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20 May, 18 tweets, 5 min read
1/18
Enclosed below is a copy of the IDC 2020 accounts. The IDC is the S.A. Government's investment vehicle, investing c. $780m in 2020.

Their New Industries unit has taken a 45% stake in the #BMN electrolyte plant currently being built in South Africa.

idc.co.za/wp-content/upl…
2/
Page 44 deals with the business activities of the New Industries unit.

What is interesting is on addition to the electrolyte plant they are clearly also the funder for the Vametco mini-grid which is currently awaiting license sign off from the regulator. Image
3/
So not only are they backing electrolyte but also the project that BMN describe in their 11th Nov 2020 RNS as,

"one of the first solar generation project with long-duration storage to be financed, off-balance-sheet in Africa."

BMN go on to say,
4/
"In showcasing the business case for solar plus long duration VRFB solutions, this project will open up significant opportunities for further VRFB deployment."

I suddenly feel a lot more confident about everything S.A. VRFB related and the regulatory approvals needed...
5/
to ensure they are delivered.

What this insight says to me is that arguably the most significant investor in S.A. is not only backing electrolyte production but also the type of projects that will be required to make that plant a success.
6/
This in turn will help make Enerox succeed because they are clearly the VRFB manufacturer in this particular venture.

If they succeed then BMN inevitably will also because they own 25.25% in them and are their vanadium products supplier.
7/
By backing this deal the IDC is saying it's acceptable to back this new technology in S.A. and is demonstrating a clear link between the electrolyte plant and a new mini-grid related VRFB business in S.A.
8/
The IDC's New Industries unit was set up in 2015 and focuses on three things, one being,

"The clean energy solutions industry, with a specific focus on the energy storage value chain"

To date the only clean energy technology that they have invested in is VRFBs.
9/
However, it gets better.

Here now is an exert from the 2019 IDC accounts page 47.

IDC funding in that year used to "test a VRFB for the production of electrolytes and ultimately, should these tests be successful, the assembly and local manufacture of the batteries." Image
10/
A reminder now of BMNs ongoing strategy as laid out in their Feb 2021 presentation.

"Support of local VRFB manufacture in South Africa"

It's been around a while but now at the very least, we can see who else will likely be investing in it when it comes to S.A. Image
11/
If so then that places IDC at the core of the electrolyte plant, mini-grid and VRFB assembly.

So effectively the S.A. government.

With the same S.A. government about to sign off regulatory clearance on up to 10MW of self-generation, the stage is set for all of the above.
12/
Mini-grids and self-generation are just one angle. To this, we need to also add the possibility of Eskom BESS contracts.

Here now is the first of three articles that I wrote back in 2018 on the drivers behind VRFB opportunities in S.A.

thebushveldperspective.com/blog/public-ar…
13/
Some of the links have now been lost but in essence,

The 'South Africa Energy Storage Technology and Market Assessment' was the basis for Eskom delivering the 1,400 MWh BESS project tender.

That market assessment was driven by a steering committee...
14/
that contained all relevant stakeholders including Eskom and NERSA and whose leader was the IDC.

14 months prior to this Market Assessment being published, the IDC signed a co-operation agreement with Bushveld Energy, a company that had only been around c. 6 months.
15/
At the time of signing their agreement, the IDC's Bertie Styrdom said,

"The “most significant mileage” for the IDC, however, is in the backward integration of storage technologies into South Africa’s significant mineral value chain”
16/
Jump forward 5 years and the IDC is helping fund all elements of the BMN energy storage value chain that will ensure high usage of South Africa's vanadium mineral value chain.

But to do so they have to gain regulatory approval and win significant enough contracts.
17/
The S.A. government is also set to directly profit from this value chain (45% ownership in the electrolyte plant alone remember) and have to date not committed to any competitive technology.

Under that scenario what are the chances that VRFBs are ignored in S.A?
18/
What are the chances that regulatory approvals will stand in their way?

What are the chances that Eskom contracts will completely pass them by?

Nothing is a given but as the saying goes it's not what you know but who.

