Vanadium Resources Limited (ASX:VR8) in its recent update announced that the Company was progressing on the Definitive feasibility Study (DFS) on its flagship Steelpoortdrift Project. The project is one of the world’s largest and highest-grade vanadium mining projects, located in the Bushveld Complex of South Africa.
The Steelpoortdrift Project holds 662 Mt at 0.77% V2O5. The ongoing DFS is slated to be finalised by the third quarter of 2022. In conjunction with its DFS on a salt roast process, the Company is analysing several additional processing methods to potentially make the project greener and more cost-effective.
The project is in its development phase and advancing rapidly towards its first commercial production.
VR8 is on track to its first commercial production in late 2024 and with the increasing demand for green metal, investors should track the Company’s activities closely.
Shares of VR8 delivered excellent returns of 135% in the last one year for its shareholders.
In this backdrop, let us understand green metals and the vanadium market better.
According to an estimate from VR8, nearly 85% of vanadium is produced by China, Russia and South Africa. China is currently the largest producer with nearly one-third of the world’s total vanadium production. But Chinese production is largely from stone coal which is considered highly polluting. If stringent environmental regulations are enforced, it will pose a threat to Chinese stone coal resources.
South Africa is becoming an attractive investment destination for vanadium mining.
Battery Storage
Global Markets Insights stated the stationary battery storage market was valued at US$23 bn in 2020 and is estimated to grow at 25.1% CAGR to over US$149 bn by 2030. Bloomberg NEF, New Energy Outlook 2018 estimated battery storage capacity to grow to 600GW by 2025, out of which nearly 15 to 25% will be supplied by Vanadium Redox Batteries. The battery storage industry represents an additional supply requirement of 10,000mtV of vanadium. Based on the data from the Department of Industry, Science, Energy and Resources (DISER) 2021 Report, demand for vanadium for battery manufacturing is estimated to grow at an average rate of 20.7% annually between 2020 to 2029.
Steel
The 2021 DISER report further revealed that the consumption of vanadium by the steel industry is forecasted to grow by an average 2.9% annually between 2020 to 2029.
Chemical sector
The Chemical sector is also estimated to increase the consumption of vanadium annually by 3.8%, as per the 2021 DISER report.
VR8 is positioning itself to become a major supplier of vanadium globally. The Company is also incorporating an advanced ESG processing technology that will allow it to produce valuable by-products, including, titanium, aluminium, iron, and hydrogen, which generally go to waste in conventional processing methods.
VR8 stands out among its peers in terms of resource volume its holds at its project in South Africa.
VR8 is led by an experienced team which has considerable experience in the mining industry. The project boasts a good infrastructure connectivity with rail, road and sea. The Company has already secured required permits from regulatory authorities and has granted Mining Right.
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