Manuka’s Diversification Strategy Provides Access To Lucrative ‘Green’ Vanadium Market
The recently announced acquisition of the South Taranaki Bight vanadium titanium iron sands project by Manuka Resources provides another valuable string to the bow for the company.
Besides being an advanced iron sands project producing a low-cost 55% – 57% iron concentrate, the South Taranaki Bight (STB) project also has an extremely valuable biproduct – vanadium, which could be very profitable for Manuka Resources (ASX:MKR) and New Zealand.
While vanadium has long been used in steelmaking because of its ability to make steel stronger, it has been propelled to the forefront of the ‘green economy’ with vanadium redox flow batteries (VRFBs) now a viable storage solution for large-scale renewable energy storage. It’s also a key element that extends lithium-ion battery life, creating batteries that charge faster, are safer as they don’t explode, last longer and are more powerful.
VRFB batteries are safer, don’t explode or catch fire, produce 78% less CO2 emissions than equivalent lithium-ion batteries, the vanadium is fully recoverable, they have a long >20-year life cycle with zero degradation and unlimited capacity by simply adding modules, and are suited to provide energy from renewable solar and wind sources with rapid response times (within milliseconds) that promotes grid stability and reliability.
BloombergNEF says energy storage applications around the world will multiply exponentially from a modest 9GW/17GWh in 2018 to 1,095GW/2,850GWh by 2040, marking a 122-fold boom over the next two decades.
If VRFBs capture just 10% of the stationary battery market, by 2030 the global production of vanadium will need to increase by as much as 50%, according to Fortune Mojapelo, CEO of one of the world’s largest vanadium producers, Bushveld Minerals.
Vanadium is already deemed to be a critical mineral by the Australian and US governments, but there are only three large-scale primary vanadium producers globally – Bushveld Minerals, Glencore, and Largo Resources.
Manuka executive chairman Dennis Karp said vanadium would become the benchmark for green utility energy storage.
“Vanadium demand is even expected to double by 2025 by some researchers’ predictions,” Karp noted.
Manuka revealed in early August it would acquire Trans-Tasman Resources (TTR) which owns the STB project, in an all-scrip deal that would reduce the company’s risk profile by broadening the range of commodities it produces.
TTR has already defined a 3.8-billion-tonne JORC resource, which is hosted within mining permit and exploration permits offshore in STB. The project is expected to recover around 5 million tonnes of VTM iron ore concentrate per annum over an initial 20-year mine life. TTR has defined resources for over 60 years of production at 5 million tonnes a year.
Alan Eggers, the current chairman of TTR, said the STB project concentrate contained around 11 pounds of vanadium pentoxide (V2O5) per tonne, which assuming a 70% recovery would deliver 38 to 40 million pounds of V2O5 valued between $US450m ($652.6m) and $US480m ($696.1m) a year (with an assumed price of $US12/lb V2O5 as per June 2022).
Eggers, who has over 40 years of industry experience and previously took Summit Resources from a NZX debutante in the late 1980s to an ASX 200 company that was eventually taken over by Paladin Energy in a $1.2Bn deal in 2007, will join the Manuka board as an executive director on completion of the acquisition.
Karp said exposure to vanadium as a commodity via a well advanced and expected low-cost multi-element project was considered to be a key strategic addition to Manuka’s portfolio.
“Incidentally, an estimated annual production of 10,000 tonnes of vanadium metal equivalent would make New Zealand (through Manuka) the third largest producer in the world,” he noted.
Currently, China is the largest vanadium producer, accounting for over 60% of global supply, followed by Russia which has around 17% market share. South Africa is the third-largest producer of vanadium, supplying around 7%, and Brazil takes out fourth spot with a 5% share.
“When you reflect on the sovereign issues of some of the major supplying countries it is even more enticing,” Karp added.
Environmental and cost advantages
The STB project is expected to be a low-cost and low-emissions concentrate producer.
The operation would have a small environmental footprint, with only 300m x 900m area of disturbance at any time, and very low carbon emissions compared to other hard rock iron ore deposits.
The project will be in the bottom quartile of CO2 emitters for iron ore producers globally, with an estimated 62kg of CO2 per tonne compared to the international average of 125-250kg of CO2 per tonne.
This is because it does not require a heavy machinery mining fleet, open pits, waste dumps, haul roads, grinding circuits, a railroad, port, or mine site rehabilitation. There are also no chemical additives in processing or tailings.
The natural marine processes will allow for rapid rehabilitation and recolonisation of the benthic marine life of the mined areas (expected to be fully rehabilitated within two years of mining) and will not cause any medium or long-term impact to the ecosystem, Manuka says.
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