A definitive guide to ASX vanadium stocks (part 2)

Date: Nov 8, 2018

Welcome to part two of Finfeed’s definitive guide to ASX vanadium stocks.

If you haven’t checked out part one yet, you can do so here.

In case you weren’t aware: China is the world’s largest vanadium consumer, and its high strength rebar standard is now in effect.

Under the new legislation, grade three steel must contain 0.03% vanadium. This amount increases with each grade and tops out at 0.1% vanadium in grade five rebar.

This new rebar standard, in combination with the commodity’s ongoing prominence in the batteries sector, has been a major driving force behind record vanadium prices.

Vanadium redox flow batteries (VRFB)

While China’s new rebar standards have caused recent tightness, it’s the allure of vanadium redox flow batteries that’s likely to drive long-term demand.

While VRFBs have a higher upfront cost than most other batteries, it’s their exceptional lifespan and flexibility that separates them from the pack.

VRFBs typically last at least 10,000 cycles, with future VRFBs lasting likely between 100,000 to 200,000 cycles as technology continues to be refined.

For a comparison, most lead-acid and lithium-ion batteries last between 500 and 4,000 cycles. Lithium-ion batteries don’t provide the flexibility or scalability of their VRFB brethren, so it’s little wonder there has been a renewed interest in vanadium in 2018.

Large-scale VRFBs are already gaining relevance in China, which is now home to the 200MW/800MWh Dalian VRFB, the largest chemical battery in the world.

In its 2017 study, the International Renewable Energy Agency (IRENA) examined the fundamentals of VRFB tech and its possible applications moving forward to 2030.

According to the study, VRFBs have extensive applications for network operators and electricity consumers in remote and rural locations. They could be particularly effective as restoration reserves for operators, injecting energy back into the grid to raise and stabilise frequency and perform load levelling in unpredictable regions.

For consumers connected to the grid, VRFBs would provide an adequate power reserve, providing energy for several hours in the event of a blackout.

While lead-acid and lithium-ion batteries can perform a similar role, their scaling inefficiency means they are more suited to rapid grid injection events.

The advantage of VRFBs’ consumer side is their ability to reduce household overheads. In theory, they could provide users with the ability to cycle their energy use around peak and off-peak times. This is incredibly beneficial in regions that are subjected to a steep peak kWh price (such as South Australia or rural Victoria).

Given the continued transition to alternative power storage and sources, VRFB adoption should continue to increase and provide a long-term demand for vanadium.

With all of that in mind, here’s five more ASX-listed vanadium plays that are well-placed to capitalise on the growing demand for this new age metal.

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