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More from @BigBiteNow

21 May
1/5
In this enclosed blog I attempted to demonstrate the significance of the V205 $8 per lb point.

Given what has just been reported in China, I believe we will shortly see $9 pr lb V205.

#BMN

2/
Here now is the same historical V205 price chart marked up at $9 per lb.

Upon hitting $9 per lb the only time since 1980 that the V205 price has not gone on to spike to at least $11.50 per lb was in 2006/07 but it was coming off a downtrend. Image
3/
on all other occasions, the price continued higher because such pricing demonstrates a tight market is in play.

On a simple comparison to FeV that equates to a $50 per kg market.

Yes, we need more information on Europe/US prices.

thebushveldperspective.com/vanadium-prices
Read 5 tweets
21 May
1/7
The latest vanadium price report is now available.

V205 120,500 CNY/t now the norm. See my previous explanations for what this likely means for the price in dollars.

I make China V205 running at $8.70 per lb.

#BMN #vanadium

Image
2/
That's now well above my $8 per lb rising trend break out point.

More importantly,

"People in the market has high enthusiasm for inquiries, and big factory is expected to adjust June V2O5 flake next week, and their wait-and-see sentiment increases."
3/
As I have said previously the big factories in China are key here as they produce the vast majority of Chinese V205.

Here's a second report from today. Image
Read 7 tweets
21 May
1/5
Bushveld Energy 2021 position if listed separately,

A. $8m profit on #IES investment.

B. 25.25% ownership in Enerox who's 2020 contract wins were c. 65% of what IES achieved and will hold $30m for expansion to production twice the size of IES.

#BMN

2/
C. 55% ownership of a 200MWh electrolyte plant under construction with the IDC of S.A.

D. Mini-grid project under construction at Vametco in partnership with the IDC with potential to open up localised VRFB production and industrial opportunity.
3/
E. Actively tendering for Eskom BESS projects totalling c. 1,440MWh with the battery tender element valued by the World Bank at $468m.

F. First active vanadium rental product in play with a UK client.
Read 5 tweets
21 May
1/4
As stated the other day #SRB hit AISC $1,080 at c. 40k oz production in 2019.

This year looking like min. 36,000 oz is on which will raise that AISC slightly.

However, we must not forget the exchange rate.

2/
In 2019 the Brazil Real averaged R3.95 to a dollar.

YTD in 2021 it is running at R5.47 a dollar.

That's a 38% difference to 2019. The vast majority of SRB costs are in Brazil Real with revenues in dollars.
3/
So it's going to have an effect and certainly gives me great confidence that my $1,200 AISC estimate is top end.

Gold price YTD is averaging $1,790 per oz.
Read 4 tweets
21 May
1/12
This energetic and informative interview with #BMN Mikhail Nikomarov gives great insight into what VRFBs can potentially offer the S.A. market

From 3m 23s,

VRFBs are "cheaper if you need multiple hours of storage on a daily basis"

#vanadium

moneyweb.co.za/moneyweb-radio…
2/
By "shifting energy from when it is sunny to when it's not, like in the evenings."

Also, to "support the transmission system and the distribution network."

There he touches upon S.A.s biggest hindrances "load shedding" but also "overloaded networks."
3/
Added to this is the vanadium rental product which significantly reduces the upfront capital costs.

Given that Eskom is effectively broke but in need of efficiencies, it is a perfect solution for their ongoing troubles.
Read 12 tweets
20 May
1/11
Further to my earlier set of tweets regarding the IDC's involvement with #BMN.

The 2020 interims stated that BMN,

"obtained a debt financing term-sheet from a French Development Bank, to be underwritten by a South African institution."

2/
The IDC is a national development finance institution.

So give that the IDC state involvement in the mini-grid and the actual debt element appears to have come from a French Development Bank, then perhaps their role is as the underwriter. Image
3/
If so then that demonstrates significant confidence in the product, the BE team, the future market and the relationship.

With everything I've discussed today in mind the following statement from the Q1 2020 update is all the more intriguing,
Read 11 tweets

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