Popular Bushveld heads for the JSE
Vanadium business may bring an energy storage play to Joburg exchange
Bushveld Minerals will bring its vanadium business and possible participation in a large Eskom electricity storage scheme to the JSE around mid-year. Bushveld, which has a vanadium mine and processing plant near Brits, has a strategy of not only supplying the steel market with vanadium but getting involved in the full value stream in large, industrial-use batteries using the mineral as an effective storage method for electricity.
Bushveld Minerals will bring its vanadium business and possible participation in a large Eskom electricity storage scheme to the JSE around mid-year.
Bushveld, which has a vanadium mine and processing plant near Brits, has a strategy of not only supplying the steel market with vanadium but getting involved in the full value stream in large, industrial-use batteries using the mineral as an effective storage method for electricity.
Bushveld, which is listed in London, will come to the JSE by end-June or early in the third quarter of the year, says CEO Fortune Mojapelo, adding that the listing was not intended to raise capital for the cash-flush company, which is benefiting from high vanadium prices of about $80/kg and strong demand for its product.
“We are a company with a very strong SA content and it’s only right that SA capital has access to it. There are also capital pools here we’d like access to. Our deposits are here, we beneficiate here, export from here and we have our energy story we are developing here. It would be bit of a waste for us not to be here,” he said.
The share price has shot up since its low of 1.35p in late 2016 to about 40p. “Bushveld has just shot the lights out in its latest operating numbers and we are looking forward to having them on the JSE,” said a local banker during a recent trip to the company’s assets.
Bushveld reported revenue of $192m for the 2018 financial year, an increase of 143%, while earnings before interest, tax, depreciation and amortisation, essentially an operating profit number, ballooned by 349% to $107m despite the loss of 38 days of production due to labour unrest and power outages.
With production of 2,560 tons of vanadium for the year at a production cost of nearly $20/kg and a realised price of $81/kg, the business is attracting a lot of interest, with nearly 30 analysts and bankers from SA and the UK visiting the site last week. Bushveld supplies about 3% of global vanadium demand but plans to lift capacity to 5,000 tons a year.
While the use of vanadium to make strong and specialist steel products accounts for about 97% of vanadium consumption, there is a small and growing use of the mineral to make batteries, one of which Bushveld is testing at an Eskom site in Johannesburg.
Eskom is expected to issue a tender for 800MW of battery storage during 2019, with a number of companies expected to compete in the tender, which is expected to be in the order of $800m. Funds have already been allocated to Eskom’s renewable energy programme.
The use of batteries that can store large amounts of electricity could be used to smooth out the variability of power coming from solar and wind power. The batteries could also be used at substations, storing 10MW of power, to release into the grid at critical times.
Bushveld believes because it has a battery on an Eskom site that is linked into the grid proving to be a safe, reliable and long-life source of stored power, it has to come under serious consideration by Eskom.