President Obama likes vanadium; or rather, he likes to say the word vanadium. Last February Obama joked that "Vanadium redox fuel cells is one of the coolest things I've ever said out loud". Obama also said this "next generation energy storage system will help families and businesses cut down on energy waste, save money and reduce dangerous carbon emissions". So what is vanadium and, more importantly, what is a vanadium redox fuel cell?
Vanadium is the 23 element on the periodic table and is a soft silver-grey ductile transition metal. It is primarily produced in Russia and China from steel smelter slag and in a few other countries around the world as a flue dust of heavy oil or a byproduct of uranium mining. Most vanadium, approximately 85%, is used as an alloy called ferrovanadium as an additive to improve steels. But recently its vanadium's status as a strategic metal and its green energy applications that have people, including President Obama, talking. Although, the more correct terminology is the vanadium redox flow battery.
Vanadium redox flow batteries are distinguished from fuel cells by the fact that the chemical reaction involved is reversible meaning that they can be recharged without replacing the electroactive material. Also, an important factor in the redox flow battery is that the power and energy density of the batteries are independent of each other in contrast to rechargeable secondary batteries which avoids cross contamination. These special characteristics make the vanadium redox flow battery uniquely applicable for energy storage applications including transportation and utilities.
Although vanadium has only recently been grabbing media headlines, one TSX-V listed company decided to pursue vanadium as an emerging opportunity when they fortuitously discovered the critical element in Nevada while drilling for base metals back in November, 2007. That company was American Vanadium Corp. (TSX: V.AVC, Stock Forum) which, at the time, was operating as Rocky Mountain Resources.
American Vanadium recently reported they are on track at the Gibellini vanadium project in Nevada to delivery of Feasibility Study in Q3, 2011 and is looking to start of production by 2013. This will position the company to have the only vanadium mine in the US, which is by some accounts, an enviable position.
American Vanadium Presdient & CEO Bill Radvak is putting his mining and technology experience to work.
Chris Barry, an analyst at House Mountain Partners, notes in a recent report, "With its low-cost project economics, AVC presents a unique opportunity to join the ranks of vanadium producers and contribute to the growing demand for this little-known metal. This is where we think AVC can create value for shareholders, near-term production of a strategic metal in a stable geopolitical jurisdiction." Mr. Barry went on to say that, "Vanadium is most exciting because there is an increasing potential demand for the metal in the energy storage and battery spaces."
Highgrade Review interviewed Bill Radvak, President & CEO of American Vanadium, to get to the bottom of vanadium and to find out what's in store for the company.
Vanadium is certainly not a house-hold name, please tell our readers about vanadium, its uses and why you were attracted to this particular transition metal.
I volunteered for this job eighteen months ago because it is was perfect mix for me as a start-up where I could use my education and experience as a mining engineer and also leverage my fifteen year stint in the technology industry. And that is what the American Vanadium opportunity is about: an advanced vanadium resource which truly gives us the capability to lead the creation of the mass storage industry in the US using vanadium flow batteries.
The street knowledge of Vanadium has jumped tremendously in the time I have been with AVC and that is only going to continue to increase due to its growing importance and new critical uses that will affect everyday life. Historically, vanadium is all about being a premiere steel strengthener which was first used in the Model T Ford and since then has become increasingly critical to the steel industry. A great example is that on July 1 of this year, China implemented a new regulation for their rebar grade that will result in an additional 27,000 Metric tons of Vanadium consumed in China which is a 40% increase in global vanadium consumption in the next few years. As well, Vanadium is absolutely critical and irreplaceable in the production of titanium alloys for aircraft and the defense industry, catalytic converters and important chemical production.
A great statement we heard recently from the US Department of Energy was “the electric grid is the world’s largest supply chain without a warehouse”. Their biggest urgency is to build these “warehouses” and the most advanced mass storage battery technology is the vanadium flow battery. Essentially these are massive vats of vanadium in sulphuric acid that allow the continual storing and discharging of electrical energy. The key is that these vanadium flow batteries are scalable to meet any needs and will last for decades and that is why there is a huge effort to commercialize these batteries worldwide.
Vanadium is on the Critical Element list in America, how might this help shape American Vanadium?
