Projects in the pipeline: Vanadium pentoxide - going with the flow

By John Ollett
Published: Monday, 22 April 2013

Vanadium has, for years, been little more than a curiosity on the horizon, but this looks set to change. Traditionally, vanadium has been used as a strengthening agent for steel and titanium alloys but new end uses are emerging.

Vanadium has, for years, been little more than a curiosity on the horizon, but this looks set to change.

Traditionally, vanadium has been used as a strengthening agent for steel and titanium alloys but new end uses are emerging. As Bill Radvak, CEO of American Vanadium, explained to a recent energy storage conference in New York - vanadium flow batteries are an exciting new prospect, with some batteries already in production or operating.

“Nobody in the audience understood that companies were actually selling [vanadium flow batteries] globally. Everyone knew about them but they were looked on more as a research project,” Radvak told IM.

“When they heard what Gildemeister [American Vanadium’s battery partner] has, and the completeness of their product and their readiness to move forward, well, we were extremely popular at the conference,” he added.

To cater for this new demand source, new supplies of vanadium will be needed and, because the majority of output is already being used in the steel industry, battery manufacturers will be looking to junior miners.

The mineral form of vanadium - vanadium pentoxide - is the medium that vanadium companies tend to use to report the size of their resources, and is the principal intermediate product from treatment of magnetite ores, vanadiferous slags and secondary materials. In its industrial mineral form, it can be used directly in non-metallurgical applications and in the production of a range of vanadium chemicals.

Vanadium pentoxide is also the starting material for production of ferrovanadium and master alloys, which are its major end-markets accounting for around 95% of current world demand.

Looking to flow batteries

Vanadium reduction/oxidation (redox) flow batteries store energy in a liquid electrolyte that contains vanadium pentoxide and a dilute acid. The electrolyte is stored in two separate tanks and is pumped through two sets of piping, which pass closest to each other in the cell stack.

It is here that chemical energy is turned into electrical energy as a single electron is passed through a membrane from the electrolyte of one tank to the other. The importance of flow batteries is that there is no chemical change, unlike other types of batteries, only the movement of an electron. This means that there is no degradation of the electrolyte as in normal batteries, giving each battery a much longer life than standard cells. The electrolyte does eventually lose some its effectiveness but this can take 20 years or more.

One of the great advantages is that the tanks containing the electrolyte can be any size, which gives great flexibility for battery power.

“Primarily, this technology is appropriate for grid storage applications including remote power network storage, storage in conjunction with intermittent grid power systems (wind, solar), and load-levelling applications,” Terry Perles, president of industry consultants TTP Squared told IM.

A question mark has long hung over whether vanadium flow batteries can be used commercially, but companies like Gildemeister, a European-based manufacturer, are already selling them to be used for both grid scale and smaller neighbourhood and industrial complex scale storage.

China, the largest producer of vanadium for the metal industries, is also said to be investing heavily in flow batteries for the future.

Vanadium flow batteries could capture about 17% of the grid storage market by 2017 which would represent about $5.4bn in potential revenue, a report by Lux Research pointed out. “This figure assumes that developers can reach a target of $750/KWh for a fully installed system by 2017,” analyst Brian Warshay told Vanadium Investing News. Currently, the price is about $1,250/KWh.

Vanadium produced in 2012 has been estimated by TTP Squared as 70,000 tonnes with demand estimated at 81,000 tonnes. The vast majority (92%) of vanadium demand was from the steel industry.

Demand from flow batteries made up just 1% of total vanadium demand in 2012 but the demand picture for the future could be very different: “There are projections from other sources that suggest demand for vanadium in energy storage applications could grow from about 850 tonnes vanadium in 2012 to as much as 20,000 tonnes vanadium by 2015,” Perles told IM, but stressed that predicting this was very difficult because of a number of technologies competing with flow batteries.

“Certainly there is a significant probability that considerable amount of vanadium will be used in these technologies in the future, but the impact is very difficult to quantify,” he said.

John Hykawy of Byron Capital Markets agrees, telling IM that battery applications are potentially a important end market for vanadium, but that: “Time marches on, and technology is getting away from vanadium for these uses. We had thought, a few years ago, that vanadium reduction/oxidation batteries could be a large market. Now, other battery types are developing, including Sadoway’s liquid metal batteries for grid storage (work done at MIT), and the reliability and cost of lithium batteries is decreasing to the point where vanadium redox has a much more difficult fight ahead of it.”

