Investment Case

Bushveld Minerals has, over the last decade, pursued a growth strategy that has facilitated the securing through acquisition of two world-class primary vanadium processing plants and the construction of an electrolyte manufacturing plant in South Africa for VRFBs.

After a period of consolidation and refurbishment of these acquisitions, Bushveld is now a well-established mid-tier vanadium producer. At the near term production rate of 5,000 mtVp.a to 5,400 mtVp.a. by the end of the financial year ending December 2022 – our currently funded production position – we have a business that is sustainable with an attractive cost proposition and good cash generation capacity.

Our asset base is scalable with potential to increase production above 5,000 – 5,400 mtV production run rate to 8,000 mtVp.a. over the medium to long term. This growth will be facilitated through the advancement of the feasibility and pre-feasibility studies at Vametco and Vanchem, respectively, which will require modest further capital expenditure relative to greenfield operations. The production growth potential is an opportunity to reduce unit costs further and can be done in incremental phases, each phase being value accretive with attractive internal rates of return per phase. The result is a large, low-cost primary vanadium producer with attractive cash generation potential through the vanadium price market cycles.

Our vertical integration strategy has seen us establish a meaningful role for the Company across the full value chain of the VRFBs that are set to play an important role in the growing energy storage market, driven by the tremendous global energy transition push. This strategy, which has been implemented with reasonably low capital intensity (relative to the upstream mining and processing activities) has created significant opportunities for the Company to capture economic value in this growing market sector, simultaneously supporting the growth and diversification of vanadium demand while positioning the Company as a key supplier of vanadium in this sector.

A green commodity for the future with attractive fundamentals

  • Medium to long-term market fundamentals remain attractive.
  • Vanadium demand is underpinned by its use as a strengthening alloy in steel sector, which is expected to drive demand growth at a Compound Annual Growth Rate (CAGR) of 2.7 % through to 2030.
  • Vanadium increases the efficiency of the steel sector, while reducing greenhouse gas emissions.
  • Vanadium demand from applications in VRFBs is expected to grow by a CAGR of 56.7 % by 2030.
  • Supply is concentrated, constrained and limited new primary supply is expected from greenfield projects.

Solid Asset base

  • The Company’s 548 Mt (100 % basis) resource is one of the largest primary vanadium resource bases and offers significant growth potential. Bushveld Minerals’ ore bodies comprise large, long-life, opencast deposits, with grades of 1.6 – 2.0 % V2O5 in-magnetite, which are among the highest in the world.
  • The Group owns two of the world’s four operating primary production processing facilities, which are low-cost and scalable operations. Vametco and Vanchem were acquired for significantly less than the cost of building a primary greenfield production facility of the same scale.
  • Production platform with a diverse range of vanadium products which gives us production flexibility to maximise sales and profit margins based on product and market demand.

Vertical Integration

  • Bushveld Minerals’ vertical integration business model allows us to mine, process and manufacture vanadium-based products in a single value chain.
  • The Company uses its low-cost scalable production base to build a significant downstream vanadiumbased energy storage platform, thus participating in a rapidly-growing industry.
  • Vertical integration is key, both to ensure future vanadium demand from energy storage and to unlock significant economic opportunities for the Company across its value chain.
  • This includes BELCO, the construction of one of the largest publicly announced Vanadium electrolyte plants’ outside of China with an expected initial capacity of 8 million litres of vanadium electrolyte per annum (using up to 1,100 Mtvp.a.) and capability to scale up to 32 million litres at the same location.
  • The growth of the VRFB industry can support vanadium demand and contribute to minimising volatility in the vanadium price. – The Group has diverse revenue streams coming from the steel, chemicals and energy markets, enabling it to maintain its solid position throughout the commodity cycle.

Sustainability – value beyond compliance

  • Bushveld Minerals is dedicated to maintaining sustainable mining and processing practices across all of its operations and projects. This includes ensuring employees enjoy a healthy and safe working environment, that it operates in an environmentally and socially-responsible manner, and that it adds meaningful value to all stakeholders.
  • The Company is committed to reducing the environmental footprint of its mining and processing operations by reducing the carbon intensity of its own operations. Achieved, through the implementation of renewable energy and VRFB storage solutions at its operations, the Company has commenced a journey to reducing the carbon footprint associated with its energy consumption.
  • Bushveld Minerals’ products play an important role in global decarbonisation efforts through its applications in both the steel and energy sectors.
  • As a strengthening alloy in steel making (0.2 % of vanadium added to steel doubles its tensile strength), vanadium increases the efficiency of the steel sector, while reducing the carbon footprint of steel.
  • Vanadium applications in stationary energy storage, through VRFBs, promotes the integration of renewable energy sources, while promoting the efficiency of electricity grids, thereby playing a key role in the energy transition. Further, the VRFB technology supports the global transition to clean energy and produces lower life cycle CO2 emissions than competing storage technologies.
  • The Company actively promotes the principles of the circular economy. It is scaling up the necessary technical and commercial parameters to ensure that vanadium in energy storage is re-used.

 

Registered Office | Oak House, Hirzel Street, St Peter Port, Guernsey, GY1 3RH

Principal Operating Address | 2nd Floor, Building 3 Illovo Edge Office Park 5 Harries Road, Illovo Johannesburg, 2116, South Africa

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