[Ferro-Alloys.com]  Australia's biggest vanadium player has been created, to leverage soaring demand from battery-makers looking Down Under for feedstock.

Australian Vanadium Ltd. and Technology Metals Australia Ltd. announced a A$217 million merger in a Sept. 25 joint statement. The move will consolidate the Gabanintha ore body that lies across the Australian Vanadium Project and turn it into a top-10 deposit globally, according to S&P Global Market Intelligence data.

"This all comes at a pivotal time for the global vanadium industry as vanadium flow batteries are established as a critical player in the long-duration energy storage market, a key requirement for the world's transition to net-zero and a cleaner future," Ian Prentice, managing director of Technology Metals, said in the statement. Prentice will join Australian Vanadium's executive team to lead the merger integration.

About 90% of vanadium is currently used as a strengthening agent in steel, but demand from vanadium redox flow batteries (VRFBs) is set to rise eightfold by 2030 as compared to 2022, according to US vanadium consultancy TTP Squared Inc.

Thus both foreign and domestic energy providers "are grappling with this massive stationary battery requirement to meet the need for long-duration storage," Australian Vanadium CEO Graham Arvidson told S&P Global Commodity Insights.

Brett Beatty, managing director for Australia and investment team leader for Resource Capital Funds Management Pty. Ltd., said battery-makers will look at partnerships with miners in Australia, which has the most active projects and more than triple the aggregated reserves and resources of Russia in second place.

"There's every opportunity for that to happen," in a similar fashion to how "lithium customers reached down to generate collaboration," Beatty told Commodity Insights, citing Albemarle Corp.'s mining and processing partnerships in Western Australia.

"Jurisdictions need to show that projects can be developed in a timely fashion. Lithium certainly proved that and provided the quality of assets, so the capital will flow [into vanadium companies] provided that they can see projects being built in that fashion."

Resource Capital Funds, which is Technology Metals' largest shareholder at 18%, also supported Australian Vanadium's A$15.7 million institutional placement on Sept. 25. The investment firm will emerge as the largest shareholder of the combined entity at about 17.6% after backing the transaction.

Big forecasts, somber reality

Wood Mackenzie expects total vanadium demand to rise to 184,000 metric tons in 2040, from roughly 127,000 metric tons in 2023.

The usable lifetime of a VRFB system can be decades longer than lithium-ion systems, which is "an increasingly important factor when considering the sustainability of new technologies in society," Max Reid, senior research analyst for Wood Mackenzie's electric vehicles and battery supply chain service, said in an email interview.

Despite the big forecasts, large-scale commercial adoption of the technology is currently lacking, according to Tees Valley Lithium Ltd. CEO Tony Veitch. Veitch led Atlantic Vanadium Holdings Pty. Ltd. and its Windimurra development in Western Australia until 2022.

Vanadium International Technical Committee, an industry organization, counts 203 operating VRFBs out of a total 328 at various stages, but they would likely be using a "very small percentage" of annual vanadium production, Veitch said.

However, "there are a number of trials of vanadium flow batteries around the world, and the technology has been proven and does a fantastic job in the long-duration storage market that is so desperately needed to underwrite new renewables penetration into the network," Veitch said. "If big energy utilities decide to put a vanadium-flow battery on the corner of every network around the world, we are going to see massive demand."

Opportunity amid China challenges

The only three primary vanadium mines in the world are Glencore PLC's Rhovan and Bushveld Minerals Ltd.' Vametco, both in South Africa, and Largo Inc.'s Maracas Menchen in Brazil, according to Terry Perles, president of TTP Squared. Most global vanadium is produced as a byproduct of steel smelter slag, particularly in China.

Perles has doubts about production expanding in China, which accounts for over 55% of global supply. And, while there is clearly "lots of vanadium in the ground" across Western Australia and Queensland, "it's a matter of the time and cost to extract the vanadium."

Vanadium operations typically take five years to reach production after receiving construction funding, followed by another 18 months to ramp up to full capacity, Perles said.

"For China to massively increase production going forward, they either need to invest in new steel mills, or they need to invest in process changes at mills that today process vanadium-titanium magnetite but do not generate coproduct vanadium slag," Perles said in an email interview.

"I am pretty sure it doesn't make sense to invest in new steelmaking capacity using vanadium-titanium magnetite," Perles said. It has low iron content, and titanium poses a "problem in the blast furnace, so this is not low-cost steel production," the executive added.

• [Editor:tianyawei]