Technology Metals Australia: steeling itself to power the next globally significant vanadium project

This is the second in a 2-part feature series.

This article is a sponsored feature from Mining.com.au partner Technology Metals Australia Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.

Advanced vanadium developer Technology Metals Australia (ASX:TMT) is progressing the development of the ‘globally significant’ Murchison Technology Metals Project (MTMP) in Western Australia.

As explained in the first part of this series, MTMP will produce high-purity vanadium pentoxide (V2O5) and a ‘high value’ ilmenite by-product. The company’s flagship project is shaping up to be one of global significance. Following a November upgrade, the MTMP measured and indicated Mineral Resource Estimate (MRE) grew to 63.2 million tonnes at 0.9% V2O5 within the global MRE of 153.7Mt at 0.8% V2O5.

More importantly, the flagship project will produce 6% of the world’s vanadium when it comes online and is poised to be the first and only Australian vanadium project in production when it does.

The vanadium market is divided into the 2 broad market sectors – steel applications and long duration energy storage.

As Managing Director Ian Prentice explains in the first part of this series, MTMP is ideally placed as a developing supplier into a steel market increasingly using more vanadium due to its strengthening properties. But importantly as a primary vanadium producer it will also be delivering a ‘very high purity’ product, which will be perfect for the vanadium redox flow batteries (VRFB) market.

VRFBs are a rechargeable flow battery that uses vanadium in different oxidation states to store energy, using the unique ability of vanadium to exist in solution in 4 different oxidation states. VRFBs provide an efficient storage and re-supply solution for renewable energy – being able to time-shift large amounts of previously generated energy for later use – ideally suited to micro-grid to large-scale energy storage solutions (grid stabilisation).

Two divergent yet important global markets

Based on the company’s drill results, Prentice says Technology Metals is in a strong position to capitalise on these 2 divergent yet important global vanadium markets.

Initially, Technology Metals was leaning more towards focusing on the steel sector for targeting end users, however it is now a 50:50 split with the battery market.

So, what was the catalyst for the change in company strategy?

The MD says: “While high strength steel will always be a key market for vanadium for its application in construction, infrastructure, and aerospace sectors, the demand for reliable battery and energy storage systems for long duration (>4 hours) storage of the energy produced from renewable sources is growing very quickly, spurred on by government policies and incentives such as the Inflation Reduction Act in the US, the EU’s Renewable Energy Directive, and the UK’s Net Zero Innovation Portfolio. This environmental and policy-driven catalyst has demonstrated to us that the long duration energy storage sector is a market in which vanadium will become highly valued.

“…vanadium will have a role to play in the long duration energy storage and grid infrastructure system”

Whilst lithium’s appeal and demand will continue to satisfy application in mobile devices, equipment, vehicles and short term / emergency energy storage, vanadium will have a role to play in the long duration energy storage and grid infrastructure system. This can be seen in the activities of the world’s biggest vanadium producers: Pangang and Hebei Iron & Steel Group (HISG) in China.

Pangang has partnered up with Dalian Rongke Energy Storage to build a vanadium electrolyte plant that is expected to supply 10,000T and 20,000T of V205 in 2023 and 2024 respectively. HISG has completed construction of a 1,000m3 per annum vanadium electrolyte plant and plans to complete construction of a 50,000m3 per annual electrolyte production facility before 2025. The movement towards the battery sector is therefore undeniable.”

The MD adds that the energy crisis in Europe brought about by the war in Ukraine has amplified the focus on more effectively harnessing renewable energy generation capacity. It has also highlighted the need for long duration storage to make renewable energy to be more efficient (manage intermittency) and to have a reduced reliance on the thermal energy “grid” – for example having solar energy generated during the day available for use all night (when the sun’s not shining).

Prentice notes that this movement towards battery and energy storage is ‘part and parcel’ of the renewable energy transition, and the technologies are continuously being tweaked and tested, for instance, in the composition of the vanadium electrolyte for optimum performance.

Therefore, there are a lot of moving parts as research and development is being conducted all over the world by different players to improve the efficiency (and therefore reduce costs) of the batteries.

“In that respect, compared to the traditional steel sector for which vanadium has been a proven element in the steelmaking process, the battery sector requires a lot more monitoring and analysis to fully understand our product specification requirements. This is also a developing sector of the battery industry so it is important that Technology Metals engages with the more established groups to ensure confidence from financiers and other stakeholders.”

Technology Metals has established a subsidiary company vLYTE to support its energy storage sector activities and appointed a Business Development Manager for Energy Storage who keeps abreast on the developments within the battery sector and transmits the data back to the team. The company is also a key sponsor in the Future Battery Industries Cooperative Research Centre (FBICRC) on the Development of Electrolyte project, which again helps the company understand the vanadium pentoxide specifications we need to target to facilitate downstream processing into electrolyte.

