Sleeper Vanadium Metal Takes the Price Lead in the Battery Technology Space
Published: Nov 27, 2018 9:00 a.m. ET
LOS ANGELES, November 27, 2018 /PRNewswire via COMTEX/ -- LOS ANGELES, November 27, 2018 /PRNewswire/ -- FN Media Group Presents USA News Group News Commentary
USA News Group -Last year was a great year for most battery metals with cobalt taking the lead as its price more than doubled. Lithium prices also rose healthily. But 2018 saw a different dynamic as prices cooled and corrected for all but one metal gaining favor in battery markets: vanadium. That grey metal rose even stronger than cobalt last year and continues to surge in 2018.
Mining companies in the vanadium space have experienced an increase in interest including BHP Billiton Ltd BHP, -0.76% Ferroglobe PLC GSM, -62.26% Glencore PLC (GLEN).
Indeed, the interest has spurred on junior miners like Maxtech Ventures to add vanadium to their roster. Maxtech Ventures MTEHF, +29.80% is possibly one of the most likely near term producers of new manganese resources based on its Brazilian prospects. The company just announced its acquisition of two large vanadium properties (3,500 hectares) in the state of Bahia, Brazil, putting Maxtech squarely in focus.
This also comes at a time when the U.S. Government is moving to reduce the country's reliance on imports for critical materials, such as vanadium, used in the manufacture of battery technologies for automotive and high tech applications. And so the race is on
Vanadium Pricing a Stronghold
Roughly 90% of global vanadium supplies go to hardening steal. The little-known metal is also used to prevent global warming in an increasing manner.
Since lithium is currently the metal of choice for powering EVs (electric vehicles), vanadium has the opportunity to become its counterpart for powering stationary batteries. These are large utility-scale systems used to store mass energy from wind and solar farms. Like the well-known zinc-air flow batteries, vanadium batteries can provide significant advantages compared to large stationary lithium-ion battery systems.
In the pricing game, vanadium is not only impressive thanks to its price performance that is up over 700% since 2015, but all that more attractive since supply and demand look very bullish at this point. Thanks to rising applications, demand has increased significantly over the last several years, however supply is steadily decreasing, largely because of mine depletion and global environmental restrictions slowing production.
As a kicker, China applied new steel reinforcement standards to fight floods and earthquakes in late 2017. The new regulations require a doubling of vanadium content in the steel used for high-rise constructions and other applications.
Where Vanadium Makes Sense
Most of us are now aware of the rise of lithium batteries. They are common place in your phone or notebook. They are completely self-contained, but store their energy in cells that generate heat. Vanadium flow batteries are considerably different, storing their energy in tanks.
The key factor in the equation is that doubling the size of a lithium system virtually doubles the price, whereas with the vanadium model, all that's needed is building a bigger tank to lower the cost per kilowatt hour. In addition, Vanadium Redox batteries can be charged and discharged 35,000 times with a projected potential lifespan of a 35 years compared to conventional lithium batteries that last from 3 to 5 years.
The flow batteries may offer a superior alternative to lithium ion technology for stationary grid support energy storage too. Lithium ion batteries are capturing an increasing share of power grid support applications, however flow batteries are particularly effective for load leveling and frequency control in electric power grids when batteries with both high power and high capacity are needed.
Strategic Moves into Vanadium
Many of the leading resource companies spotted the trend in vanadium some time ago and moved to secure new resources. Most recently, junior Maxtech Ventures joined those ranks with its acquisition of two large vanadium properties in the state of Bahia, Brazil. The company also formed a vanadium exploration-research team to identifying other potential vanadium mineralization deposits in Brazilian areas where Maxtech has already established high-grade manganese assets.
The acquisition is a real opportunity for Maxtech whose prominent neighbor is Largo Resources Ltd., the only pure-play producer of vanadium going. Largo owns the exceptionally high-grade world-class Maracàs Menchen Mine. It reportedly shows average head grades of 1.15% V2O5 in pit reserves and has one of the worlds' highest grades with very low levels of contaminants.
Based on its reported $4.15 USD annual average operating cash cost per pound of V2O5, the Maracàs Menchen Mine is currently rated as the worlds' second lowest cost vanadium producer. That leaves significant profit margins with the market price of V2O5 near $20 USD/lb.
For Maxtech, the prospects are obvious with the entire strike length of the Maracàs Menchen Mine Property rich in vanadium and hosting many deposits of vanadium-rich titaniferous magnetite mineralization. The chances of finding more vanadium-rich deposits on Maxtech's newly acquired properties are considered high according to Largo's own assessment that there exists "substantial regional growth to feed the Maracàs Menchen Mine for the long-term."
That comes from a mining team who managed to bring Maracàs Menchen from construction in 2012 into production of vanadium flake in August 2014. Those kind of timelines are nearly unheard of in the mining sector.
Uptake On New Supplies
The industry appears to be reinforcing the sentiment that vanadium has a bullish road ahead. At Tesla's shareholder meeting in June 2018, Elon Musk put forth his view of the market for stationary and flow type batteries where vanadium is in strong demand. According to Musk, things are not slowing on this front any time soon.
"The rate of stationary storage is going to grow exponentially. For many years to come each incremental year will be about as much as all of the preceding years, which is a crazy, crazy growth rate," says Musk.
Companies with active interests in vanadium suitable for use in battery metals include:
BHP Billiton Ltd BHP, -0.76% is an international resources company that discovers, acquires, develops, and markets natural resources worldwide. It operates through four segments: Petroleum, Copper, Iron Ore, and Coal. The company explores for copper, silver, lead, zinc, molybdenum, uranium, gold, iron ore, and metallurgical and thermal coal. BHP Billiton Limited is a subsidiary of BHP Billiton Group.
Ferroglobe PLC GSM, -62.26% operates in the silicon and specialty metals industry in the United States, Europe, and internationally. The company offers silicon metals that are used in personal care items, construction-related products, health care products, and electronics, as well as used in the manufacture of silicone chemicals; silicomanganese, which is used as deoxidizing agent in the steel manufacturing process; It also provides ferrosilicon products that are used to produce stainless steel, carbon steel, and various other steel alloys, as well as to manufacture electrodes and aluminum.
Glencore PLC (GLEN) is engaged in the production, refinement, processing, storage, transport, and marketing of commodities worldwide. It operates in three segments: Metals and Minerals, Energy Products, and Agricultural Products. The Agricultural Products segment engages in the farming, processing, handling, storage, and port facilitating of wheat, corn, canola, barley, rice, oil seeds, meals, edible oils, biofuels, cotton, and sugar
TNG Price at posting:
11.0¢ Sentiment: Buy Disclosure: Held
