Bushveld secures funding for Vametco mini-grid project
South Africa-focussed vanadium producer Bushveld Minerals has secured funding for the engineering, procurement and construction (EPC) of the Vametco hybrid mini-grid, it announced on Thursday.
The AIM-traded firm has a controlling interest in Vametco through its 84%-owned subsidiary Bushveld Energy.
It said Bushveld Energy had completed the development, and achieved financial closing, for a 3.5 MW solar photovoltaic plus a 1 MW-4 MWh vanadium redox flow battery (VRFB) “hybrid mini-grid project” for Vametco, which would operate as a funded independent power producer (IPP).
Bushveld Energy and NESA Investment Holdings, a South African investment firm, had signed a shareholders’ agreement as strategic equity partners in the project's development and financing, with the project being housed in a separate special purpose vehicle (SPV).
NESA provided 60% of the equity, while Bushveld Energy provided 40%.
The company said Bushveld Energy would recognise a development fee of ZAR 5.6m (£0.29m) as revenue from the project on financial close.
ABSA Relationship Banking approved a ZAR 64m loan, meanwhile, to part fund the construction of the project, with the total cost estimated to be ZAR 113m.
It would be built on a turnkey basis by NESA Power, the board said, which had already executed an engineering, procurement and supply (EPC) agreement alongside the SPV.
As it previously announced, the project's 1 MW-4 MWh VRFB would be supplied by CellCube, a VRFB original equipment manufacturer in which Bushveld owns an indirect 25.25% interest.
The board of the SPV would consist of five directors - three from NESA and two from Bushveld Energy, in proportion to the shareholding.
Vametco had sold the vanadium for the production of electrolyte, required for the VRFB, which is currently being converted into electrolyte overseas.
Site preparation for construction began in the first quarter, with the project now fully-funded and expected to be completed in the first half of 2023.
“This project is the first of its kind in South Africa, and will serve as a VRFB reference site in South Africa for the mining industry, utilities and other users,” said chief executive officer Fortune Mojapelo.
“This VRFB mini-grid project is a useful proof-of-concept of the greater technological qualities of long-duration VRFB systems when used in conjunction with renewable energy.
“At a fundamental level, the project also perfectly demonstrates the sustainable uses for vanadium and positions it as a key metal in the green energy transition.”
Mojapelo said it was also “very encouraging” to note that the majority of the capital invested in the mini-grid project had come from sources outside of Bushveld.
“This not only proves the attractiveness of the business case for long-duration energy storage using vanadium, but also demonstrates investor interest in the market in the roll-out of VRFB technology.
“In the future we expect to see increased demand for projects combining solar photovoltaic and VRFB technology, especially in regions with similar challenges to South Africa.”
At 1543 BST, shares in Bushveld Minerals were down 0.74% at 6.75p.
Reporting by Josh White at Sharecast.com.