Australia’s Neometals announced that it will not proceed with its Vanadium Recovery Project in Finland. The reasons behind the decision appear to be primarily financial, despite the project’s sound economics.
Neometals is an Australian company focusing on critical and strategic battery materials. The company has developed and is commercialising environmentally friendly processing technologies to produce lithium, nickel, cobalt and vanadium from recycled lithium-ion batteries and recovering steel waste.
Neometals and its project partner, Critical Metals, had been evaluating the feasibility of recovering high-purity vanadium pentoxide (V2O5) from high-grade vanadium-bearing slag in Scandinavia. The VRP1 project was supposed to be operated through a special purpose vehicle called Recycling Industries Scandinavia (RISAB), owned by Neometals (72.5%) and Critical Metals (27.5%). The slag had been planned to be supplied by Sweden’s SSAB under a 10-year take-or-pay feedstock agreement with the plant being built in the port of Tahkoluoto, Pori, Finland. An offtake agreement was signed with Glencore for 100% of the vanadium production in July 2023.
The economics of the project appeared sound with a capex of US$314M, and an announced operating cost of US$4.19/lb of V2O5. Such an opex would place the project in the lowest quartile in terms of production costs. The estimated production capacity was 9,000tpy of V2O5 through a secured stockpiled slag volume of 2Mt, with a first right to purchase additional volumes from SSAB’s future production. Production was supposed to start in 2026.
According to the company’s announcement, the Feedstock Agreement required substantial prepayment and financial guarantees from RISAB’s shareholders, and the board decided ‘that it will not agree acceptable equity financing terms within the required timeline for consideration of the VRP1 final investment decision’. However, Neometals intends to revert to a technology licensing business model to commercialise its proprietary vanadium recovery process, VRP Technology.
Neometal’s decision makes the Finland slag recycling project highly uncertain, despite its economics and implied green credentials. It also shows the uncertainty surrounding many announced vanadium projects, whether they are primary or secondary. Many of them will not be developed, and Project Blue’s forecast methodology is to evaluate each of them, based on economics, technology, detailed market analysis, and other specific factors.
Future supply will also be driven by demand, mostly coming from vanadium redox flow batteries (VRFB) as vanadium consumption growth coming from the steel industry will slow due peaking Chinese steel production. Project Blue forecasts that by 2033, VRFBs will account for 17% of vanadium demand, although several scenarios could translate into different outcomes depending on many factors, including economics, technology or regulatory policies.
Source: Project Blue