For AVL I have always stated it must enter the steel market, and the battery market is something it can deal with later.
In short, Chinese vanadium output arises from vanadium slag it imports into the country and production from 'stone coal'. Most of China's vanadium resources come from stone coal - 87% to be precise (refer:
https://pubs.rsc.org/en/content/articlehtml/2017/ra/c7ra04741j). The chinese government in effect is moving to reduce/remove vanadium production in China from these two sources, the first vanadium slag through banning imports, and the 2nd by incorporating more rigid environmental standards which will drive up costs. The net result is said to be a supply deficit in China not covered by actual mines, but given falling vanadium prices there must be question marks over the strategy of enforcement in China - ironically, there are few actual vanadium mines in the world (as most mines where vanadium occurs is actually a byproduct of something else and that something else - stone coal, for example.
Furthermore, in November 2018 new rebar standards came into being in China which effectively doubles the vanadium need in steel. So ineffect the double whammy effect - lower Chinese production (when the environmental standards are enforced) and a doubling in vanadium in steel use (but obviously vanadium can be substituted in steel with niobium if the price of vanadium runs to high like it did last year). Vanadium stockpiles are said to be falling in China and teh articles below also suggest that, implying local production can't keep pace with demand
In summary a shortfall in vanadium is likely going forward, but the next question is whether AVL can enter the market. That is an 'if' question given missed timelines here. I note you have a 'buy' and 'held' sentiment (and suspect that may be an oversight or you just bought in) but if interested these articles and previous posts of mine may guide.
I see AVL as a high risk/high reward play so invest what you are willing to sit on (or lose). Timeframe to market a key here and missed deadlines have not helped sentiment. Nice articles to read are below:
https://*********.com.au/china-new-vanadium-steel-rebar-standards/http://www.mining.com/web/bull-market-storm-brewing-vanadium/
1. Vanadium in the steel market and AVLRelevant posts of mine for background information:
1. Post #:
38738778 (addresses issue of falling price in a IRR context and where new vanadium supply can come from)
2. Post #:
38041828 (explains new rebar standards)
3. This post explains niobium as a substitute, linked article - Post #:
38247804 4. Provides my thoughts on what is happening to vanadium prices - Post #:
36982141 In the last post above this comment is a key - it came from an article, and obviously an assumption in that article is falling Chinese production from stone coal and slag:
"
Adding to the situation is the prediction new vanadium supply will not come online until at least 2022.And, until then, it’s estimated about two new operations the size of London AIM-listed Bushveld Minerals’ Vametco asset are required to come online each year for the next seven years just to meet projected market consumption."
2. BatteriesOn batteries I am not up to date with zinc bromine, but my understanding is that the battery per se could be good for the home storage market, so its direct competitor in that sphere would be lithium ion batteries (home storage is in kWh). Vanadium batteries IMO cannot effectively compete at the home storage level at the moment IMO given its energy density levels, but that could change over time, but much development is required there IMO.
Some information is present in the articles below on the home storage front:
https://reneweconomy.com.au/gelion-launches-zinc-bromine-gel-battery-to-take-on-lithium-mainstays-28079/https://www.solarquotes.com.au/blog/redflows-zinc-bromide-zcell-battery-may-have-the-edge-over-lithium-ion/But zinc bromine batteries are having there issues in home battery market and currently are not making any inroads into lithium ion batteries there:
https://reneweconomy.com.au/redflow-cant-compete-with-lithium-batteries-on-price-in-home-market-77290/Where vanadium batteries compete is in large scale energy storage systems of the 1 MW (probably 5MW or more) systems because it can charge and discharge over thousands of cycles and more than once per day to boot and holds efficiency for 20 years to 25 years. This article explains that:
https://www.sciencemag.org/news/2018/10/new-generation-flow-batteries-could-eventually-sustain-grid-powered-sun-and-windZinc bromine batteries hold less charge and last less years, so ultimately the choice between batteries in the large scale energy storage market is dependent on storage capacity, number of use per day, size, capital cost and most importantly how long you need to energy efficiency to remain, so if seeking a energy storage solution for 20 years, with daily charge and discharge of more than one a day, that is vanadium's sphere. If seeking much less than that and smaller units, well that might be the sphere of zinc bromine and lithium ion battery solutions for storage in the stationary market (i.e. obviously in the moveable market like EVs that will remain the sphere of lithium on batteries, full stop). Interesting article here:
https://unauthorised investment advice/resources/picking-a-winner-how-vrfbs-match-up-against-battery-rivals/Obviously, the price of the input (vanadium, zinc or lithium) in the various battery types is also a consideration on takeup as well as impacts economics and choice.
I went through some of the energy density issues associated with vanadium batteries in these two posts, but as I said the main demand right now and what gets you into the market is targeting steel (which is then reliant on the Chinese, in part, enforcing their new environmental standards etc)
Post #:
38128288Post #:
38125358Anyway, I am more interested in vanadium targeting the steel market where more than 90% of current demand is as that is what will get a new vanadium player into the market. Batteries come thereafter, but IMO vanadium's sphere in that space IMO is in large scale energy storage, as other battery types are more cost effective at the household level energy storage market IMO.
All IMO IMO IMO
(20min delay)