Great market potential for vanadium battery

Asian Metal: Thank you for accepting our interview, Mr. Tian. Please give us a brief introduction of your company.

Mr. Tian: Focusing on refining of vanadium pentoxide, Hunan Sanfeng Vanadium Industry Co., Ltd. purchases low-purity ammonium metavanadate with grade of 96-98% to produce high-purity ammonium metavanadate with grade of 99.5-99.7% and then sells. It has an annual refining ability of 2,000 tons of vanadium pentoxide and an annual production capacity of 2,000-3,000 tons of other vanadium products.

With its own vanadium mine, Hunan Xinhongda Vanadium Industry Co., Ltd. mines stone coal ore as the raw material to produce industrial grade ammonium metavanadate 98%min, with an annual production capacity of 3,000 tons.

Asian Metal: Price for vanadium pentoxide flake once reached the higher level of over RMB500,000/t (USD33.5/lb V) from the previous level of RMB50,000/t (USD3.3/lb V) over the past decade but dropped to RMB120,000/t (USD8.0/lb V) in the first half of 2019. What are the main reasons for those sharp ups and downs?

Mr. Tian: I attribute the fluctuations in prices to national industrial policies, which aimed to increase demand and cut production capacity.

Vanadium prices witnessed several big changes in the past years and hit the record high in 2018, which completely went beyond my expectation. Vanadium producers saw considerable profits last year with dramatically increasing prices. As early as 2008, several national authorities recommended vanadium as the best additive to improve the quality of rebar, for which vanadium prices went up notably. However, prices moved down soon afterwards as it was just a recommendation. In 2018, a mandatory standard was carried out to upgrade Grade III rebar, so the demand for vanadium increased sharply. On the other hand, the strict environmental inspections resulted in shutdown of some small and unqualified vanadium plants. Higher requirements on market access reduced production capacities of vanadium products.

Asian Metal: Could you specify impacts brought by sharp ups and downs in vanadium prices to vanadium producers in terms of your operation practice?

Mr. Tian: Big changes in vanadium prices absolutely made great impacts on entity enterprises, including producers and processors. It's easier to do business when prices show a flat trend. Xinhongda Vanadium is out of production now and only a few producers maintain production in Hunan, with little profit margin. In the first half of 2019, almost all producers of vanadium raw materials suffered losses. Producers that are not required to upgrade environmental protection equipment have a slightly lower production cost while producers that follow environmental requirements all suffer losses. Producers hope prices can stand stable. Only when prices stabilize at a relatively high level, the whole industry chain can survive. Excessively high prices will harm sustainable development of the industry. According to our discussion with some experts, prices for vanadium pentoxide would stabilize at around RMB180,000/t (USD12.1/lb V) after the Spring Festival of 2019, but by the end of H1 2019, prices still moved down to RMB120,000/t (USD8.0/lb V). Sharp changes in prices brought great impacts.

Asian Metal: What are your opinions in the supply and demand structure and development prospects of vanadium market?

Mr. Tian: Over 90% of vanadium is still consumed by steel mills at present while the rest is consumed by vanadium battery, chemical, glass, catalyst and other fields. Vanadium battery industry deserves attention as chemical and other industries wouldn't see a sharp increase in consumption volume unless there are new enterprises. The development space of environmental protection industry, such as desulfurization, denitration, decarburization and catalyzing, is also stable. Vanadium battery has not been developed strongly and it would have a demand no less than that from steel mills after the technology gets matured. Thus, it may overturn the market demand layout and become an important market. We are about to set up a niobium and vanadium research center.

Asian Metal: Could you tell us the market share of your high-purity vanadium product? Where does your major pressure come from?

Mr. Tian: I have never calculated the market share. In terms of production capacity, the figure can stand at around 40% of nation's total. Only a few producers produce high-purity vanadium product in China and each has its own focus. Our product advantage lies in the high vanadium content, which is always higher than 99.5% and can reach 99.9% or even 99.99%. As for control over other impurities, the content in our product is lower than general standard. That's the reason why we can sell at a high price. Customers choose us out of trust.

The major pressure comes from downstream demand. Sanfeng Vanadium keeps certain market share by producing high-purity vanadium product while Xinhongda Vanadium suspended production due to weak downstream demand, with production resumption date pending.

Asian Metal: Please share your opinions in all-vanadium flow battery with us.

