Australian vanadium miners, battery players collaborate to build supply chain

Australia's vast vanadium resources present an opportunity to develop an entire supply chain from mine to battery, according to industry experts.

Australia takes the lead in active vanadium projects globally, according to S&P Global Market Intelligence data. It has more than triple the aggregated reserves and resources of second-place Russia, which currently dominates global supply along with China and South Africa.

All-vanadium redox flow batteries (VRFBs), which were invented at the University of New South Wales in 1985, are considered promising for electricity storage because of their long cycle life and ability to deliver consistent power over much longer periods than lithium-ion batteries. They have the flexibility to be added to an existing grid or used to store energy off-grid.

About 90% of vanadium is currently used as a steel additive, but demand from battery makers is set to soar in the medium and long term.

"The big change in the vanadium market is that Wood Mackenzie is forecasting demand to grow by a factor of five over the next 15 to 20 years driven by the vanadium redox flow batteries," Neometals Ltd. Managing Director Chris Reed told S&P Global Commodity Insights.

Up to A$5.2 billion worth of vanadium projects are in the investment pipeline Down Under as of Oct. 31, 2022, according to the Australian government.

"Australia can become a serious player and could be looking at half the market" of global vanadium production, Jon Price, managing director of Richmond Vanadium Technology Ltd., told Commodity Insights.

'Pit-to-battery' potential

The world has 328 VRFBs at various stages, 203 of which were operational as of Sept. 22, according to the Vanadium International Technical Committee, an industry organization.

A lack of awareness and price transparency is holding back Australia's integrated vanadium industry, but miners hope that partnering with battery makers could solve that problem and result in an entirely onshore supply chain.

In February, Richmond acquired 10.94% in Thorion Energy, formerly known as Ultra Power Systems Pty. Ltd. Thorion intends to replace all of its imported supplies with domestic components, General Manager Jeremy Newman told Commodity Insights.

With one battery maker locked in as a partner, Richmond's Price said the company "[wants] another 50 of them to talk to us about getting supply from our mining industry. The technology is easy. An electrical contractor that makes [traditional] batteries now can get the blueprint to make these VRFBs and grow their own business from a small scale."

Australia's vanadium companies are working to "unlock awareness of this vertical integration story ... for Australia's vanadium 'pit-to-battery' supply chain," Australian Vanadium Ltd. CEO Graham Arvidson told Commodity Insights.

"Then as the penny drops with more and more of the energy providers, there will be an understanding that this is a really good economic solution to their problems," Arvidson said.

This is "not too different from what eventually happened in lithium, where original equipment manufacturers are participating right down to mine level. If we can get there a bit faster than lithium, then the world is our oyster," Arvidson said.

Australian Vanadium plans to crush, mill and beneficiate vanadium-bearing magnetite ore at its namesake mine and bring the resulting concentrate to a proposed plant near Geraldton, which it hopes will be a regional hub for other projects in Western Australia's Mid West region. Australian Vanadium is also building a vanadium electrolyte facility in Western Australia.

Adoption challenges

Western Australia's Horizon Power agreed in July to buy a VRFB from Australian vanadium unit VSUN Energy Pty. Ltd. for a long-duration energy storage pilot. This marked the first contracted vanadium battery project for an Australian energy utility.

The battery will be supplied by UK-listed Invinity Energy Systems PLC, which also built one of the world's largest solar-powered vanadium flow batteries in South Australia. Japan's Sumitomo Electric Industries Ltd. is building its first VRFB system in Australia for vanadium miner Vecco Group Pty. Ltd.

Price said batteries being built offshore are "fine for now, but let's build our own capacity and capability, because the technology is not that difficult, and the supply chain is not that long."

Lithium-ion systems still dominate the stationary storage market because of their high energy storage capability and high efficiency on each cycle, according to Max Reid, senior research analyst for Wood Mackenzie's electric vehicles and battery supply chain service.

"VRFBs have a tendency to 'leak' energy over time, so charging a system up won't necessarily mean recovering the same amount of energy back," Reid said in an email interview, adding that lithium-ion batteries benefit from economies of scale in the EV market. "However, with further investment into VRFB production, the benefits of lower cost raw materials (and less volatile raw material prices) that VRFB promise could see greater use in the growing stationary storage market."

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.