Bushveld Energy secures funding for Vametco hybrid mini-grid

Bushveld Minerals Limited (AIM: BMN), the AIM-quoted, integrated primary vanadium producer and energy storage solutions provider with ownership of high-grade assets in South Africa, is pleased to announce that it has secured funding for the engineering, procurement and construction (“EPC”) of the Vametco hybrid mini-grid, which is owned by its 84%-owned energy subsidiary, Bushveld Energy Limited (“Bushveld Energy”).

• Bushveld Energy has completed the development and achieved financial closing for a 3.5 MW solar PV plus a 1 MW / 4 MWh Vanadium Redox Flow Battery (“VRFB”) hybrid mini-grid project for Vametco, which will operate as a funded independent power producer (“IPP”).
• Bushveld Energy and NESA Investment Holdings, a South African investment firm, have 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 has provided 60% of the equity, while Bushveld Energy has provided 40%. Bushveld Energy will recognise a development fee of ZAR5.6 million as revenue from the project upon financial close.
• ABSA Relationship Banking has approved a ZAR64 million (approximately US$4.1 million) loan to part fund the construction of the mini-grid project.
• The project’s total cost is estimated to be ZAR113 million (approximately US$7.1 million).
  • It will be built on a turnkey basis by NESA Power, who have already executed an Engineering, Procurement and Supply (EPC) Agreement alongside the SPV.
  • As previously announced, the project’s 1 MW/4 MWh VRFB will be supplied by CellCube, a VRFB original equipment manufacturer in which Bushveld owns an indirect 25.25% interest.
• The Board of the SPV will consist of 5 directors, 3 from NESA and 2 from Bushveld Energy, in proportion to the shareholding.
• Vametco has sold 26 mtV for the production of electrolyte, required for the VRFB which is currently being converted into electrolyte overseas.
• Site preparation for construction began in Q1 2022. The project is now fully funded and is expected to be completed in H1 2023.

Fortune Mojapelo, CEO of Bushveld Minerals, commented:

“We are delighted to have secured the necessary funding for the EPC of the hybrid mini-grid at Vametco. 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. 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.

“It is also very encouraging to note that the majority of the capital invested in the mini-grid project has come from sources outside of Bushveld Minerals. 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 PV and VRFB technology, especially in regions with similar challenges to South Africa.”

Percy Ying, Director of NESA Investment Holdings, commented:

“NESA Investment Holdings and the NESA Power Group are proud to partner with Bushveld Energy to develop its flagship renewable energy project for Bushveld Minerals’ Vametco mine. In addition to generating long term positive benefits for the mine, the project will also be one of the first renewable energy projects in South Africa to employ vanadium battery storage technology and demonstrate its commercial viability on a large scale. Understanding the value proposition Vanadium Redox Flow Batteries have for South Africa, we are confident that the project, once completed, will catalyse further deployment of large-scale vanadium battery energy storage systems in South Africa and contribute to securing the country’s energy future.”

Justin Schmidt, Head of Renewable Energy at ABSA Relationship Banking commented:

“We are excited to be part of this project and relationship. The project is another proof point that the ever-evolving market for solar is growing. In addition, it also highlights the important role regulatory reform is playing to enable energy availability for business.”

In the film below, SP Angel Analyst John Meyer highlights the investment case for Bushveld Minerals