Vanadium: America’s energy solution?

Materials World magazine
1 Mar 2014

With the increasing global use of renewables, ways of storing green energy are a growing focus for industry. Melanie Rutherford talks to Scott Eldridge of American Vanadium Corp about the Canadian mining company’s unique vanadium deposit in Nevada, USA, and how it is exploiting it for an energy storage technology that could transform the US power grid.

For most mining companies, it’s simple. Find the resource, extract the ore and make some money. But for American Vanadium, based in Vancouver, Canada, mining is just the tip of the iceberg. Not content with having acquired the USA’s only vanadium deposit, the company has partnered with German industrial giant Gildemeister AG to exploit the metal for a new redox flow battery technology for green energy storage. Having acquired distribution rights for the batteries across North America, this mining start-up has its sights set on revolutionising the country’s green energy market.

The USA currently imports its vanadium from a variety of sources, most commonly in its ferrovanadium form to strengthen steel. In its electrolyte form, it has been used as a key component of vanadium redox flow batteries (VRBs) for grid-scale energy storage since the 1980s. With many US states pushing for greener energy and more still looking for cheaper power supply, American Vanadium’s Gibellini prospect in Nevada, USA, could be the answer the country is looking for. The world’s biggest vanadium producers are currently Russia, China and South Africa, but with governments capable of banning exports at any time, the USA’s supply of the metal is by no means secure. And with fluctuations in steel demand forcing two substantial vanadium price spikes over the last 12 years, questions have been raised as to how cost-effective the metal is as an energy storage material. The vanadium electrolyte (VE) used for VRBs represents 50% of the cost to build the battery – and another price spike would see that increase to the point that the batteries are uneconomical to produce. Seeking to secure a fixed-cost, long-term supply of the raw material for its CellCube VRB technology, Gildemeister has looked to American Vanadium’s Gibellini mine to source the critical ingredient for its batteries.

The Gibellini project is the USA’s only primary vanadium mine – elsewhere, it is largely extracted as a by-product, primarily from steel slag. Scott Eldridge, Project Finance Director at American Vanadium, which acquired the project in March 2006, explains, ‘The unique geology of the mine means Gibellini can produce both vanadium electrolyte and vanadium pentoxide – and produce the electrolyte at a very low cost.’

Inside Gibellini
Located 40km south of the nearest town, Eureka, the Gibellini property comprises a northwest prominent ridge on a sedimentary-hosted fault, formed of highly folded, distorted and fractured shales. The vanadium resource lies within a black shale unit measuring 50–60 metres thick, the uppermost 30–35 metres of which is oxidised. The highest grades, however, can be found in the transition zone directly below, which comprises both oxidised and unoxidised rock. Eldridge explains, ‘The deposit is fairly simple and is mined as an open pit. The orebody comes to the surface, so there is no pre-strip – you’re immediately in ore. It’s just a matter of blasting, loading up a 100-tonne truck and transporting it to the crushing circuit and leach pad. And once blasted, it’s highly fractured, so it’s very amenable to heap leaching.’

According to a feasibility study completed in September 2011, the resource represents more than 60,000t of measured and indicated vanadium pentoxide grading at 0.285%, and an additional inferred resource of more than 21,500t at a grade of 0.172%. The adjacent Louie Hill deposit is estimated to add a further 18,500t of inferred resources, ‘so the project does have some longevity,’ says Eldridge. ‘It’s just a matter of in-fill drilling of the inferred resources to bring them up to measured and indicated so that we can carry out a feasibility study. And there is exploration potential in the project as well – while the feasibility study predicts a seven-year mine life, inferred resources suggest it could easily be 10, and with further exploration that could reach 15 years.’

The feasibility study states that the Gibellini project has the potential to be a low-cost primary source of vanadium in the world, with a unit operating cost of just US$1.86/kg. And with the mine expected to produce in excess of five tonnes of pentoxide a year, it has the potential to supply 4% of global vanadium demand. Much of this demand comes from the construction industry, where vanadium in its pentoxide form is primarily used in rebar. ‘The world’s greatest demand for that, probably 50%, comes from China,’ says Eldridge. ‘The country is currently monitoring the vanadium content in its rebar, as it is looking at transitioning to a more European or American specification. If that is the case and they are going to need more vanadium, that could cause a spike in demand.’

While Eldridge says American Vanadium is not discounting pentoxide production as demand dictates, the company is focusing on an altogether different market. ‘We want to pursue the electrolyte business because that’s where we’ll have the most robust cash flows,’ he explains. ‘Right now, electrolyte is worth between US$7–9/kg – that’s more than double the price of pentoxide. And it’s the more exciting side of the business, where we can attract energy storage companies and investors that are interested in green technology, rather than just being a mining company producing vanadium purely for steel.’

