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Vanadium Overview

Vanadium is derived from three sources: co-production, primary production and secondary production. In 2020, approximately 90% of global vanadium was recovered from magnetite and titano-magnetite ores, either from co-production or primary production.

  • Co-production derived from iron ore processed for steel production remains the main source of vanadium, accounting for 72% of 2020 global supply.
  • Primary production involves salt-roasting, water leaching, filtration, desilication and precipitation. This accounted for 18% of global supply in 2020, and rose year-on-year in tonnage terms, even though its market share percentage decreased relative to 2019.
  • Secondary production is the recovery of vanadium from fly ash, petroleum residues, alumina slag, and from the recycling of spent catalysts used in crude oil refining. It accounted for approximately 10% of global supply in 2020.

In 2020, global vanadium production increased to 116,128 mtV from 109,643 mtV in 2019. This increase was due to higher slag production in China, driven by:

  • Increased crude steel production, supported by the Chinese Government’s stimulus measures, primarily driven by infrastructure spending, which translated into record steel production of 1,065 Mt, a 7% year-on-year increase.
  • High seaborne iron ore prices (iron ore prices rose to their highest levels in the last five years, at over US$150/t) by December 2020. This was driven by China’s strong demand, as well as constrained global supply. As a result, Chinese steel mills used more domestic vanadium titaniferous magnetite ore.

China is the world’s top vanadium producer, accounting for 60% of global vanadium supply in 2020. Most of its vanadium was derived from co-production. Russia is the second-largest producer and South Africa the third-largest, accounting for 17% and 7% of 20201 supply, respectively. South Africa’s vanadium was derived from primary production from Bushveld Minerals and Glencore.

Vanadium Market fundamentals


Most of the volume, on a unit basis, came from Chinese slag producers, whose production of slag increased. This resulted from higher steel output on the back of fiscal stimulus that the government introduced in late March 2020 to fast-track an economic recovery. These measures included increased infrastructure spending, which translated into record steel production.

China became a net vanadium importer for five months in 2020: June, July, August, October and November.  This absolute increase in steel production has resulted in Chinese co-producers operating at near capacity, limiting the scope for further vanadium production growth from this source.

Outside China, production increases were recorded by primary producers in South Africa and Brazil. Stone coal production declined slightly year-on-year, as low prices disincentivised production. Although stone coal producers could be re-incentivised by higher prices, environmental, financial, and technical constraints remain.

Historically, vanadium supply and demand has relied upon steel supply and demand, respectively. The limited capacity of vanadium-producing steel plants has driven vanadium’s price volatility. With growth in primary production of vanadium, the dependency of vanadium supply on co-production from steel is decreasing.

The same trend would be likely to follow in vanadium demand, if new uses of vanadium continue to grow faster than steel demand, such as from energy storage.

Despite the significant increase in vanadium slag production, several efforts by the Chinese government to rationalise its steel industry and cut pollution may impose further constraints on vanadium co-production steel plants. Stone coal production, meanwhile, will continue to be limited by environmental restrictions. The result is a constrained growth outlook for Chinese vanadium production from co-producers, which are already operating at near capacity, and stone coal vanadium producers. The constraint is exacerbated by the ban on vanadium slag imports into China.

Secondary production is poised to increase supply in the medium term, as a result of the International Maritime Organisation (“IMO”) 2020 regulations that require the use of more refining catalyst. However, it remains a higher-cost form of production than primary and co-production. The new supply could either displace the projects with weaker economics or create a larger and more durable surplus. Secondary production is limited, not by processing capacity, but by both the availability of the necessary feedstock and the high costs of production. Supply of secondary materials is derived mainly from spent catalysts associated with the processing of crude oils and oil sands, the manufacture of various acids, ash and residues from the combustion of oils and coals, and some residues from alumina production, particularly in India.

Supply growth can be considered across three categories: capacity expansions of current producers, re-starts of production plants that had been mothballed, and greenfield project development. Capacity expansions have the highest probability of realisation, with the lowest capital and quickest path to production. New greenfield projects face the most significant hurdles. Most of the recent greenfield projects announced for development are of a co-production or multi-commodities nature, suffer from relatively low grades and require significant capital and a relatively stable and higher price outlook than recent prices indicate.

Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862)

Section 232 of the Act provides the President of the USA with the ability to impose restrictions on certain imports, “based on an affirmative determination by the Department of Commerce that the product(s) under investigation is imported into the United States in such quantities or under such circumstances as to threaten to impair the national security”.

In November 2019, a petition was filed by two domestic vanadium producers (AMG Vanadium and U.S. Vanadium_LLC) alleging that vanadium is imported into the USA in quantities or under circumstances that threaten to impair national security. In May 2020, in response to the petition, Bushveld and a clear majority of other vanadium industry stakeholders responded in opposition to arguments that the national security of the USA is threatened by vanadium imports. They noted in particular that Nitrovan has been imported into the US in stable volumes over several decades, and in part highlighted that even the domestic USA producers of vanadium are non-integrated processors that actually import a significant portion of their feedstock. Bushveld Minerals’ sales volume to the USA accounted for 34% in 2020.

The US Commerce Department submitted the results of their investigation to the President in February 2021. Neither the headline findings nor the report itself have so far been made public.

By 22 June 2021, no official statement has been made by the President of the USA about the Section 232 investigation into vanadium imports. It is now being assumed that there will be no changes to the current situation regarding importation of vanadium into the USA.


Total vanadium demand is dominated by the steel industry, which accounted for 91% of total demand in 20201 and will remain the largest source of vanadium demand in future.

Global vanadium consumption increased from 109,835 mtV in 2019 to 112,157 mtV in 2020, supported by increased infrastructure spending in China, which resulted in higher steel production, in turn supporting vanadium demand.

During the period, Bushveld took advantage of the robust vanadium demand and higher prices in China than in other jurisdictions by diverting a larger portion of its sales to China in H1 2020. The vanadium demand from the North American and European steel and aerospace industries declined during the period, due to the pandemic and associated plant shutdowns.

The increase in consumption was primarily driven by the Chinese Government’s stimulus for infrastructure spending, as well as increased intensity of use of vanadium in steel, as enforcement of rebar standards improved during 2020. According to Roskill, vanadium demand in the steel market will grow at a CAGR of about 2.7% through to 2030, with global vanadium demand from steel reaching approximately 136,000 tonnes by 2030.

Developed economies, such as Europe, Japan and North America, have a higher vanadium intensity than developing countries. China surpasses the world average in its intensity of use, supported by enhanced compliance on rebar standards.

While vanadium demand will be underwritten by the growing intensity of use of vanadium in the steel market, the energy storage industry offers significant demand upside.

An example is Nusaned Investment, a Saudi Arabian-based company that entered into a joint venture with Germany-based technology company, Schmid Group, to focus on manufacturing and technology development.

According to Roskill, vanadium demand from VRFBs will grow at a CAGR of approximately 56.7% through to 20301. Longer-term demand will be even greater. For example, the World Bank Group forecasts that by 2050 vanadium demand from energy storage alone could be twice as large as global vanadium production in 2018.

Market balance

Supply and demand dynamics point to a structural net deficit. Supply is concentrated and constrained as:

  • In China, capacity utilisation from slag producers was estimated at 80 to 90% in 2020, with the top five producers operating close to full capacity. Russia was also operating close to full capacity, at approximately 90%1.
  • The steel industry in China has been increasingly relying on imported iron ore, which is non-vanadium bearing.
  • Over the longer term, Chinese vanadium production will be constrained by the decline in domestic iron ore supply and iron ore quality, coupled with environmental restrictions on steelmakers, co-product and stone coal vanadium producers, as well as the ban on vanadium slag imports.

Growing demand is underpinned by higher intensity of use of vanadium in steel. China will drive most of the increase. The growth in demand for vanadium will be impacted by demand for VRFB’s and by how quickly non-Chinese global steel and alloy demand recovers.

The vanadium market moved into a short-term surplus in 2020, as ex-China steel mill shutdowns continued due to the COVID-19 pandemic. Roskill expects the market will move into a deficit from 2021 to 2023, followed by a surplus from 2024. The market will revert to a deficit from 2029. Roskill takes the assumption that all new projects announced will come into production

Roskill has revised upwards its forecast for vanadium consumption in energy storage through VRFBs upwards. It forecasts growth in demand between 2020 and 2030 from 163 mtV to 14,585 mtV.

