LONDON: Bushveld Minerals Limited, which owns high-grade vanadium assets in South Africa, has signed a joint venture agreement with redT energy plc to form a Vanadium Financing Partnership to supply vanadium electrolyte to be used in third party-owned Vanadium Redox Flow Batteries (VRFBs) projects developed by redT.
The financing partnership is in line with Bushveld Minerals’ strategy of partnering with VRFB companies for the supply of vanadium material, vanadium electrolyte and vanadium electrolyte rental, as announced on 1 November 2019.
Highlights
- A key part of Bushveld’s strategy is to encourage the growth of the market for VRFBs, an attractive commercial opportunity in itself, which will also help strengthen vanadium demand profile.
- The simple architecture of a VRFB, combined with the re-usability and consequent positive residual value of the vanadium electrolyte after a long lifecycle create an opportunity for vanadium rental strategies that will reduce the upfront cost of purchasing and installing VRFBs to end users, by separating the cost of the mechanical and chemical elements of the VRFBs.
- The Partnership will take the form of a special-purpose vehicle structured to hold physical vanadium. It will supply vanadium electrolyte, an important element of VRFBs, to a series of VRFB projects in Europe (the “Projects”) to be deployed over an initial period of 2 years, which will help demonstrate proof of concept for this financial model at a larger scale. It builds on the smaller contract executed in 2019 in the USA with Avalon Battery Corporation.
- The Partnership’s initial target will be to deliver approximately 15 MWh of VRFBs to market, this will require approximately 80 mtV to be supplied by Bushveld.
- The vanadium electrolyte will be supplied to the Projects via long-term lease or rental arrangements, with financing from external funders that the Partnership are currently in discussions with.
- The vanadium electrolyte will be processed from feedstock from Bushveld’s primary assets in South Africa, by an industrial partner in the United Kingdom.
Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented: “Driving VRFB adoption will allow Bushveld to command meaningful market share in the growing stationary energy storage market whilst growing long term, structural demand for vanadium.
“Costs to users will be key. On a lifecycle basis VRFBs are competitive but reducing upfront capital costs will speed market wide take-up versus rival technologies.
“The rental model Bushveld is pioneering will reduce purchase and installation costs, taking advantage of the re-usability and consequent positive residual value of the vanadium electrolyte.
“In addition, the electrolyte rental model, along with structurally higher demand, will reduce volatility in vanadium prices.
“This joint venture will deepen and strengthen our relationship with redT and allow Bushveld to develop further expertise in financial modelling and legal structuring of the vanadium electrolyte rental model.”