This is why the world’s most influential leaders, ranging from U.S. President Obama to the Premier of China and even famed multi-billionaire Warren Buffett, are all heralding an exotic industrial metal called vanadium.
Governments the world over are directing billions of dollars of grants into vanadium’s fast-emerging role in the electrification of society’s energy supplies. And major corporations are likewise investing in this ‘next big thing’ in the hopes of addressing global warming and society’s dependence on dwindling fossil fuel reserves.
By way of explanation, a new generation of advanced green batteries is set to do everything from beefing up electric cars to providing uninterrupted solar and wind power to whole cities. That’s because of a crucial new battery ingredient, vanadium, which can cost-effectively supercharge batteries of any size, even ones so big they have to be housed in substations for large-scale power grid usage.
Most significantly, vanadium-enhanced batteries can store prolific amounts of energy, which solves the major drawback of alternative energy. For instance, solar power currently cannot be harnessed for use when the sun doesn't shine, and at night-time. Likewise, the electricity generated by wind turbines presently goes to waste when the wind stops blowing or when the wind speed is too high or too low.
The only limitation to this breakthrough battery technology is the scarcity of the planet’s economically viable vanadium deposits. So the world’s few primary vanadium producers will be pressed to their very limits in trying to satisfy a looming year-on-year exponential surge in demand for this increasingly invaluable 21st century metal.
That’s great news for a tiny handful of mining companies around the world that control these limited mineral resources, according to Bill Radvak, CEO of American Vanadium Corp. (TSX.V: AVC).
With extensive vanadium rich land holdings in Nevada, American Vanadium is developing what promises to be the only vanadium mine in the U.S. Not only is it expected to be a low-cost operation but the project’s location is also another major competitive advantage, according to Radvak. That’s because the world’s largest economy has to import the majority of its annual vanadium needs.
The U.S. gets most of its domestic vanadium supplies by way of a by-product of oil refining. But it’s expensive to extract,” Radvak says. “And the rest comes from such politically problematic jurisdictions as Russia, South Africa and China – all of which account for about 90% of the world’s reserves.
He adds that North America’s automotive and battery manufacturing industries are very concerned about the possible disruption of long-term supplies when dealing with these overseas vanadium producers. Even President Obama has expressed serious concerns about supplies of strategic metals needed for green batteries. In a speech last year he declared: “Switching Middle Eastern oil for foreign batteries is not an option.”
Obama’s concerns are underscored by the fact that China is believed to be hoarding vanadium supplies. It has even become a net importer of the metal and has recently imposed tariffs on exports due to burgeoning domestic demand.
It’s no surprise that this emerging super-power increasingly needs vanadium for its traditional use as a strengthening additive in steel alloys. But what will also become increasingly evident is that China now requires vanadium for its own clean energy applications, including large-scale energy storage.
Then there’s also the electrification of China’s fast-growing numbers of automobiles and scooters. Notably, the world’s most successful investment guru, Warren Buffett, has even invested in BYD Company Ltd (BYDDY.PK), a Chinese auto manufacturer that is developing lithium/phosphate/vanadium batteries for its next-generation of fuel-efficient electric vehicles.
And with a domestic marketplace of well over 1.3 billion citizens, BYD is poised for major market penetration, especially since most Chinese motorists have modest incomes that make them averse to expensive gasoline and diesel prices.
With industry analysts forecasting as many as 250 million electric cars in the world by 2020, lithium/phosphate/vanadium batteries seem to be the future battery of choice. That’s because they do not have the same barriers to widespread market acceptance as existing green batteries.
For instance, they have far more energy storage capacity than their conventional lithium-ion counterparts. This translates into a range of up to 600 kilometers on a single charge, which is as much as ten times the distance offered by cars powered by lithium-ion batteries. Also, these lithium/phosphate/vanadium batteries can be recharged in a few minutes, versus a typical 10-hour recharge cycle for ones that rely on lithium-ion.
The advent of these more powerful batteries becoming so popular suggests that vanadium demand will grow exponentially. So says Jonathan Lee, a battery materials and technologies analyst for the Toronto-based investment bank, Byron Capital Markets.
Vanadium-enhanced batteries will also be imperative for the implementation of green energy storage solutions, Lee adds. Hence, the prospect of a looming global supply squeeze heightens the need for the U.S. to develop its own rare reserves. And that, he says, offers American Vanadium “a bright future.”
It would be imperative for the U.S. to have its own secure supply of vanadium to aid the electrification of the nation. So the adoption of lithium/phosphate/vanadium batteries would bode well for American Vanadium, which has the opportunity to be a low cost producer.
The company’s Gibellini deposit, which is situated at the heart of mining-friendly Nevada, is at shallow depths and promises to be one of the most inexpensive to operate primary vanadium mines in the world. The project exhibits such an encouraging risk/reward profile that a bankable feasibility study (a final blueprint for a mine) is already underway. The deposit is scheduled for commercialization before the end of 2012, according to Radvak.
By then the other major application for vanadium should also be starting to assert itself as a key driver of the green revolution, Radvak adds. Specifically, giant vanadium redox flow batteries (VRBs) have demonstrated the ability to act as energy storage solutions for wind turbines and solar power installations.
That’s a big deal. It’s because any surplus of wind or solar power currently has nowhere to go – except to be either wasted or discharged back into the ground. But these promising forms of renewable energy can finally realize their full potential once they are able to provide uninterrupted supplies of electrical power. In this regard, VRBs will be able to store large quantities of electricity produced during peak production periods. This will then be available to power grids to ensure a steady flow of energy.
Electric cars and renewable energy storage solutions are therefore poised to become ‘game changing’ events in the business world. And American Vanadium is relishing the opportunity to offer the necessary stability of supply to the U.S. vanadium marketplace, while becoming a lucrative success story in the process.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.