Given that the US government has recognized it is in a terrible spot trying to secure supplies of rare earth metals, it taking a very serious look at all their supply chains. We have helped them further recognize that the US only domestically produces 5% of its raw vanadium needs as a by-product of a uranium mine while 80% of its needs are met by the Venezuela, China, Russia and South Africa. One hundred percent of the supply for the vanadium flow battery industry will come from these same countries. And 100% of the vanadium required for their titanium alloys used in the aircraft and defense industries comes from a single source in Russia.
When key industries and national defense rely on a critical element primarily from Venezuela, China, Russian and South Africa, the US has to look for domestic supply. And there is no other domestic US option on the table or being considered other than American Vanadium. As we are driving fast on our timetable to begin production by the end of 2012, we are being taken seriously by the US Government agencies as the key domestic source of vanadium for current and future needs. Importantly, this gives us tremendous leverage in partnering with vanadium flow battery companies as anyone seriously wanting to capitalize on the huge need in the US logically has to have access to our production which could easily be turned 100% to meet this premium need.
Please tell us a bit about the background of the company and, specifically, some background on your flag-ship Gibellini project in Nevada?
American Vanadium was built around the Gibellini Project which was historically drilled up by Union Carbide, Noranda and Atlas mining. What has made this project economic is we have recognized that the unique geology enables us to use simple and cost-effective heap leach processing to extract the vanadium. Being located in the middle of Nevada, the unique sedimentary hosted deposit is essentially a ridge of exposed, heavily oxidized, crumbled rock with a strip ratio of a remarkable 0.2.
A Scoping Study was completed by AMEC in 2008 and the operation they designed had an after tax IRR of 40% with a capital cost of less than $100 million. AMEC has been engaged to complete a Feasibility Study and we expect this to be delivered in this quarter.
The Gibellini project has a defined 43-101 resources estimate of 122 million pounds of indicated vanadium (i.e., vanadium pentoxide or V205) grading at 0.339%, where does this put American Vanadium in terms of size and grade of other known deposits?
At 3 million tons per year mined, our mining project could be considered small relative in the mining industry, but this production rate would represent about 50% of the United States annual vanadium demand or about 5% of the world supply this year. This makes our operation very important to the vanadium industry, particularly the US consumers. We are fortunate that we are in a very friendly mining jurisdiction where we can control costs on an already inexpensive mining and processing operation. Therefore, while our grade is relative low, we expect it to be very economic as most other mines have a magnetite that requires stages of crushing, grinding, magnetic separation and roasting.
We also have a very expandable resource potential. We focused on getting to production base on the historic drilling on the main occurrence. Now that the Feasibility Study on this occurrence is nearing completion, we are turning our immediate attention on building the resource on expanding this main occurrence and upgrading the already drilled Louie Hill that is adjacent to the Gibellini. After that there are a handful of other occurrences on the property we will be exploring as well as looking regionally.
What does the end-user market look like for Vanadium and how is Vanadium sold into that market?
The vanadium market has been in a state of oversupply for the past decade and is now transitioning into an extended period of undersupply; coincidentally, this is anticipated around the time we expect to reach production. This bodes well for the producers as the price of vanadium is forecast to climb for the next 5 – 10 years. And this does not take into account any demand at all from the vanadium redox battery so obviously we are thrilled with market timing and the vanadium outlook.
The consumers are now becoming worried about surety of supply. Our priority, while the vanadium flow battery market grows, is to pursue the US consumers beginning with the handful of steel companies that rely on foreign sources. We can offer a longer term, domestic supply to satisfy their surety of supply concerns. Additionally, we will be focussing on the titanium market where vanadium sells for a premium. While on a global scale only 4% of world vanadium is consumed in titanium alloys, in the US almost 20% of the vanadium is consumed in titanium alloys due to the significant aircraft and defense industries which rely on a sole source of vanadium from Russia.
What milestones do you hope to reach before the end of 2011?
We have a number of very important milestones we expect to deliver in the coming months including the completion of our bankable Feasibility Study by AMEC in Q3, issuing a revised NI43-101 within 45 days of the Feasibility Study and testing of our vanadium electrolyte for the mass storage industry. We will leverage these near term milestones to pursue a number of key initiatives such as joint ventures and partnerships with international leaders in the Vanadium Flow Battery space and off-takes with steel producers for our early production. Project wise, we are going to put a lot of energy towards increasing the resource thereby extending the mine life. All in all, there is lots going on and lots to look forward to for the remainder of this year and next.
This article was first published in online magazine The Highgrade Review.
Disclosure: American Vanadium is a Stockhouse client.