Vanitec – 4th Energy Storage Meeting (Part 1)
22 July 2018
9th July 2018, Lausanne - see the Vanitec page for copies of the presentations
We were welcomed by Vanitec chairman, John Hilbert, who remarked on the fact that this meeting had twice the number of attendees as the one in Manchester almost exactly a year ago. He then gave the usual introductory preamble about the need to avoid discussions around future pricing or any specific pricing policies of individual companies, so as to meet anti-trust requirements.
Introduction to the Vanitec Energy Storage Committee - Mikhail Nikomarov of Bushveld Energy
Mikhail started out by explaining the reasons for the Energy Storage Committee, created in 2016, to help develop the market for VRFB energy storage technology and then made a brief pitch for everyone becoming members of Vanitec. One of the interesting points is that all members are encouraged to share some information about their activities, including demand, usage and quality information - as the data obtained in this way is used to provide the best measure of global Vanadium usage that is available.
Notable new members since the 3rd ESC meeting in London last October were, I believe: RedT Energy, Vanchem Vanadium Products, Blackrock Metals, Dalian Bolong New Materials and Vanadium Corp - the last two of which have also been elected as members of the ESC Committee. One notable exception this year is Glex, who controlled Gildemeister, which has since been sold off to Stina Resources, which then relaunched themselves as Cellcube Energy.
Mikhail pointed to the Vanitec data, collected via their statistical reporting program that indicated that whilst production is up since it dropped back in 2015 - it is still over 8,000 Tonnes short of the 88,600 Tonnes consumption in 2017, which is the highest value Vanitec has ever recorded.
You can also see from this how the consumption rate dropped in 2014 when Chinese steel mills first started supplying quench and tempered non-V-containing steel for rebar rather than the much more resilient Vanadium-containing rebar. Thanks in great part to the efforts of Vanitec with their Chinese partners the latter has now been mandated as obligatory from the 1st November 2018, yet it is clear from this data that consumption has recovered well before this date has arrived. Terry Perles had a lot more to say on the subject of Chinese rebar later in the morning.
Mikhail went on to summarise the work of the ESC committee so far - whilst much of the detail was left to Gabriella Von Ille's subsequent presentation on the Vanitec VRFB marketing programme Mikhail was able to show a solid 100% increase in traffic to the Vanitec website since it was relaunched two years ago. Much of this will have come about due to the potential used of Vanadium in VRFB, and other, energy storage applications.
Market Update on Vanadium – Terry Perles of TTP Squared
Mikhail handed over to Terry Perles of TTP Squared who gave a review of recent market activity. He did not start off, though he could have done, by pointing out that exactly one year ago, at the 2nd ESC meeting he correctly predicted the strong increase in Vanadium price due to a fundamental market deficit - this was followed some 4 weeks later, in July 2017 by a rapid rise in Vanadium prices, shown below, and described on this site as the 'Vanadium Bomb going off'.
No doubt this price history was well-known to all those at the meeting (though perhaps not to those reading here about Vanadium for the first time.) As a result Terry pointed out a number of less obvious facts - firstly chinese prices now seem to be lagging those in europe, which tradionally they have led. This seems connected with the chinese moving from being net exporters of Vanadium to now being net importers.
Secondly - whilst many in the industry know and appreciate that Vanadium is an abundant element there are still many outside of the industry who did not. In fact during the following International Flow Battery Forum, in the expert panel session, there was a question that seemed to reveal this, apparently from someone who professed to be a mining expert but who then went onto suggest that there was not enough Vanadium for large scale energy storage. (Evidently the questioner had an agenda and fortunately Terry Perles clarified things publicly with his answer.)
The question 'is there enough Vanadium ?' is perhaps best answered with the graph that shows the relative abundance of elements in the earth's crust:
This data, taken from Wolfram Research's Mathematic reference, shows that Vanadium is not only more abundant than the common industrial metals Chromium, Zinc and Nickel but perhaps most tellingly Lithium and Cobalt - the classic battery metals in short supply for Lithium-ion batteries. And it is more abundant than COPPER - critical for all electrical applications. Before we ever need to worry about Vanadium we would need to worry about running out of Copper.
The only reason that more Vanadium is not mined is that, until now, we have not had to do so. From a supply perspective it is perhaps the perfect metal to build a new energy storage revolution upon, once you accept that the revolution will not happen overnight.
Not only have we not had a large global need for Vanadium we have also not even had to mine that much - as shown below, over 2/3rds of the Vanadium currently used comes as a by-product of the processing of Vanadium-Titanate-Magnetite (VTM) ore for steel production (the so called 'steel slag' route).
Iron-ically 90% of this Vanadium then gets put back in the steel, admittedly in a more controlled fashion. However the end result is that up until this point in recorded history there has been a delicate balance struck between Vanadium production from steel processing, and Vanadium use in steel processing. This balance is maintained except during shocks such as in 2005 and 2008, when external demand shocks can push the balance significantly out.
