Of course, Arvidson is biased, but he made a strong case for vanadium at the Project Blue Critical Minerals Forum in Perth this week.

Historically, the vanadium price has been driven by steel demand, which remains the dominant use, but there’s growing demand from the energy, military and aerospace sectors.

While electric vehicle demand has slowed, the huge growth in battery energy storage systems (BESS) is driving an improved outlook for lithium demand, with vanadium also set to benefit.

Vanadium demand from the battery sector was just 1% in 2019, growing to 9% last year.

By 2027, batteries are expected to account for 37% of vanadium demand.

“That’s a big opportunity, and for us, the characteristics of the [vanadium] flow battery lend themselves very well to long duration energy storage, hot climates where other technologies struggle a lot, and data centres – we’re seeing a really amazing emerging opportunity there,” Arvidson said.

“The longer the duration is, the lower the capital intensity is, and most other technologies, including lithium-ion, have a flat line capex intensity, so the economics improve the longer the duration of the battery, and that is really why we’re excited at the most basic level.

“The other thing is that flow batteries do not degrade, and if you compare that with our direct competitors right now in the BESS space, lithium, depending who you talk to, will degrade at 2% or 3% per year. It’s unlikely your asset will last longer than 15 years.”

Lithium-ion batteries don’t work well in hot climates as they’re flammable.

“If you look at the hot climate opportunities in places like the Pilbara, the size of that market opportunity in the next five to 10 years is absolutely astounding,” Arvidson said.

“If you have an environment that has a sustained temperature above 45 degrees, you absolutely will be selecting vanadium flow battery over a lithium battery, because if you pick lithium, you’re relying on an air conditioning unit to keep your asset running and not catching on fire, and in 45 degrees, not a very good idea.”

Arvidson said China alone had announced around 50 gigawatt hours of vanadium flow battery gigafactory manufacturing capacity.

“That trajectory is accelerating, not slowing,” he said.

Supply

The size of the global vanadium market was around 133,000 metric tonne units last year.

“The other unique characteristic of vanadium is that flow batteries require a lot of vanadium,” Arvidson said.

A 500 megawatt hour vanadium flow battery requires 4000 tonnes of vanadium pentoxide, equivalent to 1.7% of global supply.

Over 75% of global vanadium supply comes from China, Russia and South Africa.

Australia has significant reserves but does not produce vanadium.

“I’m obviously biased, but I would say we have the best geology in Australia,” Arvidson said.

Projects in Western Australia’s Mid West, like AVL’s namesake project, are vanadiferous titanomagnetite deposits.

“That is where all the best vanadium comes from, and it’s where high-purity vanadium comes from,” Arvidson said.

“It will lend itself well to scaling a flow battery supply chain.”

The Australian Vanadium project has a resource of 395.4 million tonnes at 0.77% vanadium pentoxide, including 104.5Mt at 1.12% in the measured and indicated categories.

AVL is advancing an optimised feasibility study, completing the permitting process and securing offtake and project funding.

Three-pronged strategy

As well as the upstream, AVL is also progressing midstream and downstream projects.

The company built, owns and operates a scalable manufacturing facility in Perth, which achieved first vanadium electrolyte production last year.

The product was successfully deployed in a battery for Horizon Power and engagement is continuing with other vanadium flow battery manufacturers.

On the downstream side, AVL is working on developing utility scale BESS solutions via its subsidiary VSUN Energy.

VSUN is working with Sedgman on Project Lumina, a cost-effective, scalable, turnkey, BESS tailored for Australia’s energy markets and hot climate conditions.

“Why don’t we see these in Australia? We’ve been grappling with that for a couple of years, and we just basically took it on ourselves to develop a downstream business and fix the problem,” Arvidson said.

“What is the problem, in my view, is they’re doing it in China, but not here, and we’re all conservative, and particularly, we can’t make an asset bankable unless someone’s done it before.”

Arvidson believes the proposed 500MWh vanadium BESS in Kalgoorlie, which is being backed by a A$150 million funding commitment from the WA government, will do for vanadium adoption what the Tesla battery in South Australia did for lithium.

“That battery, at the time, was the largest in the world. It is absolutely insignificant now, but it set off a chain reaction in 2017 that caused the adoption of lithium battery for grid scale storage across the world,” he said.

VSUN is aiming to be involved with the Kalgoorlie project, with a formal expression of interest process is expected to open before the end of the year.

VSUN is also pursuing BESS opportunities across four other Australian states.