More than just large batteries

While flow batteries are a major potential end-market for vanadium, they are not the only market. Vanadium is being used as a cathode material in lithium vanadium phosphate batteries.

“Lithium vanadium phosphate batteries are suitable for portable energy storage applications including automobiles and portable electronic applications,” Perles told IM.

“The current generation of lithium batteries are hampered by low energy storage capacity and long recharge times. These limitations severely hamper their performance in automotive applications. Recent breakthroughs in the use of vanadium in the cathodes of these systems have overcome these limitations, and batteries which can store enough energy to drive a car more than 300km and recharge in 20 minutes have been developed,” he added.

Vanadium is also used in a variety of chemical applications including oxidation and pollution control catalysts, as well as ceramic colorants, dye fixants and special glass applications. High purity vanadium oxides or other vanadium chemicals are most typically used.

“Global demand is roughly 2,500tpa vanadium (...) which represents about 3% of global demand,” Perles told IM, adding: “For the most part these applications are fairly mature and growth in demand is similar to growth in global GDP.”

The problem with prices

Pricing for ferrovanadium has spiked drastically on two previous occasions and this could discourage battery producers from investing, Radvak explained to IM: “The cost of the vanadium electrolyte is 40 to 50% of the cost of the battery (...) so when it’s half of your battery cost, you lose your shirt when the price spikes.”

American Vanadium’s partnership with Gildemeister allows for this: “We would offer up a long term stable price on the electrolyte so they can plan the business,” said Radvak.

Hykawy agreed that price is a concern: “The irony is that if vanadium redox batteries, or lithium vanadium phosphate cathodes in conventional lithium batteries ever take off, it is possible that enough additional demand is generated to effectively price vanadium out of these markets.”

However, he added, “current ferrovanadium prices aren’t showing signs of moving back to all-time highs. In fact, over the last decade one could make a good argument the prices are trending lower.”

Steel first

Vanadium batteries may be here and may work but on a commercial scale they are yet to reach their full potential in the market. As such, it is important for junior producers to retain their focus on current major end-markets - namely steel.

“If a company developing a vanadium project can’t make it work by selling their products to the steel industry, they probably can’t make it work, because the only customers in town, effectively, are from the steel industry,” Hykawy pointed out.

Radvak agrees, telling IM: “We’ll have to sell to [the steel industry] in the earlier years as the electrolyte business grows. Our calculations are that 11m lb (4,989 tonnes - American Vanadium’s estimated output) is about 700 MW of storage per year - that’s a fair amount. In the long run it’s not, but in the early days it’s quite a bit to scale up to.”

This isn’t the only market for vanadium in the US either, he added, as the US imports roughly 6m lb (2,722 tonnes) vanadium just for the higher price titanium alloys market - primarily for aircraft.

The projects

The question of which junior miners will step up and supply the budding vanadium pentoxide industry is on everyone’s lips, American Vanadium is one of the larger potential producers, which has great potential because it is a US-based source.

American Vanadium is developing the Gibellini project in Nevada which has an estimated output of 11m lb (4,989 tonnes) and should be coming online, subject to permitting, within three years, Radvak told IM.

The product will be processed on site and will focus on North America distribution because it will most likely be the sole domestic source: “We have the only local supply, at least for the next 10 years. We don’t see another scale deposit even on the horizon,” said Radvak.

The Nevada deposit is also much cleaner than some vanadium deposits, Radvak explained: “What makes it unique globally is that most vanadium comes from magnetite, so it’s a pretty intensive and dirty rock. We have a very clean rock with few contained metals and that gives us the ability to produce whatever refined product we want.”

But although it intends to sell initially into the traditional vanadium markets of steel and chemicals, American Vanadium has a very strong focus on the flow battery business.

“We want to be more than just a vanadium supplier,” said Radvak.

Vanadium electrolyte is priced higher than vanadium for the steel industry and can mean better profit margins but to capture that market there has to be a market to capture.