As Terry pointed out 'the Vanadium tail can never wag the steel dog' - by this he meant that if Vanadium increases in value steel slag production will not respond as markets are meant to - by increasing production - as nobody is going to be making more steel just to get a small amount of extra vanadium as a by-product. This is exactly what is happening right now.
Also happening as steel prices have fallen over the last 4 years is that the (generally more costly) VTM-based steel plants can no longer produce steel at a profit, and thus Vanadium production from those plants has been cut off.
Finally Chinese enviornmental regulations have put further pressure on Chinese Vanadium slag producers, as these plants are typically at the dirtier end of the spectrum.
All these factors combined mean that significant new supply of Vanadium can now only come from the primary producers - which outside of China is currently only Largo Resources, Glencore Rhovan and Bushveld Minerals.
Terry went on to describe how we can expect this supply imbalance to get even worse when new Chinese rebar regulations come into force on 1st Nov 2018. This is explained in the Vanitec 2nd ESC meeting write-up so I will not repeat the story here except to show the impact that he expects this legislation to have on Vanadium demand:
In summary he expects the 40 million tonnes of grade 4 rebar to all require upgrading - requiring just under 5000 more tonnes of Vanadium per annum and the larger quantity of lower strength, grade 3, rebar will require between 11,700 and 19,500 more tonnes, depending on the precise replacement scenario.
By themselves the new Chinese rebar regulations give an increased annual requirement of between 16,500 and 24,300 more tonnes of Vanadium. Taken together with the general increasing market penetration of high strength low alloy (HSLA) steels leads Terry to the prediction, repeated at the IFBF, that by 2025 Vanadium consumption will hit 133,000 tpa V even without any increase due to VRFB energy storage projects.
This figure is an incredible 45,000 tonnes greater than today and would require 2 new plants the size of Bushveld's Vametco to come on stream each and every year for the next 7 years.
Question and Answer Session - Terry Perles
Terry was asked what caused the drop in production in 2016 and whether this could come back online - TP responded that this was primarily down to the disappearence of Evraz Highveld from the supply side - this took 12,000 tonnes V-slag out of annual supply (and no it is not coming back). This had previously been supplied to Vanchem in South Africa and Treibacher in Austria - Russian V-slag had to be diverted from China to feed Treibacher.
As far as potential sources of supply were concerned, TP said that Vanchem is currently sitting idle in South Africa and that if there was a way to feed this then that might be able to provide some supply.
Professor Maria Skyllas-Kazacos asked about Australian shale oil deposits - I believe that these would have in principle been similar to the Vanadium rich fuel oils that used to come from Venezuela and were burnt and then reprocessed for their Vanadium in the US - as such they would be at the high end of the Vanadium production price curve. It wasn't clear whether these had any advantages over other Australian projects such as those at Gabanintha.
Similar were stone coal deposits, TP mentioned that he knew of dozens of Vanadium bearing stone coal deposits in China but as ever the ore grade was important, and as magnetic concentration could not be used, unlike VTM ores, stone coal was always going to be in a difficult position when compared with VTM ores. TP mentioned that Chinese stone coal Vanadium producers had told him that they needed virgin grades of 0.8% or better to be economically extractable.
Another question related to the substitution of Vanadium by Niobium in steel strengthening applications when Vanadium prices were high. TP pointed out that the strengthening mechanism was very different in each case and that to use Niobium required significant greater effort at the steel production plant.
Specificially, using Niobium required use of a 1200 deg C reheat furnace (they are typically only 1050 deg C) and that very heavy rolling (reducing the cross sectional area by more that 50% on each pass) was necessary to get the elongated crystal grains required to make the Niobium strengthening process work. TP said that the Chinese steel plants were probably most well equiped to cope with such a change in processing procedures and that there was some evidence that there had been some switch from Vanadium to Niobium in previous years but as this had already happened, and not been reversed, there was reduced opportunity to make further savings of Vanadium through further switching.
Furthermore worldwide supply of Niobium is even less diversified than that of Vanadium - at present a single producer makes over 90% of the world's Niobium. Wholesale substitution of Vanadium by Niobium seems impracticable.
I asked whether the greater efficacy of V+N (eg typically 20-30% more efficient per Vanadium atom for BMN's Nitrovan), when compared with FeV, might allow users to go further using the same amount of Vanadium. TP asked Fortune Mojapelo of Bushveld Minerals (BMN) to answer the question as "he is the only person outside of China doing it" - Fortune answered that it should help but it was a matter of the (relatively slow) education of the market to accept new materials and processes. Terry went on to explain that the Chinese users of Vanadium already had a very good understanding of the benefits of the V+C+N system and use it widely, making it from bought in Vanadium Pentoxide - thus in China there was little opportunity to spread the Vanadium that we have more thinly by substituting V+(C)+N for FeV.
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