Vanadium, a remarkably soft, steel-blue/grey chemical element, is found in its natural guise predominantly in the form of vanadium- and titanium-bearing magnetite rocks mostly in South Africa, China, Russia and, to a lesser extent, Brazil. In comparison though, South Africa has the largest high-grade vanadium deposits globally, located in the world-famous Bushveld Complex, in the country’s northern region.
‘It is the sheer scale and high grade of these South African deposits that sets us apart from primary vanadium production elsewhere,’ says Fortune Mojapelo, CEO of Bushveld Minerals. Add strong vanadium market fundamentals and it’s easy to see why the company has zeroed in on this commodity and developed an impressive portfolio of three primary vanadium deposits and two primary vanadium-processing plants on the Bushveld Complex.
From its origins in 2008 as a junior exploration company, Bushveld Minerals has grown its project portfolio through exploration and acquisitions, driven by an ambition to build a significant vertically integrated and low-cost vanadium company. Now listed on London’s AIM with a market cap of ZAR5 billion, the company has come a long way in a short time. Mojapelo explains that some 70% of global vanadium is produced as a coproduct, in the form of vanadium slag, by steel plants in China and Russia, and 18% by four primary vanadium-production facilities located in South Africa and Brazil. Bushveld Minerals owns two of the three South African plants.
Vametco is currently the flagship for Bushveld Minerals, delivering some 2 500 mtVpa (metric tons of vanadium per annum) to the world; slightly less than 3% of global production. With the acquisition and refurbishment of Vanchem and expansion of production at Vametco, the firm plans to grow production to some 8 400 mtVpa within five years.
‘Supporting the Vametco and Vanchem processing plants are three primary vanadium deposits – the Vametco mine itself, and the Mokopane and the Brits vanadium projects,’ he says. ‘Together they represent a 550 million ton combined resource (on a 100% basis), the largest high-grade primary vanadium resource base in the world.‘All three deposits are within a 200 km radius of the processing plants, to which they are well connected with good rail and road infrastructure. But even at the desired 8 400 mtVpa production level, we will use less than a fifth of the resource base over the approximately 25-year life-of-mine.’
Predominantly, vanadium is used as an alloying additive to strengthen steel, most commonly rebar steel used in construction. It is also used in specialised steels for the aerospace industry, where strength and lightness are imperative. While the steel market in general faces a subdued growth outlook, demand for vanadium in steel is expected to grow, driven mainly by regulations in China, which consumes about half the world’s steel production. These regulations seek to increase the quality of construction rebar by stipulating the addition of steel-alloying elements, such as vanadium.
‘However, it is a different sector – energy storage – that brings a lot more excitement around vanadium’s demand prospects,’ says Mojapelo. ‘This is a rapidly growing market in which vanadium will play a significant role through vanadium redox flow batteries, or VRFBs.’ Unlike lithium batteries, which are mainly used in mobility-based applications such as electric vehicles, VRFBs are ideally suited to stationary energy storage applications where long life, scalability, flexibility and safety are key.
Mojapelo explains that stationary energy storage is largely needed when electricity generated at one time is consumed at a different time. ‘This is particularly useful for power grids, where electricity generation does not necessarily match consumption patterns. The ability to store power that is generated cheaply during the day to supplement power requirements during peak demand periods is exceptionally important.’ And, of course, to use solar PV-generated electricity at night requires storing it first.
‘To give you an idea of storage opportunities, the recently published South African Integrated Resource Plan provides for over 2 000 MW of new energy storage, which will help unlock storage demand in the region,’ he says. ‘The falling costs of renewable-energy generation and increasing availability of storage solutions such as VRFBs is good news for Africa and the greater Third World. No longer will countries need to overbuild large power-generation plants or expansive transmission networks. Instead they can build modular, scalable mini-grids to connect remote communities or industrial sites.
‘This consideration has a triple benefit. It allows Africa to increase access to electricity, leveraging resources it has in abundance while simultaneously leading the energy transition towards cleaner electricity. Herein is not only an opportunity to meet a basic need of its people but to build a global industry,’ he adds. ‘The World Bank recognises this opportunity, having committed some US$1 billion to support the deployment of 17 500 MWh of battery energy-storage systems in low- to middle-income countries by 2025.’
The push for cleaner energy generation, informed by climate change concerns, is driving the growing adoption of renewable- energy generation and, with that, the growing demand for battery energy storage. Analysts estimate that the global energy storage market will require 100 000 MWh per annum by 2027; with 90% of this in the form of long-duration storage – ‘a sweet spot for VRFBs’, as Mojapelo puts it.
There is another benefit. Vanadium in a VRFB is re-usable at the end of its 20-plus-year life. It can be removed easily for reuse in another VRFB or reprocessing into steel alloys. ‘As sustainability grows in importance, this circularity of vanadium is powerful and further reinforces our vertically integrated model, ensuring Bushveld Minerals contributes to both the mining and energy sectors in South Africa,’ says Mojapelo. ‘Vanadium presents a good example of how a country can take advantage of its rich mineral endowment and maximise its share of the value chain through in-country beneficiation, while simultaneously creating a leading position in the energy industry globally.’
This is particularly important in the context of South Africa’s current energy crisis. Given the country’s rich endowment in primary energy resources (sun, wind, coal), it need not be in an energy crisis but rather leading Africa’s electrification, while driving the transition to cleaner energy and simultaneously growing local downstream energy-focused industries, according to Mojapelo.
‘As a company we are doing our part and charging ahead. Our business model, inclusive of the mining and processing of vanadium, also builds the downstream VRFB business. We intend to manufacture vanadium electrolyte in South Africa, assemble VRFBs in Africa and develop large-scale mandates for energy storage across the continent.
‘Practising what we preach, we have developed a mini-grid at the Vametco mine, which will combine 1 MW PV solar with a 4 MWh VRFB,’ he says. ‘At current tariffs, Vametco will not pay a cent more than it pays to Eskom, yet the project is bankable for project finance. The vanadium electrolyte in these batteries will be rented out.’
However, is there enough vanadium to cope with this increasing demand? Mojapelo believes so. ‘South Africa’s Bushveld Complex has more than enough vanadium resources to support the energy-storage market to do this. What’s required is processing infrastructure,’ he says, adding that ‘the basis for building this infrastructure on top of what already exists is there’.
Mojapelo is adamant that the Bushveld story is attractive for multiple stakeholders, not least its employees and the communities in which it operates. While the company is finalising an employee share ownership plan for its workers, which will be introduced next year, it pays a share of its profits to employees as a special bonus.
Surrounding communities benefit from a trust the company established when it acquired Vametco. Their economic interest in the mine increased from some 3.75% to more than 10%. ‘We believe this approach builds deep and meaningful partnerships with stakeholders whose importance can not be overstated,’ says Mojapelo.
Bushveld Minerals is likely to do very well, according to Mojapelo. ‘Everyone is talking about vanadium and, increasingly, VRFBs – and their role in energy storage.’ It’s a delightful paradox; renewable energy’s greatest challenge is vanadium’s greatest opportunity. No wonder, as Mojapelo often says: ‘The story of Bushveld Minerals is not even halfway told yet.’