“What we saw was Europe, Japan and China, were almost decades ahead on research compared to North America,” Radvak told IM, which meant that in order to profit from the market “we would have to help create the vanadium market in North America”.

To do this, American Vanadium partnered with European-based flow battery producer Gildemeister which is been selling batteries commercially in Europe. American Vanadium will handle to marketing and sales of batteries in North America while Gildemeister will handle production. The eventual goal is a production facility in North America but that will be further down the line.

The batteries will be aimed at the mass storage market in the 0.5MW to 5MW range.

American Vanadium has already seen interest both from larger scale grid storage customers and from smaller scale customers which will use the batteries to store energy generated by renewable sources (chiefly wind and solar).

Batteries that store energy generated by renewable sources can also be used to take entire communities off the grid as the batteries mean that intermittent generation of energy by renewable sources does not mean an intermittent supply of electricity. Several smaller communities are investing in this approach and, in the Middle East, Abu Dhabi is developing the city of Masdar which will run entirely on renewable sources.

This could also be used to help more isolated Canadian communities, Radvak explained, which still rely on diesel generators because of their remote location. “The numbers show, that if you have battery backup you still need diesel but you can cut 40% of your diesel costs - that’s millions every year,” he said.

Atlantic Ltd begins production

A project that has recently made it into production is the Atlantic Ltd’s Windimurra project, Western Australia, which has been restarted from a previously producing mine.

Windimurra first started production of vanadium in 1999 but was shut down, and the mill scrapped, in 2003 due to poor market conditions. The mill as now been rebuilt and production commenced in 2012.

The operation is now ramping up to its full production capacity of 6,300 tpa, which it expects to reach by the end of June 2013, and will continue at this rate over a mine life of more than 28 years.

“Windimurra production is expected to meet about 7% of world demand,” Atlantic Ltd has pointed out, “and it is expected global demand growth will require the equivalent of a “new Windimurra” to come on stream almost every year”.

Largo Resources to follow in 2013

Another major project scheduled to come online in 2013 is Largo Resources’ Maracas project in Brazil.

Construction of the project commenced in June 2012 and commissioning of the mine is targeted for Q4 2013. Largo already has an offtake agreement in place for with Glencore International for 100% of material over six years.

On average, the mine will produce 11,400 tpa of vanadium equivalent over a 29-year mine life from a reserve of 13.1m tonnes grading 1.34% vanadium pentoxide. The company also has a measured and indicated resource of 24.6m tonnes grading 1.11% vanadium pentoxide, and an inferred resource of 30.4m tonnes grading 0.83% vanadium pentoxide.

The company recently received a report to re-scope the project by incorporating a new production stream of both vanadium pentoxide and ferrovanadium as opposed to only ferrovanadium, which was originally intended as the sole product.

The report pointed out that results from metallurgical testing indicate that it is more economical to produce vanadium pentoxide for life of the project and convert 65% of it to ferrovanadium from year five onward.

Further down the line

Economically viable deposits of vanadium are often found as co-deposits with other minerals, several of the producers aiming to come online in the next few years will produce vanadium pentoxide as a co-product.

One such producer is Energizer Resources which is developing the Green Giant project in Madagascar, which includes a graphite deposit as well as the vanadium prospect.

Similarly, companies such as Argex Titanium and TNG Ltd are looking to produce titanium dioxide and vanadium pentoxide from their projects. For projects such as these, vanadium could prove to be a solid revenue stream in addition to the main product.

Other companies, however, have put their vanadium projects on the backburner in order to focus on other deposits. Speewah Metals began exploring a large titanium dioxide and vanadium project in Western Australia but has since shifted its focus to copper and gold: “Speewah continues to monitor the market conditions and the potential of joint venture and/or any other transactions related to its titanium and vanadium project,” the company said.

Much of the demand for vanadium pentoxide remains hypothetical but it is clear that there are several interesting projects looking to cater specifically to that market.

Although, many of these projects could easily supply the steel industry instead, potential producers would prefer the mineral end-markets because of the extra profit margins.

Much still hinges on the success of flow batteries but, as Hykawy pointed out, “the time frame is unknown. I suspect, though, that we will know by 2015-2016 whether the vanadium redox battery for grid energy storage has any legs at all”.