been a remarkable sight to behold, given that it has developed into one of only three operational primary vanadium producers in the world despite only being incorporated in January 2012. Two months later Bushveld was listed on London’s AIM as a mineral development company focused on exploring and developing projects in South Africa’s Bushveld Complex. Today the company owns three high grade vanadium assets, one already in production and two under development, which provide a total resource base of 440 million tonnes (Mt). Bushveld currently supplies around 3,000 Mt of vanadium from its Vametco mine – representing 3% of the global vanadium market. With expansion plans underway at Vametco plus targeted brownfield opportunities, Bushveld aims to expand its Group production to 10,000 Mt in the medium term.
The company consists of two flagship platforms: Bushveld Vanadium and Bushveld Energy. The former is a growing, low cost, vertically integrated primary producer which manages the three vanadium assets in the Bushveld Complex.
The latter is a leading energy storage project developer and component manufacturer, exclusively focused on Vanadium Redox Flow Batteries (VRFB) technology. “Bushveld Energy was accordingly launched in 2016, to capture a share of this attractive market,” says Bushveld’s CEO Fortune Mojapelo.
“Bushveld Energy’s business model envisages activities along the VRFB value chain and will include an electrolyte capacity in South Africa, a VRFB assembly and manufacturing as well as an energy storage project development.”
The best performing commodity
Without a doubt, vanadium has been the front runner of the commodity price market in recent years, surging by more than 365% in the last three years from US$18.6 per kg of vanadium to US$81.2 per kg in 2018.
Mojapelo explains that this astronomical price increase in vanadium has been driven by a fundamental supply deficit in the vanadium market, arising from growing demand underwritten from the steel sector, which accounts for around 90% of vanadium consumption.
“The steel market is set to continue supporting robust vanadium demand, which is expected to grow at a CAGR of approximately 2% over the next 10 years, supported by the increased intensity in use of steel in emerging markets, particularly in China, underpinned by the improved enforcement of regulations.”
Therefore, Bushveld believes that the current vanadium price and supply/demand gap suggests that there is sufficient incentive to stimulate new production from existing primary producers, which is exactly what the company plans to do in the near term.
Bushveld’s unique position as one of three operational primary vanadium producers, and one of only two vanadium-focused pure play companies, will also allow the company to leverage its large low cost production base and be a catalyst in the emerging energy storage industry.
“The market share of VRFBs compared to other energy storage technologies is a key assumption,” states Mojapelo. “Recent trends to revise energy storage forecasts upward imply that vanadium demand from VRFBs may be greater than expected, even under ‘aggressive forecasts’. Within 10 years, demand for vanadium by energy storage could equate to 50-100% of today’s global market.
“The current market dynamics point to a positive price outlook, underpinned by a growing deficit which we believe can only be closed by existing quality primary vanadium producers like Bushveld Minerals, who are in a position to scale up production.”
The resource base
The Vametco Mine in Brits, North West Province is a low cost vanadium mine with a 142.4 Mt resource that also produces a trademark vanadium product, Nitrovan® as well as modified vanadium oxide (MVO).
Bushveld increased its controlling interest in Vametco to 74% in September 2018 through a series of transactions, having first invested in the operation in April 2017. The firm recently commenced an operational transformation programme to enhance Vametco’s production efficiency.
Another key part of this ambitious medium-term production target is the development of the Brits Vanadium Project, which comprises prospecting rights on several farms adjacent to Vametco. “The mineralisation is outcropping and a continuation of the Vametco deposit strike with similar or higher vanadium grades,” Mojapelo reports.
Recent drilling results have indicated vanadium grades in magnetite of 1.54 – 2.09% vanadium pentoxide, again similar to the mineralisation seen at the Vametco Mine. Therefore, Bushveld expects Brits to support Vametco or other brownfield facilities when it comes online, but first the company must complete a mineral resource estimate that is scheduled for Q1 2019.
The Mokopane Vanadium Project is the final component of Bushveld’s vanadium triumvirate and happens to be one of the world’s largest primary vanadium resources, with a 298 Mt JORC resource including 28.5 Mt reserves and high in-situ (1.4%) and in-concentrate (1.75%) vanadium pentoxide grades.
