As the green energy transition progresses, the quest also continues to develop increasingly efficient, safe, reliable and scalable battery systems to support the storage and distribution of renewable energy.
With growing safety concerns on the fire risk associated with lithium-ion batteries, some of this focus has moved to alternative battery technologies, fuelling a shift in market fundamentals and the critical mineral strategies for mining organisations worldwide.
“In Australia, mining companies are turning their attention to vanadium, which is rapidly emerging as a safe and efficient alternative to lithium-ion battery storage systems,” says Paul Howard, Managing Partner for Gerard Daniels. “Many organisations are also developing vertically integrated strategies that allow them to explore additional downstream opportunities in the vanadium battery sector.”
Here we explore the role of vanadium in building a safer, greener and more resilient energy future and consider how growing demand will shape leadership demands in the Australian mining sector.
The value of vanadium in the green energy transition
The majority of the world’s vanadium is currently used to produce high-strength steel for construction; oil and gas pipelines; and to manufacture high tensile parts for the aviation and transport industries.
These supply chains have created some volatility in the price point for vanadium, with market demand largely dependent on China and other developing countries. But as demand for utility-scale energy storage systems grows, vanadium’s potential will be realised far beyond its current industrial applications.
“Large, static renewable energy systems only really make sense when they are capable of storing excess energy to provide back-up (or “firming”) power or a more reliable energy source when the sun and the wind are not active.” says Paul.
“During peak electricity production, vanadium redox flow battery (VRFBs) store surplus energy in a liquid vanadium pentoxide electrolyte solution, allowing it to be discharged when renewable production is low,” Paul continues. “The safety and efficiency of this technology makes vanadium a critically important resource for progressing the green energy transition.”
These advantages of VRFBs are driving vanadium demand:
- Safety: Using large tanks of electrolyte fluids to store energy eliminates the fire risk, making VRFBs inherently safe.
- Scalability: To grow the capacity of VRFBs you install bigger tanks, making this technology infinitely scalable and suitable for domestic and utility-scale renewable energy applications.
- Durability: Where traditional batteries degrade with use over time, the elements that store and generate power are kept separate in VRFBs, improving battery lifespan. The electrolyte does not degrade over time.
- Longevity: VRFBs can store large amounts of energy for extended periods of time. This feature is vital to providing energy security when demand is high, and production is low.
- Sustainable: VRFBs do not require cobalt or other expensive rare earth elements which can be carbon intensive to source, making them a sustainable alternative to lithium-ion batteries.
Australia’s growing role in the global vanadium market
While 80% of global vanadium supply has traditionally come from Russia, China, South Africa and Brazil, Australia has the world’s largest resource base – estimates indicate that 27 million tonnes (Mt) of contained V2O5 can be found in WA alone. There are also considerable Vanadium resources in Queensland.
“Australia has a growing interest and commitment to developing this critical mineral,” says Paul. “Based on planned production for 2026 and beyond, Australia is on track to become the second largest vanadium pentoxide (V2O5) producer globally.”
Upstream opportunities: Growing local production
Australia is uniquely positioned to take a leading role in the production of vanadium, with rich deposits; a thriving renewable energy sector; growing global demand for battery energy storage systems; and a range of government policies and initiatives aimed at incentivising local production (see below).
“Given the scale of the vanadium opportunity, it’s hardly surprising that some mining companies are pivoting their strategies towards becoming reliable suppliers to domestic and international vanadium markets,” says Paul. “The timing of this next development cycle is now widely recognised to be market-dependent, and the industry is waiting for pricing support for this critical element from the broader markets.”
Downstream opportunities: Growing across the supply chain
The interest from Australian vanadium producers in downstream processing and manufacturing opportunities, before production has been established on their own sites, is another interesting shift.
“While they wait for the licences and permits to extract and process vanadium from their own sites, these mining organisations are pursuing quite lucrative opportunities downstream, sourcing vanadium pentoxide from overseas to locally produce high purity vanadium oxide electrolytes,” says Paul. “Many vanadium producers are also forming partnerships that allow them to manufacture the actual VRFB battery technology.”
A mining industry perspective on vanadium
The Association of Mining and Exploration Companies (AMEC) continues working closely with Government and vanadium members to find ways to support this emerging market. With vast opportunities for local downstream processing, Warren Pearce, CEO for AMEC, describes vanadium as the next ‘logical’ critical mineral.
“There is a strong ‘Made in Australia’ ethos developing around this industry and a thoughtful approach to the way that new projects are being structured,” says Warren. "Another interesting factor, is growing opposition from fire departments around the country to the use of Li-ion battery energy storage systems in new residential developments and mounting pressure to mandate better product testing for this technology.”
As noted in a recent AMEC press release, to meet demand as it grows, we have the right frameworks in place to support a vibrant local vanadium and VRFB industry, with the recent changes to royalty structures for Vanadium and V2O5 electrolytes in Western Australia and continued federal support for the Commonwealth Critical Minerals Production Tax Incentive. “We just need the broader markets to recognise this by supporting these projects and end-user demand, allowing prices to rise to the required levels for wide scale development,” says Paul.
The leadership landscape
Navigating any significant shift in market fundamentals or organisational strategy, requires clear vision and strong leadership. While most of the skills and experience that mining leaders need are transferrable across various industrial sectors, there are some unique challenges in ramping up vanadium production and leveraging opportunities downstream.
“The ability to secure funding is one example and whether you tap into private investment or government grants, this will be a critical success factor for the growth of this industry,” says Paul.
In Australia, a range of policies and incentives support the development of sustainable energy infrastructure, including the Capacity Investment Scheme for advancing renewable energy storage technologies, like vanadium, to improve grid stability. Plans to lower the royalty on vanadium mining and scrap the royalty on vanadium electrolyte are also gaining momentum in WA, further incentivising downstream opportunities.
“These are all vital incentives, but there is a particular skill set and a whole lot of work that goes into securing the funding and progressing these opportunities,” says Paul. “Chief Development Officers with the right experience are now in high demand and there are also some great opportunities for experienced leaders to take their skills into vanadium or some other critical mineral industries, for that matter.”
“Delivering exceptional leadership talent remains part of our growing critical minerals strategy, and we continue building our global network of leaders looking to grow their critical minerals experience or move into new markets,” says Paul. “Given our track record in mining and the calibre of talent in our networks, we’re excited to support clients in making an impact in this space.”
To find the right future leaders and develop your mining talent pipelines, connect with Paul or reach out to your local Gerard Daniels team.