Vanadium price

2020 was characterised by the divergence in economic performance and steel production between China and the rest of the world, respectively depicting strong growth and strong decline. This was reflected in the vanadium market, with increased imports in China that built a Chinese price premium.

The robust vanadium demand and rising prices seen at the end of 2020 continued in 2021, across all key markets. The recovery was driven by higher steel mill capacity utilisation rates and low warehouse stocks. The vanadium price has continued to rise, with increased demand in Europe and the US. We expect prices to be stable for the remainder of 2021.



H1 2021 benefited from global demand recovery, which is expected to gain momentum in H2 2021. This is because Chinese economy remained robust and economic recovery took hold in other countries around the world.

Vanadium prices have recovered and should remain firm as long as the economic recovery persists. Governments around the world have announced different measures to revive their economies after the impact of COVID-19, and, with vaccine availability and widespread distribution, the global economy is expected to recover.

The potential headwinds are:

  • Easing of stimulus in China, which may reduce Chinese vanadium consumption.
  • Setbacks in the global recovery from COVID-19, as new variants are seen across the globe.

Demand for VRFBs is expected to increase, based on a higher number of installations in 2020, as well as in 2021, and announced projects for the rest of the decade. This translates into a higher gigawatt/h (GWh) forecast and higher vanadium demand.

We retain the view that supply remains concentrated and constrained. Limited new supply is expected from greenfield projects and co-production is still primarily driven by steel and iron ore fundamentals.

With record steel production and iron ore prices close to their all-time high, China’s slag producers are forecast to have increased their output by about nine% in 2020. Although the high iron ore price provides an incentive for steel mills to use more domestic vanadium titaniferous magnetite ore, Chinese co-producers are operating close to capacity, so their ability to produce more vanadium is restricted.

In addition, several efforts by the Chinese government to cut pollution may impose further constraints on vanadium co-production steel plants. These initiatives include the reduction of excess steelmaking capacity targeting highly-polluting, high-cost plants, and the conversion of blast furnace operations to electric arc furnace technologies, which will increase the role of scrap iron in steel making and reduce the overall demand for iron ore.

Declining domestic iron ore supply, due to quality, along with environmental restrictions on both steelmakers and co-production vanadium producers, can be expected to see a greater reliance on haematite (non-vanadium bearing) iron ore for steel making among co-producers, which will limit vanadium slag production growth.


A green commodity for the future

Vanadium’s benefits to a greener society include its contributions as an alloy in high-strength, low-alloy steels, primarily used in construction. A recent study quantified this benefit as equivalent to the annual CO2 production of the Philippines or annually “planting approximately 260 million trees.”4. Its use as the critical mineral in VRFBs further positions vanadium as a green commodity for the future.

In the aerospace sector, vanadium has long been the material used to ensure low density, high strength, and the ability to maintain strength at high operating temperatures which is essential in aero-engine gas turbines and airframes.

Development of new titanium alloys continues and grades containing 8, 10 and 15% vanadium

have even higher strengths. They have the potential to make important contributions to weight reduction and fuel efficiency in the aircraft of the future.

One of the key green applications of vanadium, with even more potential future upside, given the energy transition, is in VRFBs used for grid energy storage. VRFBs are safe and have a long lifespans, enabling them to repeatedly charge/discharge over 35,000 times for a lifespan of over 20 years.

Bushveld Minerals is building its own VRFB solar mini-grid at the Vametco mine. This will decrease the Company’s carbon footprint, as it will reduce CO2 emissions by more than 5,700 metric tonnes per year (and nearly 114,000 tonnes of CO2 over the life of the project).

Energy Storage Overview

The energy sector is undergoing a fundamental transition, both in the extent of electrification and the advent of renewable energy. Electricity’s share of global energy consumption has doubled from 10% in 1980 to 20% today. It is expected to exceed 40% by 20501. At the same time, renewable energy is displacing fossil fuels in energy generation. These two changes have enormous implications, not only for global energy production, but for all minerals involved in the electricity value chain.

