'Overlooked' vanadium may gain energy storage market from pricey lithium-ion: Mines & Money

Vanadium has been overlooked in the current mineral commodities cycle, and stands to gain market share as lithium risks pricing itself out as a battery material for the energy grid storage market, the Mines and Money conference heard May 5.

"One (mineral) that's been overlooked in this entire cycle is vanadium, which has huge market opportunities," James Hayter, Investment Advisor at Baker Steel Capital Managers, a natural resources investment fund, said during a panel on the so-called commodities supercycle at the event.

"It's increasingly difficult to see lithium-ion a sustainable energy storage solution moving forward. The battery makes sense but we have to think of the balance sheet," he said, referring to lithium's high price and potential market shortages. "Vanadium is more efficient than lithium-ion in the grid storage market."

Lithium prices have more than doubled so far this year on surging demand from EV battery makers amid a supply squeeze. Despite a rash of new projects worldwide, progress in developing new mine capacity is typically slow, partly due to environmental approval issues as some types of lithium mining may be considered pollutant or excessively water-intensive.

Miner Rio Tinto has spent years developing a major $2.4 billion Jadar lithium project in Serbia, approvals for which were blocked by government authorities earlier this year amid environmental opposition.

S&P Global Commodity Insights assessed battery-grade Lithium Carbonate CIF North Asia at $75,000/mt May 4, with battery-grade lithium hydroxide at $80,000/mt.

Prices for ferrovanadium -- an alloy of iron and vanadium used in quality steelmaking -- have also risen fast: in April averaging also just over double its average of last year. However, future supply concerns are currently not so acute as for lithium, despite the market outside China and Russia being dominated by just two major producers: Bushveld Minerals in South Africa and TSX-listed Largo Resources with mine resources in Brazil.

Vanadium producers typically lease the vanadium in batteries for use in the grid to energy companies, Hayter said.

Commodity Insights assessed European ferrovanadium with 80% vanadium content at $48,000-50,000/mt on April 28, in what Hayter described as a "hugely volatile" market.

Lithium-ion will however remain a good option for electric vehicle batteries, he said,

According to recent estimates by the International Energy Agency, by 2030 global lithium carbonate equivalent supply may meet only 50% of forecast demand of 2.5 million mt/year, leading to what IEA executive director Fatih Birol has described as a "looming mismatch" between supply of critical minerals and climate ambitions.

"It's difficult to find easy, high-grade lithium projects," Xiao Fu, head of commodity markets strategy at BOCI Global Commodities, a branch of a Chinese investment bank, said during the panel. "It's difficult to find a suitable project."