5 October 2016
Bushveld Minerals Ltd
("Bushveld" or the "Company")
Bushveld Energy Limited Operational Update
Bushveld Minerals Limited (AIM: BMN), a diversified mineral development company with a portfolio of vanadium, titanium, iron ore, tin and coal assets in Africa, is pleased to provide the following corporate update in respect of its 84% owned subsidiary, Bushveld Energy Limited ("Bushveld Energy" or "BE"). BE was launched in January 2016 to focus on developing and promoting the role of vanadium in the growing global energy storage market through application in Vanadium Redox Flow Batteries ("VRFB").
Updates in respect of the other operational divisions of the Company will be presented in coming weeks.
· Continued progress in respect of the cooperation agreement with the Industrial Development Corporation ("IDC"):
- Tenders for studies have closed, with the market study and the techno-economic study awards being concluded;
- Ongoing identification of potential sites for VRFB installations in South Africa in order to demonstrate the technology and its commercial application.
· Progressing market opportunities of VRFBs outside of South Africa through an MoU recently signed with UniEnergy Technologies, a United States of America based manufacturer of turn-key, large and medium-scale VRFBs for utility, micro-grid, commercial and industrial, and other applications.
As part of the cooperation agreement signed between Bushveld Energy and the IDC, the parties committed to undertaking two important studies in respect of VRFBs - a study for the market potential of VRFBs and a techno-economic study of Vanadium Electrolyte Manufacturing in South Africa. Both studies have already started, with initial results expected before the end of the year.
Study A) Market study for Vanadium Flow Batteries
While there are an increasing number of studies in the energy storage market, coverage of Africa as a region is limited (and usually grouped with other regions such as the Middle East). At the same time, Africa has an energy demand environment especially conducive to energy storage, which includes a significant need for off-grid solutions, a very high cost of electricity when generated by diesel fuel and some of the best solar radiation levels in the world. With this study, BE will go a step further in its identified markets and develop granular, attainable market opportunities specifically for VRFB.
Both Bushveld and the IDC are pleased to have awarded the tender to a combined team of experts from LHA Management Consultants ("LHA") and the Fraunhofer Institute for Chemical Technology ("Fraunhofer ICT"). LHA is a South African management consulting firm with over 40 years' experience and 2,000 projects in business consulting, research and analysis across the African continent. Germany-based Fraunhofer ICT carries out applied research for government and commercial enterprises. It has over 200,000 m2 of research space, which includes a purpose-built 20MWh VRFB for research into materials, battery design, prototyping, performance and safety tests, as well as the simulation of smart and micro grids.
Study B) Techno-economic study of Vanadium Electrolyte Manufacturing in South Africa
The study will identify the vanadium electrolyte production processes that best suit vanadium feedstocks available in South Africa. It will identify the costs of electrolyte production specifically in South Africa, considering the various electrolyte chemistries and other production elements including, location, employment and environmental and other risks. BE recognises the significant additional costs in converting vanadium oxides (vanadium pentoxide/vanadium trioxide) into vanadium electrolyte and is hopeful that, in addition to having access to low cost vanadium input, it can also access and utilise low cost electrolyte manufacturing processes. Given that vanadium electrolyte makes up as much as 30-40% of the cost of a VRFB, the opportunity to better manage the volatility and price of this key input is important. Furthermore, it may be able to provide South Africa with a competitive advantage as a supply centre of VRFBs.
Likewise, both Bushveld and the IDC are pleased to have awarded the tender to a combined team of experts led by Venmyn Deloitte and including Live Blue Marble Technology, LogiProc and BizBuild. Venmyn Deloitte is a global business with professional expertise in the independent technical and economic assessment and review of mineral projects, including extensive experience in both the mineral resources feedstock and downstream purification. Over the past two decades it has been involved with techno-economic assessment for most of the vanadium mineral assets in South Africa.
Fortune Mojapelo, CEO of Bushveld Minerals, commented:
"Bushveld Energy is pleased to be cooperating on both studies with the IDC, a state funding institution that committed ZAR 14 billion in support of renewable energy projects in the past five years. It has also prioritised energy storage as one of the eight most attractive new industries in terms of financial and developmental returns. The IDC also has important stakeholder linkages with the South African government, regulators and utilities and other key players that are necessary to provide a catalytic stimulus for the energy storage industry as they have for the renewable industry to date. We look forward to continuing to work with the IDC to develop the energy storage industry in South Africa."
