By 2030, demand for vanadium in energy storage applications is expected to increase by almost 60%. Although need for vanadium in steel production will also grow, the World Bank predicts that by 2050 demand for vanadium from energy storage alone could be twice that of the entire global vanadium production in 2018. This is because advances in flow batteries, with vanadium being their state-of-art technology, have made them integral to long-duration clean energy storage.
Europe is 100% dependent on vanadium imports, and this is a serious conundrum. Events like the Covid pandemic and war in Ukraine highlighted the fragility of global supply chains and risk of depending on non-allied countries for materials so critical to the European economy and green and digital transition.
Vanadium is one such material and Europe relies on China (62%), Russia (20%), South Africa (11%) and Brazil (8%) for its supply.
What’s more, the existing vanadium supply chain is a highly polluting one. There is a massive dichotomy in the EU relying on vanadium produced in carbon-intensive ways and then transported across the world to help meet its net zero ambitions.
Grounds for optimism
These factors underscore the importance of building a strong and sustainable domestic vanadium supply chain in Europe.
Several recent developments bring grounds for optimism, not least the JORC resource estimate that shows Norge Mineraler’s mineral deposit in Southwest Norway has substantially grown.
The report underlines the significance of the Company’s vanadium, phosphate and titanium discovery by identifying a huge increase in the amount that’s under the ground in southwest Norway. Norge Mineraler’s Storeknuten site, also known as the Eigersund Project, now totals 3.17 billion tonnes, up from 1.94 billion tonnes in October 2023.
While this news is encouraging, Norge Mineraler is also buoyed by the recent granting of extraction rights by the Norwegian government for Storeknuten. The Company is also currently finishing a pre-feasibility study with aims to start operations at the latest in 2029.
Broadening the scope of EU Strategic Projects
The EU’s Critical Raw Materials Act (CRMA), which came into force in May, is another step in the right direction, in my opinion. The legislation seeks to develop a CRM value chain in Europe and decrease EU reliance on foreign supplies, especially relative to 17 strategic raw materials (SRMs), critical for strategic technologies for green and digital transition and within aerospace and defence. While vanadium is one of the CRMs, it is not identified as “Strategic”. The advantages attached to the CRMA Strategic Projects like faster permitting procedures and help accessing finance are thus less readily available to projects addressing this value chain.
Broadening the scope of Strategic Projects to incorporate the whole list of CRMs, including vanadium, would be a sizeable boost to Europe’s CRM value chain.
Growing investor appetite
Norge Mineraler has made good progress in CRM exploration against a difficult economic backdrop that continues to present challenges for new projects in high-cost regions like Europe.
Recent geopolitical developments however appear to have mobilised investors, and new funds are emerging along the whole CRM value chain.
This includes the EBA Strategic Battery Materials Fund, launched by EIT InnoEnergy and Demeter, to advance European battery raw material supply chain. The fund addresses some major gaps in institutional financing by focusing on the upstream part of the value chain (extraction and processing) and early project stages (scoping and pre-feasibility study). The fund is being developed with the first funding distribution planned for 2025. Additionally, individual EU Member States, namely Italy, Germany and France, are launching their respective CRM Funds, combining public and private funding to channel to the CRM value chain in Europe.
Initiatives like these are sorely needed to overcome the critical shortage of funding, especially in early project stages. Public sector support for private investment through the provision of guarantees and direct financial support through grants and subsidies to early development projects, would also help attract further private investment.
Building blocks for a home-grown vanadium supply
In addition to these measures, the EU’s new Carbon Border Adjustment Mechanism (CBAM) could benefit vanadium production in Europe if its scope is widened.
The legislation is set to fully come into force in 2026 to try and level the playing field between EU and non-EU producers by penalising carbon-intensive products. It is the EU’s most decisive attempt so far at quantifying and monetising the benefits of more environmentally friendly production and to prevent carbon-leakage by introducing tariffs on imported products that exceed carbon emission thresholds.
As it stands, the CBAM applies to number of selected sectors only; vanadium production is not included. If it is expanded over time to include vanadium production and processing, it would significantly help boost chances of building a home-grown supply. The foundations are in place to create a responsibly sourced and produced vanadium that will power Europe’s energy transition. By adjusting existing initiatives like broadening the remit of EU Strategic Projects, encouraging more public underpinning of projects, namely in their early development stages, and enlarging the CBAM to include vanadium production and processing, the whole flow battery sector in Europe could flourish.
