Aim-listed Bushveld Minerals’ 84%-owned subsidiary Bushveld Energy has signed a term sheet agreement with CellCube Energy Storage Systems to acquire all issued shares in Enerox for €11-million.

A Bushveld Energy-led consortium has been granted exclusivity until the end of February 2020 to complete due diligence and negotiate definitive acquisition documents.

Austria-based Enerox is a researcher, developer, manufacturer and distributor of vanadium redox flow batteries (VRFB).

The acquisition is in line with the Bushveld group’s strategy to establish a VRFB investment platform, intended to lead investments in VRFB original-equipment manufacturers (OEMs) with upside potential.

Bushveld and its initial investments through the platform will play a catalytic role to mobilise additional capital from third-party funders to establish an investment capital pool in support of VRFB OEM growth.

In turn, these partnerships support Bushveld Energy’s business model, which includes electrolyte manufacturing and rental, and VRFB manufacturing and deployments.

Explaining the rationale for the acquisition, Bushveld stated that Enerox’s VRFB products were some of the most widely deployed over the past ten years, with installations at more than 130 sites globally to date.

Enerox had developed one of the first containerised energy storage solutions in the market, as well as a newly redesigned VRFB product oriented around a modular and stackable 40 ft container base configuration. This product helps to reduce the costs of manufacturing, field installation and maintenance.

Under a separate agreement between Bushveld and Enerox, the former will be awarded a right of first refusal to supply vanadium products to Enerox. This provides a hedge to Bushveld’s position against volatility in the vanadium price once the VRFB market had developed further.

“Investing in the development and deployment of VRFB technology was a key part of Bushveld’s corporate strategy for several reasons. Firstly, the market opportunity presented by the widespread adoption of VRFBs was sufficiently attractive to grow Bushveld and generate returns for shareholders.

“Secondly, by helping to increase the speed and scale of adoption of VRFBs, the company would help boost long-term structural demand for vanadium, which was key for our existing primary vanadium production platform.

“In addition, the combination of vanadium production and commercial exploitation provided a natural hedge for the company against vanadium price volatility,” Bushveld CEO Fortune Mojapelo said.

CellCube interim president and chairperson Brett Whalen commented that, as a leader in the VRFB space, Enerox deserved the capital that was necessary to maintain its competitive advantage.

“We are confident that the Bushveld consortium will maximise Enerox’s full potential for its fourth-generation project, while increasing manufacturing capacity.”