However, the steel market is still lucrative and Technology Metals has already received firm interest from major end users in the sector.

Prentice explains: “In the steel industry the geopolitical tensions with both China and Russia – the world’s two largest vanadium producers – provides a unique opportunity for the MTMP to carve out a very strong market position – high quality product, high ESG credentials coming from a stable global jurisdiction.”

That position is looking particularly strong given global Indian steel manufacturing giant Tata Steel has expressed interest in offtake and technical collaboration on downstream vanadium products with the company.

The MD notes: “Tata Steel is one of the largest steelmakers in the world and having them come on board with a Memorandum of Understanding with us shows their motivation for supply chain security when it comes to vanadium as a steel strengthening element as well as the quality of the MTMP.

“Tata Steel is one of the largest steelmakers in the world and having them come on board with a Memorandum of Understanding with us shows their motivation for supply chain security”

The incredible forecast growth in steel production for India in the next decade can be seen as one of those motivating factors – India’s production is set to grow to ~300Mt by 2030 from ~118Mt in 2021. To add strength to steel, The intensity of use rate for vanadium per tonne of steel in India is about 0.039. So, with this increase in steel production, India’s use of vanadium will go from 4,675 tonnes per annum (equivalent to ~8,350 V2O5) to around 11,900 tonnes of vanadium (equivalent to 21,200 tonnes of V2O5).

Tata Steel can see the value of the MTMP in both the quality of the vanadium to be produced as well as the diversification of its supply chain, and that is great validation of the project and the company.”

Prentice says there are a range of opportunities being discussed with Tata Steel including offtake, collaboration, and investment. Any or all of these would be ‘fantastic’ outcomes for Technology Metals and the MTMP.

“Tata also provides a bridge into the broader Indian market – both into other steel market participants as well as the rapidly growing long duration energy storage sector – with India set to become one of the largest renewable energy generators in the world by the end of the decade and a strong awareness of the competitive advantages of VRFBs.

It is also very important to discuss this agreement in the context of the recently executed – and enacted – Australia India Economic Cooperation and Trade Agreement (AI ECTA) – which is building stronger trade ties between Australia and India across the Indian ocean.”

Adding fuel to that strong position is the interest Technology Metals has received from LE System – one of Japan’s leading research and development companies for vanadium redox flow batteries and is on track to become a leading supplier of electrolytes to VRFB manufacturers.

LE System is investigating vanadium electrolyte production in Australia and is interested in offtake of vanadium into Japan.

Prentice adds: “The Japanese, Koreans, and East Asian markets are at the forefront of electrolyte and energy storage innovation. LE System has been investigating vanadium electrolyte since 2011 and commissioned its commercial scale vanadium electrolyte plant in 2021 that is able to produce ~5,000m3 of vanadium electrolyte per annum, which is equivalent to ~100MWh energy storage capacity.

LE System has come to visit us here in Perth and to our MTMP site, and we have been to Japan to visit them at their lab and factory. They have good relationships into the Japanese, Korean and Chinese VRFB industries as well as with Japanese trading houses and government agencies.  Securing a stable long-term supply of vanadium into Japan would be very important for LES to continue the growth of its business and for the accelerated roll out of VRFBs into the region.”

At present, Technology Metals is working with LE System to support the development of the company’s vanadium electrolyte production capacity in Australia – through Technology Metals’ wholly owned subsidiary vLYTE – which will enable the accelerated roll out of VRFBs into the Australian market, facilitating the entry into this market of the major global VRFB manufacturers.

Financing a future-facing project

With such interest, it seems no wonder that MTMP is considered a project of national and global significance.

As a junior exploration company, with such a flagship asset in its portfolio, it does not appear all that ambitious to raise the expected $600 million-plus in project capex. The MD explains that with an estimated average annual EBITDA of $182 million over a 25-year mine life, MTMP has an extremely high-value proposition.

“The MTMP is a long-life, high revenue generating critical minerals project. Similar to the majority of critical / battery mineral projects, it requires a significant capital investment.  Support of sovereign funding agencies (EKF, NAIF, CMO, EFA, etcetera) is important to ensure the development of these long-life assets to supply the world’s critical minerals vital to the decarbonisation journey.” 

Prentice adds that the MTMP is different to the typical gold or base metals projects that the Australian market is accustomed to, with generally lower capex but typically relatively short (<10 years) initial mine lives. This requires a different mindset when assessing the value proposition for what will be a long-life asset.

The MD notes: “The value proposition that sets the MTMP apart is the forecast ilmenite production and elevated vanadium production in the early years of the operation – while mining ore from Yarrabubba – which translates in to elevated revenue (cash flow available for debt service) in the period that funding groups are looking to be repaid.”

