Transcript
So, the vanadium market’s broadly categorised into three main areas. Historically, the major use is the use of vanadium in steels as an alloy and that’s been the dominant use for decades. The next category is emerging and very interesting to us: vanadium flow batteries or batteries more broadly, where the market has historically been a relatively small component comprised of maybe 1% of the world’s supply. In the last three years, that’s moved to what we think now is about 13% of the market, so a very interesting change happening there.
A smaller but very important part of the industry as well is vanadium use in specialty chemicals, aerospace and defence and that can play an outsized role in underpinning the quality of our societies. We intend to play a role in all of those markets or at least have the ability to play a role in all of those markets. For us, the most important and interesting emerging story is the batteries, and uniquely, our geology and how we’ve proposed to set up our project should set us up to play a really important role for a very long period of time, producing high-purity, high-quality vanadium oxides that are uniquely suitable for batteries for sure.
Then, we also have the ability to produce ultra-high-purity vanadium for that other sector: aerospace, defence and specialty chemicals. All of those sectors are important; they do comprise the entire vanadium market.
But what we see happening now is that instead of the historical story of a market dominated by steel use, we’re seeing slow but important momentum towards the battery metal market and that’s that change from 1% to 13%. There’s lots of good supply and demand logic that would imply momentum will continue and at some point, we cross an inflection point where this becomes a price driven on the demand and supply side by batteries instead of just steel. Over this period of time, I’ve seen the market fluctuate dramatically. Typically, there’s an 8 to 10-year cycle in vanadium where you’ll have a period of very low, which is that the low price can be as low as the bottom of the cost curve of the vanadium producers and the high price can be ten times of an order of magnitude basically above the normal vanadium price. So, it’s been quite dramatic and you know, if you do that every ten years and you do it for 45 years, I’ve seen a lot of them.
Now, the market’s sort of two-sided. You’ve got the commodity price market that goes into the steel industry and that’s strongly driven by supply out of China. You know, they make up 60% of the world’s supply and they consume about 50% of the world’s supply, so there’s excess material that flows out of China. It can flow out at any price and that can impact the vanadium price quite dramatically, especially during times of oversupply. But there’s another portion of the market that’s driven by the aerospace industry, the chemical industry and the catalyst industry, which requires very high-purity vanadium products and it doesn’t follow the commodity at the same level. So, you can have a very consistent price at a good level if you produce a very high-purity product and that’s the area of the market that we will aim for when we work on this project. As we work on this project, we have taken it downstream to the point where we can produce very high-purity products, greater than 99.9% V₂O₅, that will fit very nicely into those markets. We understand the markets because we have people who work in that.
Myself and Todd, for instance, have both spent a lot of time in that part of the industry. We understand it and we know the customers and we know what it takes to supply that market. So, I think our focus won’t be so much on commodities but on where the true value comes into the business and if you can have a stable price, then you can have a really good long-term project. If you look at the industry long-term, I think the biggest challenge is actually going to be the ability for the world to supply enough vanadium to deal with the growing need in energy storage. I think I first started working in vanadium redox batteries back in the ’80s, so the technology has been around for a long time. I worked on developing the process to produce electrolyte back at that time and that process is still the best process in the world today and that’s the process that Australian Vanadium is using. If you look at 1GWh, it requires the equivalent of one year’s annual production of what we will produce at Australian Vanadium, over 20 million pounds of V₂O₅. If it grows at the pace that’s anticipated, there won’t be enough vanadium in time to meet all the demand.
In terms of what we will do to mitigate challenges, we’re going to bring a good project online and we have really good people.
