Vanadium redux: WA project leads VFB charge

Right place, right time, right geology: Graham Arvidson believes Australia has a unique opportunity to build a world-class vanadium battery storage and circular value chain on the back of a 50-year resource in arguably the world's best mining jurisdiction.

Arvidson, who had a front-row view of the explosive growth in Western Australia’s lithium industry over the past decade, heads Australian Vanadium, touted by some as the company most likely to become the world’s next large-scale primary vanadium producer.

The lithium space is flat now amid low prices but it spawned a A$15 billion lithium major (Pilbara Minerals; currently worth about $8.7 billion) and broader WA battery-grade material supply base in the past decade. State lithium exports climbed from sub-$6 billion in 2015-2016 to more than $18b last year.

“I've worked in most of the lithium mines here in WA and if you roll back time to 2016 most people couldn’t spell lithium,” says Arvidson, an IMARC 2024 Mining Spotlight speaker and lead on a feature panel discussion: What does a future made in Australia mean for mining?
“We would have sat across a table like we are right now having a conversation about price growth projections and you’d have had one party saying 10% growth and maybe someone talking about 200% growth. And the truth is, it’s been more extreme than that.”

The comparison highlights the difficulties nailing supply and demand, and pricing, predictions in such turbulent times for global energy, transport and manufacturing. It also points to an increasing market appetite for funding and advancing world-class projects with the right cost and risk settings where the long-term price signals are favourable, as with lithium.

Australian Vanadium’s managing director sees tailwinds building behind the company’s cornerstone WA project as vanadium’s long-term demand and price links to steel are transcended by the metal’s use in long-duration energy storage linked to renewable power and a multitude of industrial and societal use cases.

“Australian Vanadium aspires to manufacture vanadium flow batteries and is one of the few companies developing a grid-scale battery supply chain in Australia,” Perth investment firm Shaw and Partners said this month.
“The Australian Energy Market Operator [AEMO] forecasts that the National Electricity Market will quickly follow the US and need 19GW of storage capacity by 2030, rising to 43GW in 2040 and 56GW in 2050.
“Current storage capacity is just 6GW.”

Shaw says battery energy system storage is the fastest growing battery demand market in the US as that market matures and duration increases.

“The operating capacity of battery storage in the US grew by 7.9GW in 2023, bringing the country’s total cumulative installed base to 17GW. In more precise terms, there was 7881MW of new storage installations and 20,609MWh of new storage capacity deployed over the past 12 months.
“In 2024, battery storage capacity will grow 89%, or a further 14.3GW, according to the US Energy Information Administration, with most of that in California and Texas. Twelve US States now have grid energy storage targets, such as 15GW in California by 2032 and 6GW in New York by 2030.”

Meanwhile, costs per MWh have fallen 73% over the past 10 years and are expected to dip further as the industry scales.

Which, of course, is already happening in China.

Arvidson says China added more than 25GW hours per annum of vanadium flow battery (VFB) and vanadium electrolyte manufacturing capacity last year to support the rollout of VFB storage.

“To put that into context, that equates to 207,690 tonnes of annual vanadium demand,” he says.

Australian Vanadium aims to produce 11,200t per annum, roughly 5% of the Chinese gigafactory demand added in 2023, via the US$435 million project it outlined in a 2022 feasibility study. It is working on an optimised FS after completing a A$217m merger with Gabanintha project neighbour Technology Metals Australia earlier this year.

The merger consolidated their adjoining projects across the same orebody to give Australian Vanadium an updated mineral resource estimate of 395 million tonnes grading 0.77% V2O5, including a higher-grade domain of 173.2Mt grading 1.09%, and more options for lower-cost early extraction.

Vanadium’s use in batteries has grown from 1% of the market two years ago to more than 10% now.

