Prices for vanadium — a minor metal traditionally used to strengthen steel, and more recently a key component in new battery technology that could store electricity from solar and wind generation — are to rise in coming years, Christopher Ecclestone of Hallgarten & Co. forecasts.
Vanadium pentoxide prices moved from US$5 per lb. at the end of December 2016 to US$12.50 per lb. at the end of July 2017, before closing the year at US$9.50 per lb., and the U.K.-based analyst predicts the price will reach US$13.20 per lb. by the end of 2018, US$15 per lb. by the end of 2019 and US$19 per lb. by the end of 2020.
“Last decade vanadium surfaced as a subject of interest primarily tied to the fortunes of the then-booming steel industry,” he writes in a Jan. 3 research note. “Now vanadium is coming back with a vengeance for its potential in mass electricity storage devices, namely the vanadium redox battery [VRB].”
The surge in vanadium prices in the second half of 2017, he says, can be chalked up to “a combination of perceptions of changing Chinese policies on vanadium content in steel alloys and the fervor relating to alternative battery metals.” China steelmakers have been ruminating about increasing the vanadium content in their steel to make it stronger, while vanadium’s potential in mass electricity storage devices, such as VRBs, have also made it appealing to investors.
And it hasn’t hurt that mine finacier Robert Friedland, who received a lifetime achievement award from The Northern Miner last year, has also been singing the metal’s praises.
At the Natural Resources Forum at the London Stock Exchange in July, Friedland spoke “in nothing short of a vanadium-induced ecstasy,” Ecclestone writes. “Never could we have imagined the metal having such a euphoric effect.”
His speech “gave the Friedland imprimatur to a metal which most metals watchers have rarely paid any attention to due to it [largely] being a by-product of the mining of other metal, and, curiously, of the petroleum-refining industry,” Ecclestone says. “It was not just Friedland, though, who has latched onto this bandwagon, as we have heard vanadium name-checked at a number of events during 2017 as the next big thing now that lithium has somewhat done its dash, with promoters overcooking the soufflé.”
In September, the China National Development and Reform Commission released a document that outlined a policy to accelerate the deployment of energy storage. The policy calls for the launch of pilot projects, including the deployment of multiple 100 megawatt-scale vanadium flow batteries by the end of 2020, with the aim of their large-scale deployment between 2020 and 2025.
In November, Pu Neng, a privately held clean technology company that has developed a long-lasting vanadium redox battery, was awarded a contract for a 3-megawatt, 12-megawatt-hour VRB. The VRB is the first phase of a demonstration project in China’s Hubei province, and, once completed, Pu Neng’s VRB will be the largest flow battery installed in China, the company says. As part of the agreement, Pu Neng and Hubei Vanadium will jointly develop a vanadium electrolyte supply from local vanadium sources to meet demand.
Friedland, Pu Neng’s chairman, said in a press release on Nov. 1 that “China has the largest and highest-grade vanadium resources in the world and is poised to use this miracle metal to fundamentally transform its electricity grid.”
“With massive amounts of renewable energy and storage coming online, China will create the most modern, clean and efficient grid in the world.”
Pu Neng’s vanadium flow batteries store energy in liquid electrolyte, which is held in tanks external to the cell stacks that contain the cathode (positive) and anode (negative) sides of the battery. When charging or discharging the battery, electrons are added into or drawn out of the electrolyte as it circulates across membranes inside the stacks. Unlike other types of batteries, the company outlines in the press release, vanadium flow batteries use the same electrolyte solution on both the positive and negative side of the battery, yielding a nearly repeatable electrochemical processes. According to the company, its VRB “has more than 800,000 hours of demonstrated performance.”
In his research note, Ecclestone says the surge in vanadium prices in the last six months has “sent investors [and promoters] scrambling to find primary vanadium mines or projects into which they could sink their teeth.”
By some estimates, there are 16 listed vanadium companies worldwide, he says, which makes the metal “potentially a Vancouver promoters’ delight.”
“However, as the promotorial class are sheep-like, they won’t want to be interested [a good thing] until the price is significantly higher and the air is full of buzz,” he writes. “They are so high on lithium they need little else to stimulate their imaginations these days. At least so far, all the players we know of in the space are serious, which makes this metal a rarity in mining circles.”
The most prominent producers that are accessible, he says, are Largo Resources (TSX: LGO; US-OTC: LGORF) and Bushveld Minerals (LON: BMN), while those with “serious short-term potential” include Western Uranium (TSXV: WUC).
In December, Largo set a production record at its Maracas Menchen vanadium mine in Brazil, producing 903 tonnes of vanadium pentoxide — 13% above the plant’s nameplate capacity.