TIDMBMN
RNS Number : 0914O
Bushveld Minerals Limited
16 August 2017
16 August 2017
Bushveld Minerals Limited
("Bushveld" or the "Company")
Bushveld Energy Operational Update
Bushveld Minerals Limited (AIM: BMN), a diversified mineral
development company with projects in Southern Africa and Madagascar
and Namibia, is pleased to provide an operational update for its
84%-owned energy subsidiary, Bushveld Energy Limited ("Bushveld
Energy").
Highlights
a) Completion of studies carried out in conjunction with the
Industrial Development Corporation ("IDC"):
-- Market studies for African vanadium redox flow battery (VRFB)
demand and global electrolyte demand have been completed and
indicate:
- Favourable demand for VRFBs, especially in the utility and
off-grid, mini-grid use cases, peaking in 2025-2030;
- Global electrolyte demand likely to peak in the same time
frame at 1200-1800 megawatt hours (MWh) or 40-60 megalitres (ML)
p.a.;
- Potential for Bushveld to conservatively supply an initial
5-10ML of this demand, supporting supply of an initial 200MWh in
energy storage per annum;
- At present, the electrolyte market is dominated by China, with
90% of global production capacity, with smaller facilities in
Europe and batch production in other regions;
-- Bushveld Energy and the IDC are also progressing the techno
economic study on a vanadium electrolyte production plant to be
located in South Africa. The study results highlighted that:
- Bushveld can manufacture electrolyte at a cost-competitive
basis, thereby allowing it to compete both regionally and
globally;
- A scalable plant can be configured with an initial annual
production capacity of 200-400MWh;
- The estimated initial capital expenditure for the plant of
ZAR130 million (US9.7 million), of which more than 75% comprises
balance of plant;
- There is scope to reduce the capital expenditure further
through co-locating the electrolyte plant with Vametco Alloys
(Proprietary) Limited, the primary vanadium producing mine and
plant in Brits, Northwest Province, South Africa;
- By far the main driver of costs (upwards of 70%) is the
vanadium feedstock, making locally available, low-cost supply a
critical success factor and natural competitive advantage for South
Africa;
b) Increased participation by Bushveld Energy in global energy
storage industry platforms, such as the Energy Storage Committee
("ESC") of Vanitec, will continue to support the emerging leading
role for Bushveld Energy in the energy storage market;
c) Continued exponential growth in the energy storage market,
especially longer duration energy storage that suits applications
serviced by VRFBs.
Commenting on this progress, Fortune Mojapelo, CEO of Bushveld
Minerals, said:
"There is no longer any doubt about the growth of energy storage
globally to gigawatts of annual capacity and billions of dollars in
market opportunity. Similarly, favourable factors in this industry,
such as the move toward longer duration storage, are increasing the
demand and competitiveness of VRFBs. We are seeing this with
massive systems deployed in 2015, 2016 and under construction in
2017. Through our energy platform, Bushveld remains in a leadership
position to participate in this market, cemented by the results of
our work with the IDC and now Vanitec.
"As we have maintained for three years, the largest threat to
the success of VRFB technology remains the supply of low cost
vanadium feedstock. As an integrated mining to energy minerals
company with an interest in an operating, scalable, low cost mine,
thanks to our participation in the acquisition of Vametco by
Bushveld Vametco Limited, we are uniquely positioned to address
this challenge."
THE BUSHVELD ENERGY - IDC STUDIES
In the second half of 2016, Bushveld Energy and the IDC
commissioned two studies:
-- a market study for the African opportunity of VRFBs and the
global opportunity for vanadium electrolyte (the "Market
Study");
-- a techno-economic study for the local manufacturing of
vanadium electrolyte for the global VRFB industry (the
"Techno-economic Study").
The studies have now been completed with positive outcomes and
provide a sound base for advancing the company's objectives to
participate in the VRFB value chain.
a) Market Study
The Market Study focussed on the African market opportunity for
VRFBs and the global requirements for vanadium electrolyte. Results
confirmed favourable demand for VRFBs, especially in the utility,
off-grid, mini-grid and commercial and industrial use cases,
achieving peak demand in 2025-2030. Unsurprisingly, global
electrolyte market demand is directly related to VRFB demand
forecasts but supply was found to be even more heavily concentrated
than vanadium supply, with nearly all of it being produced in
China.
Key insights from the Market Study on global vanadium
electrolyte demand and the African market for VRFB's include:
-- Africa VRFB demand will come primarily from
off-grid/mini-grid and utility applications (especially
decentralised, grid-connected storage) peaking around 2025-2030.
The size and speed of the market will depend on how quickly
regulations evolve in Africa. If similar to developments in the US,
Europe, Australia, India and China (e.g. favouring renewable energy
and more distributed electricity production and consumption), we
expect the market to be multiples larger than current
forecasts;
-- Global electrolyte demand is likely to peak during the same
time frame. Bushveld would be able to compete cost effectively for
not just the electrolyte market in Africa but other regions, as
well.
