Green hydrogen could supercharge Australian Vanadium’s economics
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Special Report: Australian Vanadium’s (ASX:AVL) green hydrogen strategy will not just reduce its carbon footprint, it could also have concrete benefits for its bottom line.
Earlier this month, the company unveiled the strategy which seeks to incorporate green hydrogen – hydrogen produced using renewable energy – into its namesake vanadium project to leverage the emerging hydrogen economy.
Speaking with Stockhead, managing director Vincent Algar said that while vanadium is a critical mineral, there are just three producers outside of China that produce vanadium from vanadium deposits as their primary metal.
This meant that it was important for Australia to get involved and also for Australian Vanadium’s project to reach a bankable feasibility study outcome that is at the lowest possible cost curve.
“That’s where we’re going, and we’re making good progress on that bankable feasibility study and the pre-feasibility study update which we are currently working on,” he added.
Here’s where the green hydrogen strategy could play a role in ensuring that the Australian Vanadium project achieves its goals.
Algar noted that besides the interest shown by funds on the potential use of hydrogen from the environmental, social and corporate governance (ESG) angle, there were four areas where its use could have a real impact on the Australian Vanadium Project.
The first point he touched on was that the project’s primary energy consumption is a natural gas roast for the extraction of vanadium.
By virtue of having its processing plant close to Geraldton, the company could introduce green hydrogen into the pipeline to replace up to 10 per cent of its natural gas supply without any impact while reducing its carbon footprint.
“It’s the very first step for us, and that’s a big step because one of our biggest cost drivers is natural gas consumption, so we’ll definitely be focusing on that,” Algar told Stockhead.
AVL has announced an MOU with ATCO Australia to secure green hydrogen offtake for the pipeline.
He added that the company could use any ammonia created as a byproduct of the hydrogen production process in vanadium processing.
“We are a ready market and it gives us a cheaper, lower cost source of ammonia and should have a positive impact on what we’re doing.”
The third point involving the use of hydrogen to fuel mine trucks and long haul vehicles still requires work, though there are already some commercial vehicles that use hydrogen fuel cells.
In July, Hyundai started deliveries of the first commercially available, hydrogen fuel cell-powered trucks
While still at the early stages, this will undoubtedly be welcome news for Australian Vanadium with Algar noting that long distance trucking it is a particular area of cost that the company will experience.
“So as the technology advances in line with our project development, that will be a really good area to move to,” he added.
“I think light vehicles would be more readily available. And if you’re producing hydrogen on site, to refuel those on site will be easy or close by for us to add to our gas feed.”
He also noted there would be more reason to adopt hydrogen powered vehicles if there were government incentives for their adoption like there was for diesel.
It is the last point that could have the greatest impact on Australian Vanadium, though there are also significant challenges towards its adoption.
Algar notes that with titanium vanadium projects, there are a range of options for their development.
The low end method is to simply dig the material out and sell it as a magnetite concentrate.
“That’s the cheapest way and you’re never going to get full recognition of value for that material, it is going to be sold as an iron ore,” Algar explained.
The next step up would be to take the vanadium out for sale as a separate, high-value product before selling the remaining material as a good iron product.
However, the best way to extract full value – what Algar describes as the Holy Grail for such projects – is to extract all the metals and sell them as separate products.
Here is where green hydrogen can play a key role.
As the vanadium is extracted, the remaining material can be subject to a process called a reductive roast – roasting it in the absence of oxygen – to create a pig iron product that is worth substantially more than iron ore.
While this process normally uses coal or carbon, testing has shown that hydrogen is an equally effective reductant.
“When you use hydrogen, you could bring the material back towards pig iron and as you do that you can add a massive amount of value,” Algar said.
“There are other ways to do this, but they involve a lot of chemistry and it is technically and environmentally difficult to do it all with acid.”
The reductive roasting process could also allow Australian Vanadium to extract a high value titanium product, as the roasting process also separates the iron material from the titanium.
“There is up to 12% of titanium in our ore, so it’s a really rich source of titanium,” he added.
However, introducing the use of hydrogen in this process represents a substantial capital investment over and above that required to extract vanadium.
“We just have to find a way to make them work and we think that Australian Vanadium’s project is definitely right up there with one of the best,” Algar noted.
“We want to get the maximum value out of it for ourselves, for our shareholders, for our stakeholders and for Western Australia in general.”
This article was developed in collaboration with Australian Vanadium, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.