The 3rd meeting of the Vanitec Energy Storage Committee meeting was held at the Sheraton Skyline Hotel, Heathrow on the 10th of October 2017.
John Hilbert of Vanitec opened the meeting with the usual warnings about not compromising anti-trust legislation then went on to explain that Mikhail Nikomarov of Bushveld Energy had been elected as the new chairman of the Energy Storage Committee (ESC).
2nd ESC meeting followup survey
The results of the followup survey after the last meeting were then presented. There was almost universal agreement that Vanitec should continue to grow its role in the promotion of Vanadium in the Energy Storage sector. In terms of ranking the activities that Vanitec might undertake as part of this effort there was no single strong element – so the decision was taken to focus on the top 5 survey responses as shown below:
Whilst there was general agreement about the sorts of the activities that the ESC might undertake there was no consensus achieved on what the technology might be called. Whilst the term ‘VRFB’ got something like 35% of first choices, there were 5 other options suggested and so it was suggested that it might not be realistic to expect independent businesses to adopt a single agreed term for their marketing. This issue would be returned to later in the day during the marketing consultation sessions.
Market update from Terry Perles of TTP squared
Terry started out by pointing out that Vanadium is actually surprising abundant in the earth’s crust (20th most abundant element) – A really valuable fact to remember is that Vanadium is 3 times more abundant than Copper (Wikipedia – Abundance of elements in Earth’s Crust) . As Terry said, “the real question is how economically viable it is to extract it”.
The comparison with Copper is striking – in 2016 there were 20 million tonnes of Copper produced – Vanadium production was only 0.4% of this amount – 80,000 tonnes. At these rates of usage the world’s Vanadium would last 750 times as long as its copper. There is plenty of Vanadium – the argument that Vanadium is ‘rare’ is completely incorrect. The cost of the material is another matter and depends upon demand.
In terms of production Terry reiterated that 75% of the Vanadium produced comes as a by/co-product from the production of Iron – thus this production route does not depend on or respond to the price of Vanadium – “the Vanadium tail cannot wag the steel dog”. Of course if the Vanadium is used purely for steel strengthening applications then there may be a balance struck here – less steel produced might also mean less Vanadium is needed. As the graph below shows there is indeed a strong correlation:-
At least until 2015 – when steel production shifted to regions with lower vanadium consumption rates (think what happened to the steel price in 2015). China’s specific consumption of Vanadium is 0.044Kg V per Tonne of Steel, whilst North America’s is twice as high – 0.096 Kg V per Tonne. Might Vanadium producers be concerned that this trend will simply continue, or get worse ?
As Terry explained at the previous Vanitec ESC meeting – since 2014 there has been significant ‘grade 3’ rebar steel being produced in China which does not incorporate the 0.03% of Vanadium that should really be used. This is because a number of mills there used a quench and temper process that could emulate the enhanced Tensile stress performance of proper V-containing grade 3 rebar but that the elongation test which could differentiate the two was difficult to perform in the field. A recent modification to Chinese grade 3 rebar standards now incorporates an easy to do surface hardness test – the quench and tempered steel will be much harder on the surface and can now be weeded out. The key thing is that these changes to rebar standards have not yet been implemented in China (they were expected to be in September) – thus the recent price spike in Vanadium has not been caused by this new standard – in fact it may have slightly delayed the implementation of the new standard.
John Hetherington of New Zealand Steel pointed out that grade 3 rebar (0.03% V) is still quite a low standard when considered in global terms – there is apparently also grade 4 (400MPa) which has 0.1% Vanadium and grade 5 (450MPa) which has 0.15% Vanadium so there will be a natural long-term pressure upon Vanadium consumption as China improves its standards.
Peter Fischer of the Institute of Chemical Technology in Karlsruhe asked whether if there was a shortfall in Vanadium production then what is going to be left for VRFB electrolyte production? TP responded that it all depends on the price – at significantly higher prices some applications (eg steel strengthening) can perhaps switch to using Nb as a strengthening alloy – or of course Vanadium primary producers can increase production !
I asked whether the steel strengthening market could actually tolerate higher Vanadium prices – after all the amounts of Vanadium used in steel seem rather low (eg in 1 tonne of grade 3 rebar costs perhaps $600 – this contains maybe only 1/3Kg of Vanadium – so maybe only $15 worth when V-prices are $50/Kg FeV). Terry responded by saying that if other uses of Vanadium start to push up prices then the challenge for Vanadium producers would be to keep up with the growing demand – i.e. avoid steel applications switching out of V – so it’s a ‘they would rather not tolerate higher prices if they have an option’ answer to my question.
Terry continued, explaining that since the last meeting the Chinese government had announced that producers there would not be able to import Vanadium Slag after the end of the year. This will significantly affect a number of the steel mills in China as the Vanadium producing ones generally are amongst the worst performing as the ore is poor. 9 Steel mills in china generate 70% of the world’s Vanadium but only 5% of the steel – and these will be the most marginal steel producers.
In summary – for the last couple of years global Vanadium consumption has exceeded production and this has caused the complete elimination of the global Vanadium stockpile that developed since 2004. This of course has happened even without the rebar and slag processing changes that have yet to take effect in China. As Terry went on to point out this has had an interesting effect on the intra-/ex-china prices of Vanadium. In the past Chinese Vanadium prices have lagged some 4% behind US and European ones, but since around July this year Chinese prices have led the rest of the world (eg see the comparative study of EU and Chinese prices during the recent Vanadium mini-shock).
A rather interesting new dynamic is starting to become established – for the first time since 2005 (excepting a brief aberration in 2009) China is now cutting back significantly on exports of Vanadium. Might exports from China dry-up on a long-term basis (as they did for the rare-earths in 2010) ? This might ultimately lead to a divergence between the Vanadium pricing inside and outside of China. It is of course interesting to note that the primary Vanadium producers, who might be expected to have to take up the slack caused by reduction in slag processing, all lie outside of China – so it is hardly surprising that Chinese exports are being reduced – they need the Vanadium for themselves. It will be very interesting to see if this trend is maintained or if it is a temporary effect caused by the recent shutdown of chinese processing plants for environmental inspections.