At present, the electrolyte market is dominated by China, with
90% of global production capacity, with smaller facilities in
Europe and batch production in other regions. This market
concentration creates an opportunity for supply in other regions,
such as the markets prioritised by Bushveld Energy.
b) Techno-economic Study for Electrolyte Manufacturing
In order to be able to cater to this growing demand for
vanadium, Bushveld Energy and the IDC are also advancing the
Techno-economic Study on a vanadium electrolyte production plant to
be located in South Africa. The results show that subject to the
necessary funding being available such a plant, located in South
Africa and using locally produced vanadium feedstock, can
manufacture electrolyte at globally competitive cost levels:
-- The plant will be scalable, with an initial production
capacity of 200MWh per annum that can be increased to 400MWh;
-- A fairly low capital expenditure is estimated of ZAR 130
million (USD 9.7 million), with roughly 75% of the capital cost
being the balance of plant rather than production-specific
equipment.; The cost certainty level of the analysis was +/-
35%;
-- As a result of the plant costs being the more generic balance
of plant equipment, there exists significant scope to reduce the
capex further through co-locating the electrolyte plant with
Vametco Alloys (Proprietary) Limited, the primary vanadium
producing mine and plant in Brits, Northwest Province, South
Africa;
-- With respect to operations, by far the main driver of costs
(upwards of 70%) is the vanadium feedstock. This makes locally
available, low-cost supply a critical success factor for vanadium
electrolyte production and provides a natural competitive advantage
for South Africa;
-- Efforts now underway include identifying potential sites for
the electrolyte manufacturing plant, including the Vametco plant,
and finalising the project costs, prior to commencing
implementation of the production plant, as per the required
approval processes of both Bushveld and the IDC.
VANADIUM INDUSTRY PARTICIPATION
To ensure that its activities remain at the forefront of the
global VRFB industry, Bushveld Energy is strengthening its position
as a thought leader in the vanadium stationary energy storage
systems ("ESS") industry. Most recently this has included:
-- In May 2017, formally joining the Energy Storage Committee
("ESC") of Vanitec, the global body of vanadium producers. ESC was
launched by Vanitec in 2016 to support and promote the global use
of vanadium in energy storage, as the organisation historically
focused on the steel industry;
-- In June 2017, participating in the International Flow Battery
Forum (IFBF) in Manchester. IFBF provided an opportunity to
directly engage with existing electrolyte producers, VRFB
manufacturers and other industry stakeholders, with nearly 80% of
the focus being on VRFBs, underscoring the commercial proliferation
of VRFB technology globally Some highlights included:
o Discussion with multiple companies to supply vanadium and/or
produce electrolyte from Bushveld's recently-acquired Vametco
plant;
o Meeting with various VRFB manufacturers to understand their
forthcoming vanadium requirements. In fact, many manufacturers
expect "hockey stick" like demand growth for their products over
the coming years;
o Presentation by Rongke Power on the progress of its
200MW/800MWh VRFB in Dalian, China. The first 100MW/400MWh is
expected to be completed this year, with both electrolyte
production and construction of the building for the battery already
well under way;
-- Participation in the Vanitec ESC session that followed the
IFBF during which Bushveld Energy led a session considering the
threats to VRFBs from lithium ion batteries and consideration of
innovative leasing models to further drive down costs of VRFBs.
PRIORITIES GOING FORWARD
Priorities for the next few months for Bushveld Energy
include
-- Jointly with the IDC, complete a bankable business case for
electrolyte production to determine unit costs in Rand and USD per
kWh of production and confirm the initially implied strong
economics of the electrolyte plant project;
-- Study possible site locations for an electrolyte plant.
Vametco will be among multiple sites to be considered, taking into
account factors such as logistics, costs and tax incentives;
-- Evaluate the potential quality of electrolyte production at
Vametco, by performing laboratory test work with the Vametco team.
This will identify current electrolyte production quality, plus
processing techniques that could improve feedstock quality;
-- Continue developing the existing backlog of possible
projects, with a focus on southern Africa, including growth of the
project development team. Currently, the strategy consists of three
"routes to market," focusing on the largest opportunities:
- Proactive engagement with power utilities in progressive
countries, where the business for energy storage on both pilot and
wide roll out basis is already being developed;
- Creating relationships with top-tier renewable energy project
developers to create hybrid generation plus storage independent
power producer (hybrid IPP) solutions;
- Directly target a set of private customers in South Africa
whose electricity consumption patterns and circumstances (such as
time of use tariffs) supports a business case for ESS deployment
"behind the meter."
GENERAL ENERGY STORAGE MARKET UPDATE
The overall market for stationary ESS continues to grow and meet
the exponential growth forecasts of doubling annual demand for the
subsector. The ESS is considered by a number of industry experts to
be at a tipping point globally.