“We don't have them [vanadium redox flow batteries] in Australia at scale yet but China's building them at incredible scale,” Arvidson says.
“In terms of actual units of vanadium most of the growth is in China because they’re installing and commissioning massive vanadium flow batteries – gigawatt-hour scale – but they're also, in lockstep, then announcing all of the manufacturing base beside it. So, really large electrolyte production facilities, really large battery manufacturing plants. It’s a similar playbook in vanadium flow batteries to what they did with lithium-ion batteries.
“Some reports have the battery energy storage market [cumulative energy storage installations] going beyond the terawatt-hour mark globally before 2030; the question is, how much of it is going to be longer duration technology? Even if you take a small slice of that, it means vanadium has to double, triple, quadruple or more in terms of the market size.
“And that’s our thesis. We’ve got a tier one asset and we not only want to produce vanadium, we want to participate in that value chain because it’s quite a simple, elegant supply chain. Unlike with lithium, you don’t need nickel, cobalt, manganese, etc. You just need vanadium.
“The electrochemical machine that is a flow battery is a very simple device.
“It’s not farfetched to think that entire supply chain, not including the vanadium, is very easily scalable from standard industrial components. You don’t need pre-precursor cathode active materials … and you don’t need packets and assembly and everything else. You just need vanadium and electrolyte.
“One thing that China can't impact is that in Australia we can be globally competitive in producing vanadium oxides and converting that to electrolyte. Vanadium oxides being globally competitive is a function of geology mostly and we have really good geology here.
“We have a 50-year mine life with very consistent geology. So the quantity and quality of vanadium oxides is in our control and it’s uniquely better than a lot of players out there because we have a VTM [vanadiferous titanomagnetite] deposit with very consistent geometallurgy. We can over 50 years produce a 99.5% purity V205, which is excellent for making electrolytes.
“Our C1 cost will be US$4.40 a pound, based on the [2022] BFS. When you convert to electrolyte, which we're already doing here cost-effectively, the electrolyte with the oxides in it is 60%-plus of the value of the battery. So, 60% of the value of the batteries just by making the electrolyte will remain competitively advantageous if you can build out the production, which is what our core mission is.
“Our belief is that you can at least assemble the batteries locally.
“Step one is the lower risk entry point where you import the components – tanks, pumps, stacks, valves, instruments – all the stuff that we have all the trade skills to build and assemble.
“The next step beyond that, if you want to move beyond that, and we think it can become cost competitive, is more of an automated production system. In that scenario you're probably importing robotically made stacks from China or Japan.
“To get there you need scale, which China has. But can you establish a competitive industry here? Our current thinking is absolutely. At a minimum, you’ve got 60% local content with the vanadium alone.
“If you look at lithium the vast majority of the lithium we export is spodumene. Over 90% of the value add is done overseas and most of that’s in China, typically. And then we buy back gigawatt hours of lithium-ion batteries.
“I think as long as it’s economically compelling, which vanadium flow batteries are for long duration energy storage, why would we import Chinese lithium-ion batteries when we can build batteries locally to provide the lowest levelised cost of storage?
“The cost of delivering power from these batteries is lower than lithium-ion. The batteries last 50 years. They can cycle infinite times. They don’t catch fire. And they don't degrade.
“The true strength of vanadium flow batteries is that they don’t necessarily replace lithium ion, they augment it. They are just much, much better and more economic at long duration storage.
“So I think there’s a really compelling story here. Why isn’t it happening already? It’s just because nowhere in Australia yet are we tendering eight-hour batteries, but it is coming.
“The rest of the world is making that long-duration transition. They need something to do that.
“In places like Australia, pumped hydro is not working out too well. In WA there’s literally nowhere to do it.
“But you need lots of different technologies deploying to get this transition to happen.
“AEMO is saying the medium-to-long-duration storage capacity will grow to 120GWhr by 2040; growing at 6GWhr per annum. This is the long-duration category that lithium ion is not good at.
“Again, to put it in context, our mine would do about 1.1GWhr-equivalent battery capacity in terms of vanadium units. Even if all of our vanadium units just went into Australian batteries we’re still only one-sixth of the total Australian growth.
“If there was a perfect jurisdiction in the world for me to kickstart this, it’s WA. If there is an incredibly economic way to use solar it is to put 12-hour batteries with it.
“And the most economic, recyclable, circular economy, non-flammable local content for that battery is vanadium.”

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Graham Arvidson
Chief Executive Officer
Australian Vanadium

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