Bushveld, Batteries and Betamax.
At first glance, it would be easy to write Bushveld Minerals (ticker: BMN) as just another junior miner. Hell, even the Freetrade about section is a little uninspiring:
Also, looking at the last year doesn’t exactly fill you with glee:
So, what if I told you that this South African junior miner is one of the most exciting energy storage/battery hedge play you could make? And one that I think could be a major player in the worlds’ energy storage markets over the next few decades…
At a glance:
- 300 million market cap with good cash flow generation.
- Owns 2 processing plants Vametco and Vanchem.
- Producing circa 5% (just over 4 thousand tonnes) of the world’s Vanadium with plans to double this within three years.
- Average selling price of just under $40 per kilo, aisc (remember that term from the other piece?) circa $19 per kilo.
- Mining license in progress for Mokopane which looks to be the largest high-grade Vanadium mine in the world.
- Demand currently outstrips supply for Vanadium.
Indeed, they do primarily at least mine vanadium, which has a variety of uses. One of which is strengthening steel. Real-world applications (in just the UK): think HS2 and Crossrail, both of which will use plenty of Vanadium. If you’re that way inclined, the science behind the strengthening is here:
But that’s not why you’re here, so here is the juicy bit: Vanadium is also used in a breaking electrolyte technology that is used in small and large scale energy storage batteries - (seriously what a twist!).
VRFB (Vanadium Redox Flow Batteries)
That’s the marketing sorted.
So here’s how they work:
And here’s why they’re better than lithium-ion batteries:
Now I mentioned the uses for Vanadium in the UK transport (physical) infrastructure earlier, but we can now add, especially as we continue to move to new renewable energy resources such as wind turbines and solar farms, battery backups. All energy-generating renewable sources could use VRFB technology to continue delivery of energy to the grid, especially when the sun isn’t out or the wind speed is too low.
Did I mention these batteries need a lot of Vanadium? In fact, when I say a lot, they use a lot of valuable vanadium. In a market that is already oversubscribed, prices can only go up as demand outpaces supply, Bushveld is well-positioned to capitalise on this - especially if they double their production at the existing plants and get Mokopane open in good time.
Fortune Mojapelo - CEO
"The Group’s EBITDA of US$41million and free cash flow generation of US$23 million achieved in the period highlights the mine’s robust nature as a low-cost, highly cash generative operation, and was achieved in a period of weaker vanadium prices, which averaged 14 per cent less than a year earlier. Even with this strong result, we will be focusing our efforts at Vametco on further refining processes to maintain cost control.
Now imagine what will happen if Vanadium prices increase. If only Bushveld were producing the batteries…
Introducing Avalon Battery
- Bushveld Minerals Ltd is to provide a convertible loan of US $5mln to Avalon Battery Corp. to help it complete its merger with redT Energy PLC.
- The investment will also kick-start the miner’s own vanadium battery technology investment platform.
“The interim funding creates an investment in a prominent VRFB/energy storage entity with the potential to become a leading, global battery energy storage systems supplier,”
- Enerox is one of the world’s largest researchers, developers, manufacturers and distributors of vanadium redox flow batteries (VRFB), headquartered in Wiener Neudorf, Austria.
- It has installed VRFBs at over 130 sites globally.
- Right of first refusal agreement also concluded with Enerox, whereby Bushveld will have the right to match commercial terms for the provision of vanadium products.
“The acquisition places the company in an advantageous position to offer an attractive and diverse suite of vanadium products capable of servicing the steel and chemical sectors and the burgeoning energy storage market.
We are now able to fine-tune the plan for these assets and then provide, in due course, a comprehensive strategy to our stakeholders.
As we come towards the end of 2019, we have laid the groundwork for a strong 2020, which will see us strengthening its competitive position as the leading vertically integrated primary vanadium producer.”
I….have no idea what I’m doing anymore.
Plenty more going on, see:
More? Here’s Bushveld Energy
Bushveld has created a new division called Bushveld Energy which works in partnership with Avalon, REDt and Enerox GmbH.
- Bushveld Energy has installed a VRFB which has been operational just over a year. The battery is being used for evaluation purposes at the Eskom Battery Test facility. (Eskom is SA’s biggest energy supplier and has a history riddled with regular power outages and cuts).
- Bushveld Energy is in the process of building a Vanadium Electrolyte plant in East London (SA).
- The Electrolyte plant will eventually have the capacity for 1000MWh of electrolyte.
- Bushveld Energy is working with multiple partners around the world through Vanitec to build a strong business case for VRFB.
- As the Vanadium in VRFBs is fully recyclable Bushveld are working on a system to loan vanadium to VRFB buyers when the vanadium price is cost-prohibitive.
The Bears Case
The Energy Storage market is looking to be one of the most exciting sectors of the next decade, especially as the world changes from fossil fuels to renewables. VRFB is clearly a better product than its lithium counterpart in industrial applications, but as students of history will tell you, the best tech product doesn’t always win out.
We only have to pop back to the late 70’s to find a recent example when two competing products entered the home video entertainment market, the VHS by JVC and the Betamax by Sony. The Betamax had better recording and sound quality, better picture quality and stability, the tapes were lighter and smaller but ultimately lost out to its rival the VHS, if you want to read why check out:
(Seriously, what more do you want from a bloody tape!)
Kodak has a somewhat similar story with the digital camera:
Bushveld could be spreading themselves a little too thin, becoming jack of all trades master of none.
Also, it’s hard to write off Tesla and their battery tech - sometimes the cooler company wins.
- Mokopane license news is imminent
- Eskom (SA’s largest energy supplier) energy storage license tender news
- Bushveld Energy Electrolyte Plant update
- Further Bushveld Energy developments and updates
- Admission into the full FTSE 250 and JSE Exchanges.
As a product portfolio, Bushveld Minerals is very current and diverse. When the vanadium price is high, the mines will generate lots of cash, when the vanadium price is low the VRFBs will drop in price and become more attractive. To hedge yourself in this way is breathtakingly obvious and yet…I can’t name many mining companies that have done it.
I also have never seen this, essentially an investor fansite set up to provide reporting on Bushveld, track deliveries and generally make BMN incredibly easy to research, especially for people new to the stock. Seriously, if you’re intrigued, spend a few hours consuming all of the content on this site, they are a real credit to the stock and show off Bushveld in the very best light.
If VFRB becomes the worlds premier battery storage, well, I think we’ll be looking at a very different share price. Brokers targets range between 45 and 85p - but realistically the sky is the limit if it takes off.
Also worth mentioning Bushveld are looking to progress to the FTSE 250 and a listing on the Johannesburg Stock Exchange, where they’ll start to get picked up by ETFs.
I’ll admit, I find the story of BMN incredibly compelling and as could find no better finishing sentence to my notes then the one line CEO Fortune Mojepelo regularly states in interviews;
‘Our story is only half told!’.
So here are my notes, I’ve obviously tried to keep it light and interesting so errors and omissions are expected. Please don’t make decisions solely on the above information, make sure you do your own research and always fully understand the implications of investing in such a small, speculative business.
Let me know your thoughts
Edited inaccurate total mining amount.