Date: Nov 27, 2018

Surging prices for vanadium, a niche metal used to harden steel, have been a boon for London-listed Bushveld Minerals this year, helping fuel a share price rally amid a broader industry pullback.

Now the South African company wants to target vanadium’s growing use in another industry: batteries, with an ambitious target to manufacture the technology as the country’s electricity grid moves away from coal-powered generation.

But Bushveld faces a conundrum: while higher vanadium prices are good for miners, they are detrimental to battery makers, who need to further reduce their costs to make them economic for use on electricity grids.

To solve this Bushveld hopes to lease the metal to battery companies as well as assemble the batteries in South Africa. It wants to build a $10m plant to produce battery electrolyte, backed by the state-owned Industrial Development Corporation.

Under this model Bushveld guarantees a supply of vanadium at a fixed price in return for an annual fee and smaller upfront payment. When the battery comes to the end of its life after about 20 years, Bushveld receives the vanadium back, which it can then re-sell. The vanadium is completely re-usable, it says.

“We think this concept is going to revolutionise the industry since it will take out arguably the single largest risk factor, which is the price,” said Fortune Mojapelo, Bushveld’s chief executive

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