A cost-effective solution
In Germany, around 15% of energy is produced from renewable sources, mainly wind and solar, which the country aims to increase to 30% by 2030. ‘Gildemeister originally specialised in solar installations, but started looking at getting into the battery business as a way of selling a package solution to its customers,’ explains Eldridge. ‘It has already made 50 installations over the last three years and is projecting exponential sales growth. Gildemeister currently purchases the vanadium for its battery technology from traditional chemical companies, which have an expensive process cost for making electrolyte and do not have access to a large, secure supply.’

With the Gibellini mine able to produce the electrolyte at a much lower cost, Gildemeister looked to American Vanadium for a cheaper and more secure supply. The electrolyte needed for the storage batteries can be extracted during a simple intermediary step in the production process of pentoxide. The electrolyte is directly extracted from sulphuric acid – a much cheaper process than the conventional method of extracting electrolyte from steel slag.

Securing a low-cost supply of vanadium electrolyte was so important to Gildemeister that American Vanadium was able to negotiate the selling rights for the batteries in North America. ‘We are sales agents for the batteries, which is something you wouldn’t see with other mining companies,’ says Eldridge.

However, in contrast to the increasing demand for renewable energy solutions on the continent, the US market poses more of a challenge. ‘In the USA, the push on green energy is more state-specific,’ explains Eldridge. ‘Three potentially big markets are California, which is regarded as a more green state than others, Hawaii, where energy costs are sky high, and New York, which has legislation pushing for green technology. They all want to diversify out of the traditional US nuclear and coal energy businesses and transition into the green generation of energy.’

California perhaps offers the biggest potential for using VRB technology. In October 2013, the California Public Utilities Commission set an energy storage target of 1,325MW for the state’s two major power companies, with the deadline for installations fixed for 2024. The move followed the closure of the state’s San Onofre nuclear station earlier that year, which previously accounted for around 20% of power deployed to large areas of southern California.

But Eldridge admits that even California doesn’t yet have the same strong green initiative as Germany. As such, American Vanadium is also looking to target specific North American communities and companies seeking to reduce their energy costs. ‘Walmart, for instance, is looking at VRBs as a storage solution for peak savings, allowing it to source energy at night, when it’s cheapest,’ he explains. ‘And in Canada, just north of the border, there are huge numbers of remote Native American communities that run their power by diesel, which is very expensive – many pay up to US$1/kWh. Using VRBs would cut their energy costs by at least half.’

The American dream
But it is still early days for American Vanadium. The mine has yet to go into production and the company faces the usual challenges that come with financing an operation. ‘In terms of equity it’s difficult for any mining company that’s in this phase, whether that’s vanadium, gold, silver, iron or copper,’ Eldridge admits. ‘But for the right projects in the right jurisdictions, there’s certainly money available. We’ve strengthened our relationship with a strategic investor called Dundee, in Toronto, which recently put around US$4m into the company – about a 20% equity share.’ Once the mine is financed, says Eldridge, ‘it will be a case of getting the mine into production, finalising the offtakes and then selling batteries in the USA’. The final stage of permitting is expected to be completed in 2014.

While success for American Vanadium could transform the US energy mix, Eldridge remains realistic about the impact its vanadium resources could have on a global level. ‘The metal is currently not on the US Government’s list of critical metals, but it is on their watch list – so it could transition into being a critical element for them. Only then would there probably be some sort of restraints on exports, but we’re still years away from that – you would have to see huge demand for the batteries.’ As a mining company, American Vanadium’s plan is simple. ‘Our priorities are to get the permitting done, raise the money to build the mine, then construct the mine and move into operation,’ says Eldridge. But this is no longer just a mining company. This is an energy storage firm that could make a significant impact on the US energy mix.  

Vanadium versus...
With the push on renewables increasing worldwide, flow battery technology for energy storage is rife. As such, American Vanadium faces competition from rival energy companies using other metals as catalysts for redox flow batteries, such as titanium, polysulphide bromide and uranium. While vanadium is the most commercially advanced energy storage technology, to date it has also been the most expensive.

More recently, in January 2014, a novel battery technology was reported in a paper published in Nature – a metal-free flow battery that relies on quinones (organic carbon-based molecules) to store energy. The team behind the battery, based at the Harvard School of Engineering and Applied Sciences, USA, claims that just one or two days’ worth of storage would be enough to dispatch solar and wind energy through the electric grid, and that the battery performs as well as its vanadium-based counterparts. While these are early days for organic flow batteries, metalbased flow battery manufacturers will be keeping a close eye on the cheaper alternatives.  

For more information, email Scott Eldridge