Mr. Tian: The research and development for all-vanadium flow battery have been undergoing for more than four decades in the world. As the first producers in China, VRB Energy, Shanghai Shenli Technology and Shanxi Jinneng Mobile Energy laid solid foundation for Chinese all-vanadium flow battery industry. In addition, China's all-vanadium flow battery industry entered into a new stage under the leadership of Rongke Power and other companies. From then on, development and production of all-vanadium flow battery producers marched forward at a high speed. All-vanadium flow battery is mostly used in national demonstration projects and faces difficulties in commercial applications. To my point of view, the core reason is the uncontrollable production cost of vanadium electrolyte, a key part of vanadium battery.

Asian Metal: From the perspective of energy storage, vanadium battery delivers a much better performance than lithium battery, but the commercialization process of vanadium battery doesn't develop rapidly as expected. What is the market outlook of vanadium battery?

Mr. Tian: Vanadium prices have been changing notably over years, so producers of vanadium electrolyte sometimes were forced to shut down. Under normal circumstance, one kilowatt-hour of power consumes 18kg of vanadium pentoxide. Based on our independent research, we can produce one kilowatt-hour of power with 15kg of vanadium pentoxide, which still stays at a high level. I consider it as the main factor that vanadium battery is not put into mass production. Secondly, the technology and characteristics of vanadium battery are not so mature as those of lithium battery and we are still in the stage of vanadium electrolyte. When it comes to R&D of vanadium battery, we are leading in China. We developed electrolyte independently and overturned previous characteristics. The original version is highly acidic and our outcome is neutral and alkalescent, which has not been widely accepted yet. The U.S. has worked on this topic for more than 40 years and we cannot overturn it in a short period.

Asian Metal: What are the disadvantages of vanadium battery? Is it possible to completely replace lithium battery with vanadium battery?

Mr. Tian: China tends to develop vanadium battery industry, so many demonstration projects are still underway to upgrade the technology. Although the acid electrolyte gets basically matured, there are still disadvantages, such as large volume and high cost, which impede large-scale development of vanadium battery industry. Vanadium battery has a long way to go before completely replacing lithium battery. China's energy storage policies target at the overall industry and there is no specific policy for vanadium battery. Many investors and enterprises tend to engage in vanadium battery business, but some that are doing both lithium battery business and vanadium battery business said it's not the right opportunity. Without a leader in technology, all vanadium battery producers adopt old technology and wait for new outcomes, resulting in insufficient cohesion.

In terms of energy storage policy, all fields receive equal attention at present. The faster one field develops, the better future it will have. After the technology of vanadium battery gets matured, related national supporting policies will be released. That will benefit the development of vanadium battery a lot.

Asian Metal: What are the advantages of vanadium battery? What are the barriers in popularizing?

Mr. Tian: Vanadium battery is superior in safety, harmless recycling and durability. Theoretically speaking, vanadium battery has a much longer span than other batteries and no specific time limit as it is recoverable. It can delay energy degradation by stabilizing valence state changes of electrolyte and realize long-term cyclic utilization while other batteries aren't of such characteristic.

Compared to lithium battery, which takes a vast majority of market shares, vanadium battery still has a long way to go. Currently, all vanadium battery projects are supported by national industry policies. Major difficulties for promoting vanadium battery are higher total investment and unit cost than other batteries. It will be hard for vanadium battery to take a large market share if the problem is not solved. In my opinion, every investor of vanadium battery should engage in the whole process, including mine, utilization of three wastes and marketing, and then the price can be under control. Therefore, vanadium battery companies will integrate research and production. Integration of resources enables vanadium battery industry to go further and it's quite difficult to focus on only one part or do by only one enterprise. The joint operation mode is essential and more investments in R&D are required. Similar to lithium battery, the volume of vanadium battery must be smaller and the energy density must be larger.

Asian Metal: Do you have any production expansion plan for high-purity vanadium product?

Mr. Tian: We have a production expansion plan, but we will cooperate with external capital and technology providers. Actually, we will be stronger by relying on the industrial chain, including application in other fields. We are prepared in terms of technology and will decide how to do in future.

According to our cooperation with other companies, we may expand the annual production capacity to 5,000 tons in near term and our long-term goal is 10,000 tons. We are negotiating the specific implementation plan. As for extracting vanadium from stone coal, China has strict environmental requirements and the Environmental Development Center for Environmental Protection hopes us to construct a demonstration project or site of this field.

Asian Metal: Thanks for your comments!

Mr. Tian: Thank you. We hope to make some contributions to energy storage industry with other peers and establish a communication and cooperation mode.