Mining Indaba: How SA can benefit from the vanadium value chain

Vanadium is used to reduce the carbon footprint of steel, and vanadium redox flow batteries are going to be a big driver of growth: Fortune Mojapelo – CEO, Bushveld Minerals.

NZINGA QUNTA: My name is Nzinga Qunta, standing in for Fifi Peters. Tonight a big part of the show is about mining as the Mining Indaba is taking place. We are looking at the industry now. Bushveld Minerals is one of only three operating primary producers of vanadium in the world. It has two operations in South Africa and their CEO, Fortune Mojapelo from Bushveld Minerals, joins me now.

A very good evening, Mr Mojapelo. Thanks so much for your time on the SAfm [Market Update] this evening. Let’s start with what is vanadium, and what is it used for?

FORTUNE MOJAPELO: Good evening, Nzinga. Thanks for having me on the show. Vanadium is a base metal which is predominantly used today as an alloy for strengthening steel. That’s by far its biggest application. But there’s also a very significantly growing and exciting opportunity for vanadium in energy transition, in the sense that it is used for large-scale, utility-scale, long-duration batteries which are growing in importance going forward, and will be a big driver for demand for the commodity.

NZINGA QUNTA: All right. Just talk to me more about what fuels the demand for vanadium and what current geopolitical events are doing for vanadium.

FORTUNE MOJAPELO: Demand is driven primarily from the steel sector. That’s where it’s used to strengthen steel. There are standard regulations that are pushing for more efficient use of steel, using better-quality steels. That requires more alloy elements that also help with reducing the carbon footprint of steel – and vanadium is a very, very big player in that. That’s one big driver.

But I think going forward what we’ll see is the application of vanadium in long-duration batteries being a huge driver. I think it’s safe to say that the energy transition is here to stay, and that the push for net zero is not going anywhere. What that in turn means is we are going to see a substantial growth in stationary storage application.

Again today, when we’re talking about the energy transition and batteries, the main narrative is around electric vehicles, which obviously will replace internal combustion engines. Then in so doing we reduce carbon dioxide emissions and so forth. But by far what will be a very big driver of this is going to be how grids become more green, [and] the growth of renewable energy with it, which brings the growth of energy storage that is expected in the case of vanadium, at least to require global production of vanadium to more than double over the next 20 or so years. We think that’s going to be a big driver.

NZINGA QUNTA: Okay. Let’s take a bit of a step back in time when we look at your production for the first three months of the year ended March 31 [2022]. That increased. Just talk to us more about your group production and what other numbers there were of interest there.

FORTUNE MOJAPELO: We’ve got, as you said earlier on, two of four operational primary vanadium plants on the board. Between the two plants that we have, we produce about 12% of the global market. This year we expect to produce about 4 400 tonnes, thereabout, of vanadium, which is about 4% of the market. It is not a massive share. But I think what, again, will be important going forward is that primary producers, we believe, are going to be called upon to increase production significantly because about 70% of vanadium production today comes from steel plants in China and Russia, which produce vanadium as a slag.

The thing about the steel plants, number one, is that their utilisation is running quite high, which means that they are getting to a point where they can produce as much vanadium as they could, and we know that going forward steel production is not going to be of that kind of production, which means then that any growing demand will need to be met increasingly in our view by primary producers.

One other point I would then just say – you mentioned earlier on geopolitics – China and Russia account for about 70% of the world’s vanadium supply. Russia alone accounts for about 17%. I think what the Russia/Ukraine conflict has highlighted and put into sharp focus today is the geopolitics of these mineral deposits and resources, and I think that is an incredible opportunity for South Africa to position itself – and I dare say Africa in terms of a great number of these commodities – as a favourite destination going forward.

NZINGA QUNTA: All right, what’s the future of mining vanadium for you, and talk to me about how you’re working with government, in particular in the Eastern Cape?

FORTUNE MOJAPELO: Again, if we talk about what’s going to drive growth, we think that the applications of vanadium and the vanadium redox flow batteries, VRFBs, is going to be a big driver. So the question there is what needs to be done to create the opportunity for VRFBs and to give them a real chance of success. As a company, we took a view that we have to be very active in that value chain, and being active in that value chain means that we go downstream and we don’t just mine and produce vanadium products that we just sell to the market.

So three key elements we do through a subsidiary called Bushveld Energy. We are building a plant in Eastern Cape to produce the electrolyte, which is used in these vanadium flow batteries. It will be the largest such plant outside of China when we complete it in Q1 of next year. We’ve partnered with the Industrial Development Corporation in that project, which we’re very grateful for, and we’ll go a long way, by the way, to ensure that batteries that are better deployed in South Africa have got a substantial amount of local content – and we’re talking way in excess of 50%.

So it’s a project that we are particularly proud of. Its initial capacity is about 200 megawatt hours of vanadium redox flow batteries, but we’re doing more than that. We are also deploying projects that combine PV solar and VRFB vanadium battery storage, proving and demonstrating the business case for these projects which in South Africa is going to be important, considering the regulatory kind of direction the government has taken to encourage self-generation up to about 100 megawatts for big energy users.

We think that by showcasing these kinds of projects we create a substantial opportunity also for VRFBs, something which in our partnership with the IDC, we think the government in general from a policy point of view is going to open up significant opportunities for vanadium.

NZINGA QUNTA: Right. Fortune Mojapelo, the CEO of Bushveld Minerals, thanks so much for your time on the SAfm Market Update with Moneyweb this evening. It’s been very interesting speaking to him, and we’re going to be continuing to take a look at what’s taking place in the mining sector.

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they can have a winner in the flow Batteries if they can get their act together and respond to inquiries or just getting basic information:
Cost per MWh capacity or whatever building blocks are.
Which charger-inverters and basic specs like response, charge and discharge rates, and cost.

It does not really make sense to use Lithium for large (MWh and more) scale non-mobile storage.

It seems these flow batteries need a rather large minimum size to compete with Lithium. As in 10MWh. But they should still find a niche at distribution level or large factories because going from 10 to 20 MWh capacity has a relatively low marginal cost compared to Lithium that is basically linear.

End of comments.

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