2020 could be the year when vanadium really turns the corner, a belief that Australian Vanadium (ASX:AVL) managing director Vincent Algar attributes to building supply pressure.
While acknowledging that short-term pricing might stay low until March, he told Stockhead that the end of the long Chinese New Year holiday might lead to a change in vanadium pricing.
“The upside factors are the steel market and how that goes, if the steel market starts to pick up then obviously there will be a push through to more vanadium demand and that will push pricing up,” he explained.
Algar also believes that 2020 will be a watershed year for the vanadium redox flow battery (VRFB).
He pointed to factors like bushfires and grid destabilisation from people losing their dependency on the grid in Australia, while power failures in South Africa could also drive adoption of the batteries.
“Our colleagues, Bushveld Minerals are making a good case for vanadium redox flow batteries in the South African market and I think VSUN Energy and AVL can make the same efforts in Australia for similar reasons,” Algar said.
“Growth in the VRFB market is looking really good for 2020 and as some of those bigger batteries get deployed, that will put a lot of pressure on existing suppliers of vanadium to produce more.
“That’s going to be an interesting pressure factor over and above old-fashioned markets (for vanadium). The mid and long-term view for vanadium is very bullish.”
Australian Vanadium
For the company, one of the key milestones is to complete the definitive feasibility study for its namesake project, which has a reserve of 18 million tonnes (Mt) at 1.05 per cent vanadium pentoxide (V2O5) within a broader resource of 183.6Mt at 0.76 per cent V2O5.
“Our PFS shows we can be in the lowest quartile. We will accelerate, improve and finish that further in our DFS, which is due pretty soon,” Algar noted.
This includes work to increase the project’s reserves in order to push mine life closer to 40 years from the current 17 years.
“The resource can support that, and we think a lot if investors out there will like the comfort of having a large reserve base to start off with.”
Australian Vanadium is also focusing on capital cost reduction and has made progress in improving the efficiency of its proposed processing operations.
The company is also looking to secure a strategic funding partner that is already in the vanadium business and understands the market well.
This will drive The Australian Vanadium Project much closer to a financial investment decision this year.
On the battery side of the business, the company is looking to push VSUN Energy into a whole new space to drive more sales.
“We’ve run VSUN on a tight budget for a number of years now, we see the valuation that Bushveld gets for Bushveld Energy and we think we can get a correspondingly good valuation out of VSUN,” Algar said.
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