Defining Canada’s role in a growing vanadium market

Energy storage technologies are expected to increase at an exponential rate in Canada and abroad over the next decade – all positive news for proponents of a greener, more efficient grid. With growth come new opportunities, such as increased demand for graphite, nickel, and lithium used in lithium-ion batteries. Similarly, the vanadium redox flow battery ( VRFB ) is a promising technology choice for stationary energy storage, and a growing market raises the question – where do we find stable and affordable sources for high-quality vanadium?

How is vanadium sourced?

Vanadium is a grey ductile metal, but does not occur naturally in forms usable in a VRFB . Rather, it is mined in combination with other compounds that must be extracted and processed to achieve sufficient purity for these applications. The purification process ultimately produces vanadium pentoxide (V₂O₅), which is sourced in three main ways:

1. Co-production – from steel production derived from iron ore mining.
2. Primary production – from mined ore (generates a quarter of the world’s supply).
3. Secondary production – from catalysts, ash, and residues.

After V₂O₅is produced, it is primarily used in the steel industry for the production of high strength low alloy, full alloy, and carbon steels. But an emerging market opportunity is rapidly developing for V₂O₅to be used as the main ingredient in VRFB electrolyte and other vanadium redox battery (VRB) technologies, such as lithium-vanadium phosphate batteries.

What is the outlook for demand?

VRFB s have emerged as a promising solution for grid services because of their long lifecycle potential and high energy capacity, which can provide extended discharge times. Additionally, given the ability to scale power and energy of a system independently, VRFB technology may be a long-term solution for off-grid power systems and micro-grids. In particular, these systems could be used to support residential, community, military, and commercial end-users, and to fulfil remote-energy-access needs of rural areas in developing countries.

Approximately 90% of today’s vanadium consumption occurs in the steel industry. About 10% is used for non-ferrous alloys (titanium alloys, super alloys, magnetic alloys) and chemical applications (catalysts, dyes, phosphors). VRFB energy storage applications, in which V₂O₅ quality requirements are usually more rigorous, accounted for about 1 kt V demand in 2014, compared to global production of 94.3 kt V that year.

Estimates on vanadium requirements for VRFB vary among producers, with an average of approximately 8 Kg of high purity V₂O₅ per KWh ^Footnote1. Currently, there are few vanadium producers able to produce high purity V₂O₅ and products show significant differences in purity and trace element levels ^Footnote2.

High-performance VRFB s require high quality V₂O₅; vanadium electrolyte must be at least 99.5% pure. High-purity V₂O₅ production can be costly if the mined ore or secondary sources used require extra processing to achieve this level of quality. In fact, the cost of vanadium contained in the electrolyte amounts to 42% of the overall VRFB cost. Reducing electrolyte costs by 55% is needed to reduce the cost of VRFB s to make this technology competitive in grid-level energy storage applications ^{Footnote3Footnote4}.

Given cost and quality considerations, vanadium used in VRFB s is about 1% of total current demand; however, demand could increase significantly over the next several years if supply chain and cost challenges are addressed. Considering the potential size of the grid energy storage market, even a slight increase in VRFB demand would mean significant growth in V₂O₅consumption for this end-user product. For example, it is estimated that the vanadium consumption in the battery energy storage industry could rise 3100% by 2025, to 31 kt V ^Footnote5.

What’s the opportunity for Canada?

Canada is not currently a primary producer of V₂O₅ and only 1.3 kilotons of vanadium (kt V) was produced in Canada in 2014 from secondary sources. However, primary production options are in development and untapped secondary sources may produce relatively low-cost, high-quality V₂O₅for electrolytes in VRFB s and VRB technologies.

Currently, 55% of global V₂O₅production occurs in China, followed by 17% in South Africa, 8% in Russia, and 4% each in the USA and Austria. Canada’s production from secondary sources accounted for 1% of global production in 2014.