JOHANNESBURG (miningweekly.com) – Diversified miner Bushveld Minerals expects the vanadium market to expand by a compound annual growth rate (CAGR) of 3.2% between 2017 and 2027, on the back of strong steel demand and a growing energy storage market, Bushveld Minerals CEO and cofounder Fortune Mojapelo said in a webcast on Thursday.
Mojapelo noted that vanadium was the best performing battery metal for 2017, growing by 72%, and that it had achieved “fivefold” growth since 2015.
He explained that, as steel production accounts for about 90% of vanadium consumption, and as China is increasing its enforcement of new high-strength rebar standards, this has a “positive correlation” for vanadium consumption in steel production.
Mojapelo added that the enforcement of new and existing rebar standards aimed at eliminating inferior steels in construction could result in Chinese vanadium demand increasing by about 30% or 10 000 t/y this year.
Further, he noted that steel production is expected to grow at a 2.24% CAGR between 2017 and 2027, largely as a consequence of increased steel consumption in emerging market economies – some of which will have to increase their vanadium consumption in order to meet global best practices for steel production.
Mojapelo commented that, because of the high price of vanadium, there is a potential threat of steel producers replacing vanadium with niobium; however, he notes that the steel-making process using vanadium requires less energy than that of niobium, and producers would have to make significant technical changes to their plants if they were to substitute vanadium with niobium, ruling out a short-term move to higher niobium use.
With regard to energy storage, Mojapelo noted that, in 2017, vanadium held 2% of the energy storage market, but that this share is expected to increase to 20% by 2030.
Bushveld subsidiary Bushveld Energy CEO and cofounder Mikhail Nikomarov explained that stationary energy storage demand is expected to exceed 300 GWh by 2030.
Further, he noted that 48% of the 500 energy storage professionals polled by Greentech Media believe that flow batteries will become the dominant utility-scale storage solution. He noted that these factors, when combined with the fact that each gigawatt-hour of vanadium redox-flow battery storage requires 5 500 t of vanadium, has positive implications for the vanadium market.
Mojapelo pointed to the concentrated nature of global vanadium supply, with 90% of global production coming from South Africa, China and Russia, combined with decreasing supply from South Africa and China, means that there has to be a push to provide new production.
He notes that there is already a deficit and that, given the challenges vanadium producers face when trying to secure funding, combined with the high capital expenditure costs and the high operating costs of operating vanadium mines, at least 33% of all planed production replacement projects are unlikely to be brought online.
Mojapelo noted that the major problem is that supply relies heavily on economics unrelated to the vanadium price, such as steel demand and production growth.
He suggests that this will see a shift from vanadium co-producers to “pure play vanadium producers” in the near future. He reiterates, however, that the barriers to entry need to be addressed if the supply deficit is to be overcome.