Bushveld Energy continues to make progress in executing its stated strategy to build a leading energy storage company for Africa utilising Vanadium Redox Flow Batteries ("VRFBs"). As articulated in the announcement dated 18 January 2016, BE believes the commercial utility scale energy storage opportunity in Africa and globally is very significant and that VRFBs are well placed to capture a considerable share of this market. As an integrated Group, Bushveld is well placed to address two key hurdles of VRFB adoption: a) availability of vanadium supply, and b) the vanadium input costs.
To accelerate and de-risk the process, BE is partnering extensively on its two core activities in developing:
1. The business case for VRFB and vanadium electrolyte manufacture in South Africa, on which, as noted above, Bushveld has signed a Cooperation Agreement with the IDC of South Africa, a leading financier of renewable energy projects in Africa, with a stated focus on developing new industries and supporting the renewable energy industry. The current focus includes:
a) Tendering for studies on the market demand for VRFBs in Africa and the techno economic characteristics of a vanadium electrolyte plant in South Africa (see further detail below). Both studies were launched in September are expected to be completed by early 2017;
b) Identification of prospect sites for installation of a multi megawatt hour (MWh) VRFB in South Africa to demonstrate the technology and its commercial application at the utility scale. This would be the largest VRFB and one of the largest batteries on the continent, with operation, subject to securing the necessary funding, expected during 2017;
c) Growing its in-house vanadium chemicals capabilities. This includes accessing both existing South African capabilities and identifying international partners to develop intellectual property for low cost, high energy density electrolyte manufacturing.
2. Energy storage projects across Africa befitting the unique technical capabilities of VRFB technology, including a 20 year life, capability to cycle daily or more frequently without performance degradation and the ability for 100% depth of discharge. During the course of 2016, BE has witnessed an increase in demand for off-grid and intermittent-grid solutions, combining solar photovoltaic (PV) generation and energy storage. The demand will continue to rise if, as expected, oil prices continue their recovery from the lows of early 2016, leading to higher diesel prices, and both PV and VRFB costs continue to decline as forecasted. The current focus includes:
a) Working together with solar PV and wind project developers to grow the pipeline of renewable energy plus storage projects. BE's role is to co-develop the technical case and in some cases the business case for the renewable energy with storage projects;
b) Collaborating with UniEnergy Technologies (UET), the leading manufacturer of large scale VRFB systems, with whom BE has signed an MoU for developing the market opportunity for VRFBs in Africa with a view to establishing local manufacturing capacity for VRFBs. UET has a commercially proven, megawatt-scale VRFB product that is already cost-effective for certain applications in Africa. Its ability to perform in islanded mode, containerised design and provision of a "plug & play" alternating current (AC) product make it ideal for remote and difficult to access locations;
c) Growing the project development capabilities of the BE team, especially with projects moving from concept to implementation.
Globally, Bushveld Energy continues to see acceleration in the growth of the large scale energy storage market and in the deployment of VRFBs within that market. 2015 was landmark year for energy storage in the USA, the most advanced market, where installations more than tripled from 2014. Globally, according to Navigant Research, over 1650 MW of new large scale energy storage was announced in 2015. The largest component of this, which is for grid, is forecast by Navigant to grow 20 fold over the next 10 years. This is important for VRFBs, as well, since the technology is better suited for larger batteries. In 2015, Sumitomo commissioned the largest VRFB to date, a 15MW/60MWh system in Japan. In 2016, Rongke Energy, a sister company of UET, announced a 200 MW / 800 MWh VRFB for installation in China. All of this points to an excellent timing opportunity for the Group to continue, subject to funding, its foray downstream into energy storage.
Enquiries: [email protected]
Fortune Mojapelo / Mikhail Nikomarov
+27 (0) 11 268 6555
Strand Hanson Limited
Andrew Emmott / Ritchie Balmer
+44 (0) 20 7409 3494
Mirabaud Securities LLP
+44 (0) 20 7878 3360
Beaufort Securities Limited
+44 (0) 20 7382 8300
Gabriella von Ille
+44 (0) 20 7138 3204
+44 (0) 20 7138 3224
+27 (0) 711 121 907
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