Vanadium, the silvery-grey specialty metal found in over 60 minerals, has long been acknowledged for its corrosion resistance, structural strength and stability characteristics.
Steel industry accounts for the largest share of vanadium demand with increasing intensity of vanadium usage in China. In the Chinese steel industry, most of the increase in vanadium use is being witnessed in vanadium nitrogen alloys.
Future Demand from Energy Storage Sector
With growing renewable energy adoption, there remains a dilemma of storing energy efficiently, and the industry believes the solution is - Vanadium Redox Flow Batteries (VFRB).
VRFB is considered as a game changer for energy storage safety, as it provides improved safety (non-flammable) as against Li-ion batteries and can discharge completely with no damages. Further, it provides high energy storage capacity and a reliable and long-lasting solution (~20,000 cycles). With expected upsurge in demand in the upcoming years, the sector would require supply of high purity vanadium product.
Vanadium Price Movements
Chinese vanadium supply spiked during the initial period of 2019, as a reaction to the unsustainably high vanadium prices during late-2018. Moreover, several operations by vanadium players were commenced during the period to the right of the cash cost curve. Vanadium prices during the second half of 2019 experienced a steady decline in supply, as high-cash cost players exited the market, especially the Chinese stone coal producers.
At the beginning of the December 2019 quarter, global vanadium prices declined and later stabilised in the range of US$5.50 to US$6.00/lb V2O5. Post the end of the quarter, European vanadium prices increased significantly after falling below the Chinese levels during Q419, majorly due to the period observing restocking and a decreasing supply in China.
The strong demand from China, in addition to weaker supply, would power vanadium prices to inch closer to the long-term historical average price during 2020, however the current price levels are conducive to growth and restricting high-cost producers from restarting their operations.
This scenario highlights the importance of development of stable, long-term, low-cost quartile, high-quality greenfield projects such as Western Australia-based Gabanintha Vanadium Project (GVP) of mineral explorer & developer Technology Metals Australia Limited (ASX: TMT).
GVP – High-Grade, Low-Cost, Premium Purity Vanadium Project
GVP is located in Western Australia, 40 kilometres south of Meekathara, and is one of the highest-grade vanadium projects with low estimated operating cost and long mine life. The project might be a long term (long life of 16 + years) and low cost (low cash cost of US$4.04/lb V2O5) solution to the burgeoning vanadium sector supplying high purity (>99% V2O5) vanadium product.
Australia holds almost 18% of the global vanadium reserves. Also, the Western Australian government recognises the metal as a critical mineral. The recognition of the Gabanintha Vanadium Project as the Lead Agency Project by the state government as part of its “Future Battery Industry Strategy” further underpins the importance of the project development.
How TMT is Advancing with GVP?
Technology Metals is currently engaged in discussions with end users from the steel and emerging battery sectors for offtake agreements, with almost 40% of the annual production already covered under offtake MOUs progressing to binding agreements.
There is also ongoing engagement with Northern Australia Infrastructure Facility (NAIF), a $5 billion facility set up as an initiative of the Australian Federal Government, for funding support to progress the project development.
Additionally, the Company is progressing environmental approvals with spring surveys undertaken to provide complete seasonal coverage of the project area.
TMT is expecting to start the FEED (Front End Engineering Design) study on the GVP following further progression of the environmental activities in support of the statutory approvals process.
Considering the above-mentioned activities, Technology Metals seems well placed to serve the steel industry and burgeoning battery sector with high purity vanadium product, once the production starts at the project.
The Company is scheduled to hold its general meeting on 7 April 2020 in West Perth to consider few important resolutions. The stock of TMT closed the day’s trade at $ 0.086 on 5 March 2020 with a market capitalisation of $ 9.3 million.
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