INTERVIEW-American Vanadium aims at power-storage woes with battery tie-up
NEW YORK, Feb 22 (Reuters) - Canadian miner American Vanadium Corp took its first step toward becoming a renewable-energy company this week when it pledged with a European manufacturer to create a new power storage industry in North America. Germany's Gildemeister AG makes batteries that use the little-known metal vanadium to recharge electric vehicles, store wind and solar power for optimal use by smart grids, and set up micro grids where main power sources fail to reach. The two companies hope their partnership on so-called vanadium flow batteries, which could one day allow electric cars to travel hundreds of miles on a single charge, will tackle a range of problems confronting large-capacity power storage. Sales of plug-in vehicles, for example, have been stunted in part by a lack of charging stations. Electric power grids continue to add sources of renewable energy such as wind and solar, but storing that on a scale large enough to tap during peak demand has been a challenge. The two companies announced a memorandum of understanding aimed at cracking the North American market by using vanadium flow battery technology from Gildemeister and vanadium electrolyte from American Vanadium's U.S. mine. "Two years ago, no one cared. They were still trying to put in wind and solar (power generators). Now, they're realizing that storage is what it's all about. That's a huge revolution in just the last year," American Vanadium's President and Chief Executive Bill Radvak told Reuters. The vanadium redox flow battery captures energy as it is generated, storing it and releasing it as needed. While the technology behind vanadium batteries has been around for more than 20 years, it had remained in the development phase. Previously seeing insufficient demand for the battery, holders of the technology had refrained from manufacturing it on a commercial scale, until now. China has invested heavily in the technology and last July announced its target to add 4.5 billion kilowatts of storage by 2021. Japan's Sumitomo Corp, a pioneer in the technology, said recently it would move ahead with production. Whatever it makes will almost certainly be used domestically. In Europe, Gildemeister's CellCube is now in production and three quarters of its planned output for 2013 is booked. Those orders account only for business in Europe and do not address potential customers in the United States, which is where American Vanadium comes in. Over the next two months, the miner and the manufacturer will hash out their division of labor. "It might be a brand-new company, or a joint venture. We may have the technology under license and be manufacturing it. It is our intention to get in that direction. We want to be the guys doing it here," said Ron MacDonald, American Vanadium chairman. Noting Gildemeister's $1.43 billion market capitalization, Jonathan Lee, battery materials and technologies analyst at Byron Capital Markets Ltd in Toronto, said he thinks each party would add value to a potential joint venture. "Depending on the final agreement of the MOU, if any, it could substantially add value to the shares and our valuation of American Vanadium," he said in a research note.
The partnership is scouting out potential U.S. customers for the storage batteries. Its first prospect, New York State, has an executive order requiring it to cut greenhouse gas emissions state, municipal and transit officials. "We'll be the face in North America. Gildemeister is growing this business in Europe, but not the U.S. Our number-one goal is to get a battery into New York this year," Radvak said. American Vanadium also plans to establish a U.S. fabrication facility for the batteries, rather than ship them from Europe. Plant details will be part of the discussions with Gildemeister.
FAST, STABLE, LARGE Vanadium flow batteries are more stable than their lithium counterparts and do not catch fire, because they operate with an entirely different mechanism, Radvak said. They last for years and the vanadium never degrades. They can be small enough to work with a single solar panel, yet large enough to support a power grid. At charging stations, they work fast to recharge car batteries. American Vanadium's Gibellini project in Nevada will provide at least 10 years of supply and is the only vanadium mine in the United States. Its deposit can be cheaply and easily extracted and refined to the purity needed for battery production, Radvak said, because it occurs in shale. Most vanadium is mined as a byproduct with other metals, often uranium, or extracted from steel smelter slag in expensive processes that do not always yield the necessary electrolytes. Gibellini has yet to receive regulatory approvals and will need to undergo construction before any vanadium can be mined. The company expects to start producing in the second half of 2015 and ramp up output to 11.4 million lbs annually by the second half of 2016. That timetable may fit well with the growth of the U.S. storage battery market. In the meantime, the executives said American Vanadium wants to push ahead with its U.S. marketing plans and has located alternative vanadium supplies to capture any burgeoning demand. "In North America, with the way things are building, we have the chance to dominate this industry for a number of years," the chief executive said.
(Additional reporting by Julie Gordon in Toronto; Editing by Dale Hudson)