It seems financing is unlikely to be an issue for Technology Metals.

Earlier in January, the company received a letter of interest (LoI) from EKF, Denmark’s Export Credit Agency, regarding potential financing support for MTMP.

The EKF LoI contemplates financing support of about $150 million subject to, among others, sufficient Danish economic interest in the MTMP, approvals, satisfactory documentation, and customary due diligence. As the Danish ECA, financing support from EKF is backed by the Danish state and as such can be considered to carry a AAA rating.

EKF supports Danish exporters, such as Technology Metals’ key equipment supplier FLSmidth, in their exports globally, having had extensive and positive experience with FLSmidth on projects worldwide for more than 90 years. Technology Metals is progressing discussions with FLSmidth regarding the supply of various key equipment items, including the roasting kiln section, required for the development of the MTMP.

Prentice says EKF’s LoI is an ‘exciting and significant milestone’ alongside its partnership with FLSmidth, which places Technology Metals in a strong position to progress the development of the MTMP.

FLSmidth is a Danish engineering company, with almost 10,100 employees worldwide, and is a major supplier of production facilities, equipment and service solutions to the mining and cement industries. FLSmidth has partnered and collaborated with Technology Metals on this project since early 2018, starting with the salt roast leach testwork, through to Front End Engineering and Design (FEED) for the pyro processing technology and major equipment selection reviews for the concentrator and leach circuit.

Meanwhile, the EKF LoI follows a successful drilling campaign for the company, which has helped to define the MTMP’s value proposition.

The MD says the integration of Yarrabubba into the MTMP, completed in August 2022, is expected to provide significant benefits for the project economics, given the enhanced ore reserve position and the additional ilmenite by-product. This is expected to be viewed very favourably by prospective project financiers and key stakeholders.

“The Yarrabubba ore also contains an ilmenite by-product, delivering a material additional revenue stream projected to be during the first 9 years of the operation”

“The ore at the Yarrabubba satellite deposit has higher vanadium in concentrate grades (1.61% V205) with testwork confirming that it delivers very high recoveries through the proven MTMP processing technology – which is forecast to deliver higher production rates in the early years of the operation based on the MTMP design throughput rate.

Furthermore, the Yarrabubba ore also contains an ilmenite (Ti02) by-product, delivering a material additional revenue stream projected to be during the first 9 years of the operation.

The features of the ore at both Gabanintha and Yarrabubba are fundamental to the economic viability of the MTMP – the ability to achieve high recoveries of vanadium and ilmenite using traditional mining and processing methods means the operations at MTMP will be low-cost, efficient, and sustainable.”

A foundational approach to ESG

As sustainability goes, the focus for Technology Metals extends well beyond just MTMP.

The company is well into what it calls the Implementation Phase. The team has undertaken commercial competitive tender for the MTMP processing plant and all non-process infrastructure at the end of 2022 which has provided commercial pricing to support the completion of the MTMP bankable financial model.

Progression of the environmental approvals process is ongoing, with the company maintaining its collaborative approach with the WA Environmental Protection Authority (EPA) as it prepares a further update to the Environmental Review Document (ERD), consistent with the company’s environmental, social and governance (ESG) philosophy.

“Our ESG program is based on our company mission, which is to develop and operate a world-class critical minerals project that makes a positive difference to the local community, minimises impacts to the environment, and contributes to global decarbonisation”

The company’s ESG approach is an important factor in engagement with government funding agencies, commercial banks, strategic investors, and institutional financiers. Prentice says Technology Metals has commenced designing a holistic ESG action plan to guide the development and long-term operation of the MTMP, which will ensure the sustained success of the Project and maintain support from its stakeholders.

This engagement includes working with the Traditional Owners on heritage and environmental matters and working out ways in which MTMP can provide long-term benefits to the community through employment, contracting and training opportunities.

The MD adds: “Our ESG program is based on our company mission, which is to develop and operate a world-class critical minerals project that makes a positive difference to the local community, minimises impacts to the environment, and contributes to global decarbonisation. To this end, our approach to the community and the Traditional Owners is sensitive and collaborative, making sure that we take their views into consideration and also there is an open channel for two-way dialogue.

In terms of our environmental approach, we recognise environmental values and seek to minimise our footprint as practicable and are continuing to develop strategies and incorporate designs that seek to protect water resources and improve energy efficiency. Our governance structure has been firmly established to ensure that accountabilities are set and everyone in the organisation behaves and conducts themselves with integrity and respect for each other.

Culture is the foundational block in maintaining our ESG values, and we seek to recruit and retain individuals who are aligned to our culture as we move the project to construction and ultimately production.”

Write to Adam Orlando at Mining.com.au

Images: Technology Metals Australia Ltd
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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.