Bushveld Secures Footing In Downstream Energy Storage Sector With $5M Convertible Deal

BUSHVELD Minerals has secured a foothold in the downstream energy business after agreeing to supply $5m in a convertible loan to UK-listed Avalon Battery Corporation which is merging with redT energy, another UK business.

Avalon Battery Corp is a vanadium redox flow battery (VRFB) manufacturer whilst redT energy is described by Bushveld Minerals as an energy storage provider. VRFB technology is considered crucial in enabling renewable energy projects to provide consistent power.

In essence, Bushveld Minerals – a UK-listed business with vanadium mining operations in South Africa – has the option of securing guaranteed vanadium off-take as well as further investments in the combined Avalon Battery/redT energy unit.

The terms of the transaction is that Bushveld Minerals has first right of refusal to supply vanadium to the merged entity for an initial two year period and then convert the $5m loan to about 5% of the merged entity thereafter. The loan will convert into Avalon Battery Corp. shares in the event the merger does not complete.

Bushveld Minerals will also be able to nominate a board member to the merged entity and there’s provision for further investments by Bushveld: it can protect its board membership provided it takes its investment in the merged entity to 10% and it may also install a second board member by taking its stake in the merged entity to 20%.

“This is a major leap forward in the development of our downstream energy business at an attractive price and prudent entry level,” said Fortune Mojapelo, CEO of Bushveld Minerals. “It also demonstrates our conviction in the VRFB technology’s potential and our ability to meet the vanadium supply needs of the energy storage industry.”

The energy storage market is expected to be worth more than $300bn by 2030, according to Mojapelo. “This transaction deepens our downstream integration in the vanadium value chain by giving Bushveld Energy direct exposure to the VRFB technology for the first time.

“It also exemplifies the kind of partnerships we continue to establish within the sector, covering supply, deployment and investment through Bushveld Energy,” he said.

On October 23, Bushveld Minerals said it had renegotiated the purchase price of Vanchem Vanadium Products following a slide in the vanadium price.

It will now pay an all-in fee of $53.5m comprising cash of $30m and the balance by means of convertible loan notes. The previous acquisition price was $68m. The new $53.5m number includes some $6.8m placed on deposit following the announcement of the transaction on May 1.