Dr. Jana Plananska is an expert and independent consultant in electric mobility and battery technology, with a PhD from the University of St. Gallen on clean transport transition, researching on consumer adoption of electric and autonomous vehicles. She’s also founded her own mobility solutions consulting company. Norge Mining is thrilled to be on the receiving side of her expertise and knowledge – as a member of its Board of Advisors.
In a previous article, I delved into the phosphate and phosphorus supply and demand tug of war. Now it’s vanadium’s turn – also a Critical Raw Material (CRM) on the lists of the EU, USA and Canada. Here I evaluate its highly concentrated supply chain – in terms of geography and production – leading to price volatility and insecurity of future supplies
Dr. Jana Plananska
Geo-political price soars
Vanadium prices have been most of all influenced by geo-political factors. The bankruptcy of a South-African supplier in 2015 and Chinese rebar policies of 2018 (leading to higher local demand followed by export restrictions) are two such factors that lead to price spikes; more than $60 per kilogram of vanadium pentoxide (V2O5) flake (98%) at its peak – 10 times the prices in previous years. After a drop in 2020 due to COVID-19 pandemic, the prices started to creep up and fluctuate again, most recently as a result of the outbreak of the war in Ukraine that put at risk vanadium supplies from Russia, the second largest vanadium producer.
Lack of supply diversity
Against this volatile price backdrop is the lack of supply diversity. Only four countries dominate vanadium supply: China (61.6%), Russia (19.8%), South Africa (10.6%) and Brazil (7.6%). Despite recordings of reserves in Sweden and Finland, there is no ongoing production of vanadium ore in Europe. Considering the volatility of global supply chains, the pressing need for reliable, stable partners supplying vanadium from Europe under the highest ESG standards has never been greater.
There are three ways to extract vanadium. Firstly, as a co- and by-product of steelmaking and iron production (73-75% of global supply). Secondly, primary vanadium mining (10-17%) and thirdly, from secondary sources – mainly petroleum residues from oil burning and refining such as fly ash or spent catalysts (10-15%). It is remarkable that the whole co- and by-production is concentrated solely within ten steel mills in China and Russia. Expansion of this stream therefore is geo-politically improbable, aside of being technologically challenging. Extraction of vanadium from secondary sources is not only costly, but in my opinion not a viable, sustainable and long-term solution how to provide material for green and digital transition.
The primary vanadium mining panacea
To keep the hunger of the burgeoning vanadium industry at bay, expanding primary vanadium mining, therefore, should be a focus. Right now, this area is dominated by three countries: South Africa (44%), Brazil (29%), and China (27%). The hurdles in expanding this stream are the low grades of vanadium in the ores – and the challenges of magnetite recovery. The economics of both are not favourable.
Flow battery focus
Energy storage is a rapidly growing field of vanadium use – mainly in the form of long-duration vanadium redox flow batteries (VRFB). Some statistics put this area of growth into perspective: the use of vanadium is expected to grow with a CAGR of approximately 3% within the steel industry, however up to 40% within the energy storage sector. The global demand for vanadium is therefore expected to more than double by 2030 to approximately 250 000 tonnes of V2O5, with, under the most ambitious scenarios, VRFB sector representing up to 50% of that demand.
Verticalized vanadium flow battery value chain
The value chain for vanadium redox flow batteries, similarly to the vanadium supply chain as such, is highly verticalized and consolidated. The dominant primary producers – Bushveld (South Africa) and Largo (Canada) – have substantial control of this chain, from vanadium mining to the processing of vanadium electrolyte and VRFB manufacturing by their fully-owned subsidiaries. Bushveld is also strategically investing in other leading VRFB manufacturers, such as Invinity (UK) or CellCube (Austria), thus getting an even larger share of the market.
Europe also wants a slice of the pie – with many new players on the market from Norway, Denmark, the Czech Republic, Austria, Germany and the UK. And it’s already paying off. Invinity (UK) has become one of the leading VRFB producers in the world, thanks to a strategic merger, OXKEM (also UK) one of the largest vanadium electrolyte producers outside of China. Most European companies are however focusing on VRFB manufacturing only and source vanadium electrolyte, mainly from China, that dominates the latter market thanks to the economies of scale induced price premium. This dependence is threatening further growth and long-term stability and prosperity of the otherwise burgeoning European flow battery industry.
Regulatory prerequisites and supply from Norway
That brings me on to conclude with the origin of supplies. With evolving EU battery and supply chain regulation, generation of vanadium supply chain in Europe is an increasing necessity, to comply to the latter’s more stringent due diligence and ESG criteria and to secure a stable supply for the growing local energy storage sector. The need for reliable partners – that would secure the supply under the highest ESG standards – is pressing. Norge Mining’s project in South-West of Norway, with exploration rights over world-class mineral resources of phosphate, vanadium and titanium – that from the start adheres to the highest ESG standards – is such a partner the European VRFB sector should have an eye on.