While market forecasts still vary significantly, all experts
concur that the market will achieve exponential growth. According
to the Energy Storage Association, the US market alone grew to 280
megawatt ("MW") in 2016 and is expected to reach nearly 500MW
through the deployment of energy storage systems in 2017 and over
1,600MW by 2020. Globally, Navigant Research expects the global
market to grow at 50-60% per annum for the next decade, from a base
of roughly 900MW of new ESS installed in 2016.
Within this impressive growth is a trend in the movement of
energy storage from short to longer duration energy systems
(typically 4-8 hours of storage per day). This is especially
favourable for VRFB technology, which is especially
cost-competitive for long duration systems, usually at least four
hours of duration and upwards, as its power and energy components
are independent. Although lithium ion technology currently
dominates the ESS market globally, deployment of large VRFBs is
also increasing. The largest ESS installed in 2015 was a 15MW/60MWh
VRFB by Sumitomo in Japan. The largest ESS expected for deployment
in 2017 is the 100MW/400MWh phase I of Rongke Energy's VRFB in
China. Although Africa has yet to see massive ESS demand, as has
been seen in the US and China and more recently in the UK and
Australia, the amount of interest from utilities, power developers
and end customers continues to grow.
As a consequence of this growth to date, the amount of vanadium
deployed into VRFBs is growing exponentially, as well. According to
Vanitec and based on data from the US Department of Energy's Energy
Storage Database and analysis by TTP Squared, the amount of
vanadium deployed in installed or awarded VRFB systems has grown
from 200 MTV in 2015 to 300 MTV in 2016 to 5000MTV in 2017.
Accordingly, the ability to guarantee supply of vanadium for VRFBs
will remain essential to the success of these systems in the medium
and long term. Bushveld remains in a unique position to mitigate
this risk through its large, high grade, low cost resource base and
scalable processing capacity.
Enquiries: info@bushveldminerals.com
Bushveld Minerals Limited
Fortune Mojapelo +27 (0) 11 268 6555
Bushveld Energy Limited
Mikhail Nikomarov +27 (0) 11 268 6555
Strand Hanson Limited (Nominated Adviser)
James Harris / Ritchie Balmer +44 (0) 20 7409 3494
Beaufort Securities (Joint broker)
Jon Bellis +44 (0) 20 7382 8300
SP Angel Corporate Finance (Joint broker)
Ewan Leggat +44 (0) 20 3470 0470
Blytheweigh (Public Relations)
Tim Blythe / Camila Horsfall +44 (0) 20 7138 3204
Gabriella von llle +27 (0) 711 121 907
- ENDS -
Notes to editors
About Bushveld Energy Limited
Bushveld Energy Limited is an energy storage solutions provider
focusing on the African market, with registered offices in
Mauritius and a wholly owned subsidiary in South Africa. Bushveld
Energy recognises that electricity in Africa intersects paramount
potential for social transformation with an immense commercial
opportunity.
Launched in 2016, Bushveld Energy is focused on developing and
promoting the role of vanadium in the growing global energy storage
market through application in vanadium redox flow batteries. Its
near term strategy is to install several VRFB systems as part of
its longer term vision to become a significant electricity storage
provider in Africa by 2020, meeting the demand for utility scale
energy storage in Africa by leveraging South Africa-mined and
beneficiated vanadium.
About Bushveld Minerals Limited
Bushveld Minerals is a diversified AIM listed mineral
development company with a portfolio of vanadium, iron ore, tin and
coal greenfield assets in Southern Africa and Madagascar. The
Company's flagship platform, the vanadium platform, includes the
Mokopane Vanadium Project, the Brits Vanadium Project, and the
Bushveld Iron Ore & Titanium Project. The tin platform
comprises the Mokopane Tin Project whereas the Imaloto Coal
Project, which is being developed as one of Madagascar's leading
independent power producers, makes up the Company's coal
platform.
The Company's vision is to become the largest low cost
integrated primary vanadium producer through owned low-cost
high-grade assets. This incorporates development and promotion of
the role of vanadium in the growing global energy storage market
through Bushveld Energy, the Company's energy storage solutions
provider. Whilst the demand for vanadium remains largely anchored
in a slow growing steel industry, Bushveld Minerals believes there
is a strong potential for imminent significant global vanadium
demand surge from the fast-growing energy storage market,
particularly through the use and adoption of Vanadium Redox Flow
Batteries.
Bushveld Minerals' approach to project development recognises
that whilst attractive project economics are imperative, they are
insufficient to secure capital to bring them to account. A clear
path to production with a visible timeframe, low capex requirements
and scalability are important factors in retaining an attractive
exit option. This philosophy is core to the Company's strategy in
developing projects. Detailed information on the Company and
progress to date can be accessed on the website:
www.bushveldminerals.com
This information is provided by RNS
The company news service from the London Stock Exchange
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