A positive pre-feasibility study was completed back in January 2016 which indicated a 25% IRR, $300 million capex and a 5,500 Mt per annum production rate. The intention remains to secure a new order mining right and either develop Mokopane into a vanadium mine and processing plant or supply ore from the project to plants in China and/or elsewhere in the world.
Bushveld’s target is to grow its production platform from the current levels of approximately 3,000 Mt of vanadium to 10,000 in the medium term. The company’s assets are positioned in first to second quartile cost curve position. Bushveld aims to keep reducing costs and be cash generative throughout the cycle.
The next generation of energy storage
The formation of Bushveld Energy and Bushveld’s subsequent entry into the VRFB sector was intended to position the company at the vanguard of the next generation of energy storage technology.
“The company believes that VRFBs are well positioned to take a significant share of the global utility-scale energy storage market, where their distinctive features, including low life-of-battery costs, 20-year life without performance degradation, flexible scalability, long duration energy storage capacity and inherent safety give them a significant advantage over other technologies.”
VRFB technology combines the performance advantages of flow batteries with the simplicity of using just one natural element – vanadium. Flow batteries use a liquid electrolyte to store energy, this allows for near unlimited recharging (or cycling), easy scaling by just adding more electrolyte and negligible performance deterioration over long periods of time.
As a result, for daily energy storage of a few hours or more, flow batteries provide the most cost-effective means to store energy. The advantage of vanadium, lies in its ability to exist in four different oxidation states and its water-solubility, allowing for a simpler battery with fewer inputs and no flammable elements.
Having said that, Mojapelo points out that the most common question about VRFBs is how they compare to lithium-ion battery technology. “There is no clear superiority, with use cases and site requirements often determining the optimal solution. VRFBs and Lithium-ion are non-competing technologies,” he says.
“Nonetheless, Bushveld has seen the global deployment of VRFBs increase year-on-year and has made significant progress defining the energy storage market opportunity, building industry awareness for VRFB and developing a business model for Bushveld Energy.
“The business model is anchored in Bushveld Minerals’ low-cost production platform and smart partnerships along the VRFB value chain.” One such relationship is with UniEnergy Technologies (UET), a US-based manufacturer of turn-key, large and medium-scale energy storage systems for utility, micro-grid, commercial, industrial and other applications.
The future of Bushveld Minerals
Taking into consideration the sky-high potential of the VRFB technology industry, Bushveld Energy is set to take up a larger role in the wider Bushveld story, as vertical growth opportunities multiply across the Bushveld Energy division.
“A key part of Bushveld Energy’s strategy is the creation of an electrolyte production facility which Bushveld Energy is establishing with the IDC. The electrolyte manufacturing will include building and operating a chemicals plant that purifies vanadium feedstock and converts it into a liquid electrolyte. The electrolyte is sold to VRFB companies or direct users/buyers of VRFB systems.”
Mojapelo also highlights Bushveld Energy’s role in developing the energy storage value chain in South Africa through the application of South Africa-mined and beneficiated vanadium in VRFBs.
“As a leading primary vanadium producer and exporter, South Africa serves as the logical base for VRFB manufacturing. This includes multiple steps of mineral beneficiation, including converting vanadium into electrolyte and assembling VRFBs locally.
“We are convinced that significant demand will come from Africa and for similar logic to locating electrolyte production here in South Africa. Especially in the South African market, local content plays a key determining factor and we believe that no battery technology can come close to competing with VRFBs on this criterion in South Africa.”
Overall, Bushveld Minerals is advancing a significant horizontal and vertical growth plan, incorporating brownfield expansion and acquisition opportunities to build a 10,000 Mt production platform in the Bushveld Complex, along with exciting opportunities in the lively VRFB technology sector.
This growth plan provides a sound basis for the company to develop into one of the largest, lowest cost, vertically integrated primary vanadium producing companies and one of the most influential organs of South Africa’s emerging energy storage industry.