Bet­ting on vana­dium bat­ter­ies Bushveld Min­er­als has taken a $17.2m gam­ble in or­der to ex­pand its vana­dium projects, af­ter which it plans to en­ter the sta­tion­ary bat­tery mar­ket.

Finweek English Edition - - THE WEEK - Editorial@fin­week.co.za

thebest that can be said for gov­ern­ment’s ben­e­fi­ci­a­tion pro­gramme in the min­ing sec­tor is that it’s been a stop-start process. Plans are afoot to build steel mills but not much has ma­te­ri­alised.

In re­spect of man­ganese pro­duc­tion, Kala­hari Man­ganese – a com­pany in which the In­dus­trial De­vel­op­ment Cor­po­ra­tion (IDC) was heav­ily in­vested – wanted to es­tab­lish a re­fin­ery at Coega to ben­e­fi­ci­ate the ore it was min­ing in the North­ern Cape.

Those pro­pos­als have yet to see the light of day.

Else­where, the Cham­ber of Mines suc­cess­fully launched a plat­inum-based fuel cell and it’s in the re­gion of bat­tery power that South Africa’s best chance of ben­e­fi­ci­at­ing min­er­als on an in­dus­trial scale ex­ists.

At least this is the hope of Bushveld Min­er­als, a com­pany that has com­mit­ted to spend­ing roughly its mar­ket cap­i­tal­i­sa­tion – $17.2m – on buy­ing a 78% in­ter­est in Strate­gic Min­er­als Cor­po­ra­tion (SMC), an en­tity that owns the Vametco vana­dium mine and plant in the North West prov­ince.

SMC is owned by Evraz, the steel­maker that crashed in spec­tac­u­lar style, per­haps pro­vid­ing yet an­other sig­nal to gov­ern­ment that steel­mak­ing is not the ideal seed­ing ground for ben­e­fi­ci­a­tion (ArcelorMit­tal South Africa is the other sig­nal).

Vana­dium is nor­mally mined in or­der to add to steel, which it strength­ens dur­ing the fab­ri­ca­tion process. While that is the pri­mary mar­ket for Bushveld Min­er­als, its CEO, For­tune Mo­japelo,

“It could be used for very re­mote cell­phone sta­tions,” said Mo­japelo in an in­ter­view with fin­week fol­low­ing the an­nounce­ment of the ac­qui­si­tion. “There is ob­vi­ously good po­ten­tial in this,” he adds.

There is also a mar­ket in vana­dium bat­ter­ies con­tribut­ing to­wards pri­mary en­ergy sup­ply. The tech­nol­ogy does ex­ist to scale up so that en­ergy sup­plied is of the or­der of megawatts and gi­gawatts. “That’s where it re­ally gets into a proper, in­dus­trial-scale ap­pli­ca­tion,” Mo­japelo says.

In the mean­time, there are some­what smaller fish to fry.

The Vametco op­er­a­tions are prof­itable but not fab­u­lously so. Based on unau­dited “best es­ti­mates” by Bushveld Min­er­als, Vametco last turned over R629m from which it de­rived R26.7m, a mar­gin of just un­der 5%.

Mo­japelo reck­ons lift­ing pro­duc­tion at the premises, once Bushveld Min­er­als gets on the ground, will be im­por­tant. Out­put was last at 2 419 tons but he hopes to jack this up to more than 4 000 tons an­nu­ally with a bit of ex­tra in­vest­ment.

Plant ca­pac­ity is cur­rently 2 750 tons an­nu­ally, which was made to match the Vametco mine but it’s worth not­ing that Bushveld has two nearby vana­dium projects of its own that could feed an ex­pan­sion.

“It would have cost us more than $200m to build a project like this so here we can get some­thing for a frac­tion of the re­place­ment value with the op­por­tu­nity of scal­ing up,” he says.

Shares in Bushveld Min­er­als, which also owns tin and en­ergy coal prospects, are cur­rently sus­pended pend­ing a re­lease of an ad­mis­sion doc­u­ment pro­vid­ing de­tails of the trans­ac­tion. When the shares went into sus­pen­sion, they were trad­ing at £0.249/share valu­ing the com­pany at £11.9m or $17.2m. On a 12-month re­turn ba­sis, the com­pany’s mar­ket cap is 27.5% weaker.

Based on unau­dited “best es­ti­mates” by Bushveld Min­er­als, Vametco last turned over R629m from which it de­rived R26.7m, a mar­gin of just un­der 5%.

For­tune Mo­japelo CEO of Bushveld Min­er­als

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