Circular Business Model for Vanadium Use in Energy Storage
PublicDisclosureAuthorized PublicDisclosureAuthorized PublicDisclosureAuthorized PublicDisclosureAuthorized VANADIUMBATTERYSTORAGEREPORT CircularBusinessModelforVanadiumUseinEnergyStorage CLIMATE-SMARTMININGINITIATIVE Contents 1ExecutiveSummary15 ©2023InternationalBankforReconstructionandDevelopment/TheWorldBank 1818HStreetNWWashington,DC20433 Telephone:202-473-1000 www.worldbank.org ThisworkisaproductofthestaffofTheWorldBankwithexternalcontributions. Thefindings,interpretations,andconclusionsexpressedinthisworkdonotnecessarilyreflecttheviewsofTheWorldBank,itsBoardofExecutiveDirectors,orthegovernmentstheyrepresent. TheWorldBankdoesnotguaranteetheaccuracyofthedataincludedinthiswork.Theboundaries,colors,denominations,andotherinformationshownonanymapinthisworkdonotimplyanyjudgmentonthepartofTheWorldBankconcerningthelegalstatusofanyterritoryortheendorsement oracceptanceofsuchboundaries. Thisdocumentwaswrittenforthe WorldBankGroup’sClimate-SmartMiningInitiativebyPwC. RightsandPermissions Thematerialinthisworkissubjecttocopyright.BecausetheWorldBankencouragesdisseminationofitsknowledge,thisworkmaybereproduced,inwholeorinpart,fornoncommercialpurposesaslongasfullattributiontothisworkisgiven. Anyqueriesonrightsandlicenses,includingsubsidiaryrights,shouldbeaddressedto: WorldBankPublicationsTheWorldBankGroup1818HStreetNWWashington,DC20433,USA Fax:202-522-2625 2AnalysisoftheVanadiumbatterymarket23 2.1Introduction23 2.2GlobalEnergyStorageMarket23 2.3BusinessCasefortheAdoptionofVRFBs25 2.4OverallMarketPotentialforVRFBs26 2.4.1MarketForecasts27 2.5CostAnalysis28 2.6RiskandOpportunityAssessment33 2.7OpportunityAssessment34 2.7.1Domesticvaluecapture34 2.7.2Innovativebusinessmodelformineralfinancing35 2.8CaseStudy:SouthAfrica37 2.8.1EnergystoragemarketinSouthAfrica37 2.8.2CompetitivenessintheproductionofVRFBsoverLiBsinSouthAfrica38 2.8.3VRFBmarketpotentialinSouthAfrica41 3AnalysisoftheVanadiumleasingmodel43 3.1OverviewofVanadium43 3.2VanadiumReservesandResources44 3.3VanadiumProduction45 3.4VanadiumConsumption48 3.5VanadiumProductionDriversandChallenges48 3.6Vanadium–VRFBValueChainAnalysis49 3.7VanadiumOreExtraction50 3.8VanadiumtoVanadiumElectrolyte51 3.9VRFBManufacturingandAssembly53 3.10VRFBInstalledCapacity53 3.11VRFBEndUseApplication55 3.12RecyclingofVanadium55 3.13CircularBusinessModel56 3.14ComparativeAnalysis58 3.14.1Platinum58 Contents 3.15PlatinumOreExtraction 60 6 Regulatoryandlegalanalysis(specifictoSouthAfrica) 103 3.16BeneficiationandPurificationofPlatinum 60 6.1 ConstitutionoftheRepublicofSouthAfrica 104 3.17ManufacturingofIndustrialProducts 61 6.2 Energylawsandpolicies 104 3.18EndUseApplication 61 6.3 EnvironmentalLawsandpolicies 104 3.19Recycling 61 6.4 Industriallawsandpolicies 104 3.20TechnicalandMarketChallenges 62 6.5 IncomeTaxAct 113 3.21ReuseofPlatinum 62 6.5.1Miningregulatoryrecommendations 115 3.22CircularBusinessModelforPlatinum 63 6.5.2Environmentalregulatoryrecommendations 115 3.23ProposedBusinessModelforCircularVanadiumOwnership 64 6.5.3Energyregulatoryrecommendations 115 3.23.1ScenarioA:Singlelong-termleasing 65 6.5.4Industrialregulatoryrecommendations 115 3.23.2ScenarioB:Multipleshort-termLeasing 65 6.6 UsingaVanadiumLeasingSPVtoBenefitthePublicEntity 116 3.23.3ScenarioC:Multipleshort-termleasinginfocusedgeographicalregion 66 6.7 EstimatingtheMacroeconomicandFiscalImpactonSouthAfrica 118 3.23.4FinancialanalysisforsettinguptheVErecyclingfacilityinthefocusedend-usegeography 66 6.8 DataValidation,DataQuality,andDataReliance 118 3.23.5Comparativeanalysisofdifferentmodelscenarios 67 6.9 EconomicContribution 119 6.9.1Estimatedeconomiccontributionofcapitalexpenditure,2022 119 4AnalysisofsupplyanddemandintheVanadiummarket 77 6.9.2Estimatedeconomiccontributionfromtheannualleasefeeandrecyclingofelectrolytes 121 4.1GlobalSupply 77 6.10 EnvironmentalandSocialAnalysis 123 4.2GlobalDemand 80 6.11 LegalandRegulatoryAssessment 124 4.3GlobalMarketPrices 85 6.12 StakeholderMapping 130 4.4PriceForecastScenarios 87 6.13 E&SRiskIdentification 133 6.14 VanadiumMining 135 5Financialandeconomicanalysis 91 6.15 ConcentrateProduction 135 5.1FinancialAnalysis 91 6.16 ExtractionProcess 135 5.1.1Keyfindings 91 6.17 RecoveryProcess 135 5.1.2Sensitivityanalysis 93 6.18 RefineryProcess 135 5.2LeaseRate(%) 93 6.19 VanadiumElectrolyteProduction 137 5.3PriceofVanadium 93 6.20 VRFBAssemblingorManufacturing 138 5.4ClientUpfrontPayment 93 6.21 EnvironmentalandSocialAnalysis:KeyTakeaways 140 5.5CostofDebtFunding 94 5.6CapitalExpenditure—VanadiumCost 94 7 Roadmaptoscaleupcircularbusinessmodel 145 5.7ConversionCost 94 7.1 CriticalSuccessFactorsforGrowthoftheVRFBMarket 145 5.8ReprocessingCosts 94 7.2 Applicabilityofcircularbusinessleasingmodelforothercriticalminerals 150 5.9LeaseTerm/PPATenor 94 7.3 DisseminationPlan 153 5.10AnnualUSdollarInflationForecast 94 5.10.1Riskmatrix 94 8 Conclusionandrecommendations 155 5.11EconomicAnalysis 97 ListofTables Table2.1: ComparativeAssessmentofLi-ionBatteriesandVRFBs 25 Table6.1: EnergyLa