Electricity is much more difficult to “store” than other sources of energy. On top of that, the variability of renewable energy sources further exacerbates the daily misalignment between when electricity produced and consumed. Both trends increase the need for stationary storage, including large batteries. Energy storage, especially long-duration storage (four or more hours per day), is essential to support the growth in electricity demand while enabling the energy transition to a carbon neutral world.

According to Bloomberg New Energy Finance, global stationary energy storage installations will grow 122-fold from 2018 to 2040, rising from 17 GWh to 2,850 GWh by 2040. In the shorter term, according to Guidehouse Insights, formerly Navigant Research, the market will reach US$50 billion in annual value by 2027.

Unsurprisingly, investment into battery technologies is also accelerating, with Mercom reporting that in 2020 corporate funding of battery storage companies reached US$6.6 billion compared with US$2.8 billion in 2019, almost a 250% increase. The trend accelerated in Q1 2021, with corporate funding of battery storage companies reaching US$4.7 billion in the quarter compared with just US$244 million in Q1 2020.

Bushveld Energy participates in the global value chain for energy storage through the supply of vanadium mined by the Group, electrolyte that will be produced by the Group and investment in battery companies and manufacturing. In addition, Bushveld has a deployment business that focuses on the African market, which is traditionally under-served but offers immense growth potential.

South Africa is an excellent example of that growth:

  • In 2020, South Africa was the sixth-largest market for residential energy storage, with 185 MWh of deployments, according to IHS Markit. It ranked behind Italy and ahead of the United Kingdom.
  • According to Bushveld’s own analysis, South Africa may be one of the top-five utility energy storage markets in 2022.

Over 1,440 MW of utility procurement has already been announced, including;

  • 350 MW from the first phase of the World Bank-funded Eskom battery procurement programme (already tendered).
  • 578 MW from storage co-located with renewable energy in seven awarded projects in H1 2021, under South Africa’s Risk Mitigation Independent Power Procurement (“RMIPP”) round.
  • 513 MW in new tenders announced by the Department of Mineral Resources and Energy for H2 2021 that are included in the South African Government’s Integrated Resource Plan.

Within the roughly 8,000 MW global forecast from Guidehouse Insights for 2022 for utility scale storage, South Africa is poised to account for approximately 15%.

Vanadium Redox Flow Batteries (“VRFBs”)

VRFBs are well-positioned to take a significant share of the stationary energy storage market, owing to unique advantages for long-duration stationary energy storage applications.

Advantageous features of VRFBs include:

  • Long lifespan cycles: the ability to repeatedly charge/discharge more than 35,000 times for a lifespan of over 20 years.
  • 100% depth of discharge without material performance degradation is unique to VRFBs.
  • Low cost per kWh when fully used at least once daily.
  • Safety: no fire or smoke risk from thermal runaway.
  • Sustainability: a 30% lower carbon footprint than li-ion batteries. Vanadium is re-usable on decommissioning of a system.
  • Flexibility that allows for capturing the multi-stacked values of energy storage in grid applications.
  • No cross-contamination, since there is only one battery element, unique among flow batteries.

Vanadium Redox Flow Batteries

The lack of degradation of the electrolyte, as well as the simple architecture of the VRFB that allows electrolyte to be removed and re-used, creates an opportunity to devise innovative financial solutions such as electrolyte rental.

These solutions will accelerate VRFB adoption by reducing the upfront capital costs, while creating new economic opportunities for vanadium producers.

Advancement of VRFB market and outlook

In 2020, VRFBs deployments increased and the supply chain continued to mature. Specific examples included:

  • 51 MWh VRFB awarded to Sumitomo in Japan, 400 MWh VRFB project announced by Shanghai Electric in China, and, in early 2021, a 500 MWh project announced by VRB Energy, also in China.
  • Announcement of giga factories for VRFB production in China by Shanghai Electric and in Saudi Arabia by Schmid and Nusaned, part of the Saudi Aramco group.
  • Large, multinational power companies, such as EDF and Enel, started deploying VRFB technology in Europe in 2020. More recently, Siemens Gamesa announced a joint development agreement for VRFBs with Invinity Energy Systems in Q2 2021.

Demand from VRFBs is set to grow further as governments focus on accelerating the energy transition to zero-carbon resources.


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