Bushveld Minerals, a company which is considering whether to join the Johannesburg bourse, is going to roll out a vanadium-based electricity storage device for Eskom as it diversifies its business risk away from being purely reliant on the steel industry.

AIM-traded Bushveld, which bought the Vametco vanadium producer in SA for $17m as the cheapest entrance into the vanadium market, is targeting the electricity storage market, moving quickly into the supply of large, stationary units, while supplying makers of these units.

Bushveld's intentions to list in Johannesburg are unclear and its board has not yet decided on the matter.

SA is host to one of the world’s largest and highest grade sources of primary vanadium, which is primarily used to harden steel, with other supplies coming as a by-product of iron production.

Bushveld has a mine and plant near Brits generating 3,000 tonnes a year of vanadium, representing about 3.5% of global supply, and it is busy with a project to lift output to 5,000 tonnes a year, or 6% of the global market by the end of 2019 at a cost of R200m, CEO Fortune Mojapelo says.

Bushveld’s initial project near Mokopane in Limpopo was going to cost $300m to build a mine and processing plant, money that proved almost impossible for a junior producer to raise, prompting the firm to buy Vametco at the bottom of the vanadium price cycle, he said.

Falling output in China

With falling output of vanadium in China, the world’s largest producer, there was interest from buyers in the country to fund the Mokopane project, Mojapelo said. But the focus remained on Vametco where for $100m, just one third the cost of building a new Mokopane project, output could be doubled to 10,000 tonnes a year, a decision the board had yet to make, he said.

Considering the market needed 92,000 tonnes of vanadium a year, this would make Bushveld an increasingly important player in the sector.

Bushveld is the third-largest source of primary vanadium, behind Largo Resources in Brazil and Glencore’s Rhovan operation in SA. Its production is less than 5% of its resource at Vametco and Bushveld is increasing exploration around its mine for more.

While vanadium demand from the steel sector was the anchor for the mineral, real growth lay in energy storage, the one Bushveld was aggressively targeting, Mojapelo said.

The Eskom battery project, using US technology and which is expected to be commissioned in August 2018, was just one area Bushveld was investing in, with a second $10m investment along with the Industrial Development Corporation in the production of vanadium electrolytes from 2019 for other battery makers to use. The electrolytes business would comprise factories in Brits and East London and they would eventually make batteries locally, using more than 80% of local content.

The vanadium battery at a power utility like Eskom meant that it could better control peak and off-peak power supplies, which had positive cost implications, Mojapelo said.