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Demand still high for strategic metal
In case you missed it, 2018 was the "Year of Vanadium", after prices for the strategic metal skyrocketed due to increased demand from the steel industry and a global supply deficit.
"Really, 2018 was the year of vanadium," said Jack Bedder, a director of respected independent analyst Roskill, late last year. Roskill has nearly 50 years' experience in research and consulting in the metals, minerals and chemical industries. "Prices increased considerably in 2017, but in 2018 the price rise intensified," he said.
At one point in late 2018 vanadium prices were at 13-year highs and, while they have fallen slightly in 2019, a combination of market forces is driving what many analysts believe will be a structural transformation in the vanadium market over the coming decade.
The looming supply issue stems from a combination of ageing mines, growing underlying demand from traditional markets - where it is used as an alloy in steel production - and growing demand from a new market segment where vanadium-based "redox flow batteries" are seen as the future of large-scale battery energy storage.
It is for this reason that the Mount Peake deposit, located 230 kilometres north of Alice Springs in the Northern Territory, has emerged into the spotlight. It is one of the largest new strategic metals deposits set to come on stream anywhere in the world and is controlled by ASX listed company TNG Ltd.
TNG has a market capitalisation of around $100 million, but has high hopes for a planned $850 million project which will export three high value metal products - vanadium pentoxide, titanium dioxide (used in the production of paint and other industrial processes) and iron oxide, all produced using TNG's proprietary TIVAN Process.
Significantly, the company already has offtake agreements in place with large multi-national companies for all three products it intends to sell.
It is fair to say that 2018 was a year of signing agreements for TNG and getting ready for the development of the project, which will be in two parts - the mine site at Mount Peake and a downstream processing plant near Darwin's main deep-water port.
The plan is that the ore from Mount Peake will be trucked to the nearby Darwin-Alice Springs railways line (which remains under-utilised) and be sent to the company's Darwin-based processing plant. The company has secured land to build the plant adjacent to the railway line and just a few kilometres from Port Darwin.
Key milestones that TNG achieved in 2018 were:
- The signing of a mandate with German-based project funding giant KfW IPEX-Bank as the lead debt manager for up to a $US600 million ($845 million) finance package.
- Northern Territory and federal government environmental approvals for the Mount Peake mine site.
- Execution of the Mount Peake Project Native Title Agreement with the Central Lands Council.
- Full granting of the mining and ancillary leases at Mount Peake.
- The signing of a binding term sheet with the Swiss-based market expansion services provider DKSH for the life-of-mine offtake of 100 per cent (up to 150,000 tonnes per annum) of its titanium products.
The only major permit activity to be completed is the environmental approvals for the Darwin processing plant site, with work on the environmental impact statement ongoing.
Paul Burton, TNG's managing director, said the company's board (which recently added wellknown Australian mining executive John Elkington as chairman) and management team had derisked the project, and set it up for development starting before the end of this year.
"We are focused on completing the front-end engineering and design study that will determine the final capital cost and what our debt financing needs will be," he said.
"Once we reach that point, we'll have absolute certainty on the most appropriate funding strategy."
On March 4, the company went a step further, revealing that it is looking at a dual listing on London's AIM market, which it will investigate further in the coming months.
"The decision to look at a possible dual listing comes from the fact that we've had significant interest from investors in Europe, who understand our strategy, particularly for vanadium, which isn't as well known in Australia," adds Burton.
"If you look at our European partners including KfW IPEX-Bank, SMS group. Ti-Cons and DKSHwhich is an $US11 billion company and listed on the Swiss Stock Exchange - it makes sense to have a European presence, but we'll investigate it first and keep our shareholders informed.
"We think that listing on the AIM could help with identifying additional strategic partners while also involving major institutions and funds with the company and improving liquidity in our stock.
"TNG has also demonstrated that it can produce the vanadium electrolyte required to produce vanadium redox battery systems, and we can see these replacing expensive and dirty diesel powered energy supplies in remote towns across Australia and globally- helping to transform how energy is stored.
