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Quietly building in 2019, vanadium is on the cusp of a new boom

Pic: Iron Man, 2008 Paramount Pictures

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Special Report: The blossoming vanadium battery sector will be key to the success of the next crop of high quality ASX-listed vanadium plays, like Vanadium Resources (ASX:VR8).

The vanadium investment buzz of late 2018, when V2O5 prices peaked above $US35/lb, is gone.

Also ‘gone’ are the numerous explorers who rode that buzz but didn’t have the quality projects to compete in a normal – or sub $US10/lb — price environment.

In late 2019, what’s left are the quality explorers (with quality projects), and an industry that is building — slowly and steadily — to meet projected demand from the established steel and nascent battery sectors.

To applaud the current ~$US10/lb V2O5 price environment seems counterintuitive, especially if you’re a near term producer.

But this pricing is exactly where the next crop of producers – the guys with low cost, high quality projects — want to be.

That’s because stable pricing is crucial if the fledgling vanadium battery industry, which soaks up a lot of V2O5, is to build momentum.

We’re already seeing the effects of this stable pricing environment.

The most prominent example is the high-profile Dalian battery in China, which could use almost 8000 tonnes of V2O5 for an 800MWh installation:

READ: Are lower vanadium prices triggering a wave of giant new VRFB developments?

 

But a number of companies and analysts believe the big market going forward will actually be in smaller off-grid vanadium batteries.

Big volumes of smaller off-grid batteries will quickly impact the supply chain, Mastermines David Gillam told Stockhead previously.

“I want to see smaller 10kw/40kwh batteries – the kind that takes a whole farm, a nursery, or an isolated community in Australia or Africa off the grid,” Gillam says.

“That’s where the big market is.”

Its already happening. This blossoming industry will be key to the success of the next crop of high quality ASX-listed vanadium plays, like Vanadium Resources (ASX:VR8).

Grade, mine life, location, infrastructure — VR8’s advanced Steelpoortdrift project in South Africa already stands head-and-shoulders above its peer group.

You can read all about that here.

With environmental and community approvals in place, VR8 is in a unique position of being able to grow its production in step with a developing market, initially by producing and selling a high-quality vanadium concentrate.

At the same time, VR8 is initiating studies into the more capex-intensive downstream processing of this concentrate to produce value added specialist products suitable for the steel, renewable energy, and industrial minerals markets.

A September marketing tour to Asia was very successful, and VR8 management will be heading back to China very soon for the next round of offtake and financing discussions.

“It was pleasing to present the Steelpoortdrift vanadium project to the key players in the global vanadium market and obtain such a positive response,” VR8 managing director Bill Oliver says.

“Most illuminating were the dynamics of the market, and specifically the continued appetite for vanadium and vanadium products which is growing independently of price changes.”

There was particular interest from a leading China-based vanadium battery manufacturer during this visit, the company says.

VR8 will be supplying this company samples to be tested prior to further discussions on both supply of product, collaboration on vanadium electrolyte production, and strategic alliances to produce vanadium flow batteries. Multiple samples have already been despatched to other interested parties in China. Exciting stuff.

To enable continued engagement with Asia Company just announced a placement to raise $800,000; of which $500,000 was raised from parties introduced by the Company’s South African based directors. These directors were also the original vendors of the Steelpoortdrift Vanadium Project, illustrating the confidence that the Company’s supporters have in the project.

This story was developed in collaboration with Vanadium Resources, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

 

Categories: Mining

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