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Bushveld Minerals Ltd provides Vametco mini-grid update

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Global Mining Review,

Bushveld Minerals Ltd, an AIM quoted, integrated primary vanadium producer and energy storage provider, with ownership of high-grade assets in South Africa, has provided an update on the hybrid mini-grid project being developed at the Vametco vanadium mine comprising of 3.5 MW of solar photovoltaic (PV) generation and 4 MWh of vanadium redox flow battery (VRFB) energy storage.

This project is part of Bushveld's strategy to demonstrate both the superior technical merits of long duration VRFB systems when paired with renewable energy, while providing a commercial return to the company’s shareholders. It will also use locally mined and beneficiated vanadium, showing how VRFB energy solutions can create more local value to South Africa than any other storage technology.

The hybrid mini-grid project will supply just under 10% of Vametco’s electrical energy consumption at any one time and will demonstrate the technical and commercial capability of hybrid mini-grids using solar PV and VRFB technology. Technically, the system will be able to operate independently or jointly, either as standalone systems or as a fully functional mini-grid installation.

In addition, the hybrid mini-grid project will contribute towards reducing the carbon footprint of Bushveld’s mining and processing operations as it will reduce carbon dioxide (CO2) emissions by more than 5700 tpy of CO2 emissions (and nearly 114 000 tonnes of CO2 over the 20 year-life of the project). This will be a positive contribution towards South Africa’s low emission strategy.

Recent project achievements, include:

  • Receipt of environmental authorisation, following the submission of the Environmental Basic Assessment (BA), from the Department of Mineral Resources and Energy (DMRE) of South Africa, for the construction of the project.
  • Appointment of Abengoa, a technology solutions provider, to manage the Engineering, Procurement and Construction (EPC) of the project, including the integration of the solar and energy storage systems. This will be Abengoa’s fourth project in South Africa using solar plus storage, having previously commissioned 250 MW with storage.
  • Selection of Enerox to supply the 1 MW/4 MWh VRFB for the project. The Austria-based company has installed more than 136 VRFBs and 23 MWh of energy storage capacity, bringing over a decade of VRFB operational experience to the project.
  • A memorandum of understanding has been signed with Thebe Investment Corp., a South African investment management company, as a strategic equity partner in the development and funding of the hybrid mini-grid project. Thebe will be active in the development of the project going forward including assisting the company in finalising the terms of the external debt funding.
  • In addition to the above, Bushveld had previously announced other key milestones in the project, including signing of a power purchase agreement (PPA) with Vametco and obtaining a term-sheet for long-term debt funding of the hybrid mini-grid project.

In terms of the supply chain, Vametco, the company’s mining and processing operation will supply approximately 25 t of vanadium in the form of oxide for the VRFB. Enerox GmbH, the VRFB developer and manufacturer owned by an investment consortium which includes Bushveld, will supply the VRFB and ensure the conversion of the oxide into electrolyte, and Abengoa will supply the solar PV unit, install and integrate the system at the Vametco mine and processing plant. Abengoa will also provide maintenance for the facility post-commissioning.

Commercially, the project is structured as a separately funded independent power producer that will sell the electrical energy to the mine, reducing Vametco’s reliance on Eskom. As a result, the Vametco hybrid mini-grid project installation will be one of the first solar generation project with long-duration storage to be financed, off-balance sheet in Africa.

Securing the environmental approval, PPA and the EPC are crucial project development steps leading into an application for a generation license. Recent regulatory changes in South Africa have permitted the National Energy Regulator of South Africa to issue such generation licenses without ministerial dispensation. Financial close of both debt and equity to fully fund the project is the other key outstanding step, which will occur after receipt of the license. Construction of the hybrid mini-grid project will begin after financial close. The xompany is confident in completing these last two milestones and thus has moved forward with the procurements of the VRFB.

Fortune Mojapelo, CEO of Bushveld Minerals, commented: “I am delighted with the progress of the Vametco mini-grid project. The project demonstrates the commercial viability of solar plus VRFB storage solutions for commercial and industrial scale applications. This is occurring at a time when stationary storage deployments are gathering momentum and when in South Africa the government is making concerted efforts to lower regulatory hurdles for self-generation for commercial and industrial applications. In showcasing the business case for solar plus long duration VRFB solutions, this project will open up significant opportunities for further VRFB deployments.

“In addition, there are several unique facets to this project that prove the commercial viability of VRFBs for a number of South African, but also international, industrial applications. Most importantly, we are building a large-scale solar project with a vanadium-based battery, to store the generated electricity. The vanadium comes from our mine and the battery comes from Enerox, one of our VRFB manufacturing investments. The project has already attracted both debt and equity funding interest from reputable funding institutions which demonstrates the economics of such solar and VRFB mini-grids, even when compared to grid tariffs. Furthermore, with quality partners like Thebe and Abengoa I am confident that this project presents a great blueprint for further similar developments.”

Pedro Almagro Gavilán, CEO of Abengoa Energía, said: “The project is a strategic and important milestone for Abengoa, which has installed the world´s largest fleet of long duration storage via thermal energy storage, and now is installing the world´s largest hybrid solar plant incorporating vanadium. With such a flagship reference, Abengoa consolidates its global reputation as a one-stop-shop storage provider, with lithium, vanadium and molten salt storage, for short, medium- and long-term dispatch capability.”

Sunil Ramkillawan, CEO of Thebe Energy and Resources, added: “Thebe’s involvement in the hybrid mini-grid project alongside Bushveld Energy confirms our strategy to partner with strong local and international partners with best in class technology and/or assets. This further demonstrates the importance of storage solutions that will complement our growing portfolio of renewable energy projects. The project also aims to deliver on our mandate of ‘building communities’ through the support of this high local content project.”

Alexander Schönfeldt, Managing Director of Enerox, concluded: “We are pleased that we can show our field experience of operating more than 100 vanadium redox flow systems worldwide now in this first megawatt-sized project in South Africa. The relationship with Bushveld Energy has resulted in many opportunities to collaborate in new projects and supporting them on qualifying their vanadium oxide feedstock to be operated in our systems. We expect this hybrid installation to become a blueprint of many more to come.”

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