Gosh there is a lot to unpack from today's announcement because it is truly a landmark alliance between Tivan and Larrakia at the MASDP. I'm still getting my head around the impacts and outcomes each time I re-read the announcement. This will take some time for the market to digest but I expect the media focus here will help unpack it for investors, the broder market and stakeholders.It is truly an unheralded development and a complete turnaround story from where this company (under its previous livery) was at with the Larrakia. As I recall, they were responsible for removing them from the Darwin site. All credit to GW for the restoration of trust and shared vision with Larrakia.
- I've re-stated a few takeaways which GW has mentioned but my focus and interest today really lies in the strategy behind domestic value add and local offtake. I'll circle back on the later in a moment. So the takeaways of note:
- First, Tivan and Larrakia now have an engaged and shared vision around the transition to renewable energy and creating a unified "voice" of harmony and respect of county, culture and community.
- Secondly, and this is so paramount, for Tivan to develop a vanadium electrolyte facility of 500MWh which globally is the largest outside of China to be located at MASDP using Speewah as feedstock. As noted in the announcement, it reflects the circularity principles the company has been reinforcing for some time, coupled with sustainable development pathways for industries at the precinct - such as the likes of INPEX.
- Finally, by combining the NT's solar resource and Tivan's energy storage facilitation it allows a pathway of scaleable sovereign capabilities and downstream industries to be developed and prosper across the NT and other locations.
So, in view of the above, my take is that we now have the best mine, the beneficiation capability, tenure at Darwin and ongoing Government facilitation which should allow TVN a greater share of access to the funding commitments announced by all forms of Government, specifically the $1.5bn of investment by the Feds at Middle Arm.
However, what I found the most compelling from today's announcement are these statements:
"As noted above, vanadium oxides from the Speewah Project are the proposed feedstock for the VE Facility at MASDP.
The VE Facility thus represents a form of local offtake for the Speewah Project, as part of establishing a large-scale
renewable value chain across northern Australia, where value-add is retained onshore, consistent with the priorities of
the Federal Government.
Local offtake is a strategic priority for Tivan, and an important attribute of sovereign capability. Local offtake supports
project facilitation, including in project finance, through the elimination of cross-border risk. It will also enable Tivan to
establish pricing of vanadium in Australian dollars and independent of benchmark global prices that are determined
principally by the largest global producer, China."
What this means in my speak is that we create our own vanadium market locally (outside of China) and a significant renewable value chain that maintains the circularity and value add in Australia. Hence, the production of vanadium electrolyte and VRFB capability in this country (with support obviously from major battery players like Sumitomo - which ultimately creates a market for them and others for this type of battery).
Having local V offtakes denominated in $A secured on a fixed price basis over a fixed period removes FX risk and commodity pricing fluctuations (which China currently influences). This is a significant step towards modelling sustainable cash flows for supporting project finance.
It also allows the company to influence the narrative of the V market, pricing and margin. It's a strategic move of monumental significance should this play out and moreover strengthens our sovereign influence globally for countries like the US, UK and Japan across the demand cycle for critical minerals and renewables capability.
