Neometals has signed an agreement with Glencore to supply vanadium products from its project in Finland for an initial period of five years.

Neometals has announced an agreement for guaranteed offtake for 100% of vanadium products produced by Vanadium its Vanadium Recovery Project (VRP1) in Finland, with Glencore.

Under the terms of the agreement, Novana (a 100% owned subsidiary of VRP1’s joint venture company, RISAB) will exclusively sell and deliver to Glencore. Glencore will purchase, and take delivery of, all saleable vanadium-bearing products (including but not limited to vanadium pentoxide and ferrovanadium) produced by Novana for an initial period of five years from the commencement. This automatically extends in two-year increments unless Novana or Glencore elect not to renew the agreement.

The delivery period will commence on 1 January 2026, or an earlier date notified to Glencore by Novana with 12 months’ notice.  This date is in line with Neometals’ expectations for project development. Construction is initially planned for July 2023, and operations are flagged to start early in 2026. 

The project is an interesting one. Neometals has a collaboration agreement with unlisted Scandinavian mineral development company Critical Metals to evaluate the feasibility of constructing a recycling facility to recover and process high-grade vanadium pentoxide from vanadium-bearing steel by-products at Tahkoluoto Port, Pori, Finland. Critical Metals executed a 10-year slag supply agreement with Scandinavian steel giant SSAB to access approximately 2Mt of stockpiled high-grade vanadium-bearing slag from three operating steel mills. These are in Oxelösund and Luleå in Sweden and Raahe in Finland.

As part of the project development, Neometals has developed a proprietary hydrometallurgical process which it claims can offer significant operational, cost and risk advantages over the traditional pyrometallurgical (salt-roast) process routes.

Pilot Plant testing of the selected flowsheet resulted in product purities of greater than 99.5% V₂O₅ with maximum metallurgical recoveries exceeding 75%. In July 2022, Neometals released the results of a Class 3 Engineering Cost Study highlighting an operating cost estimate of US$4.38/lb V2O5 with CAPEX of US$341M for an upsized 300ktpy plant (throughput rate) including 15% contingency.

Neometals announced improved economics following the completion of a feasibility study in March 2023. The feasibility study assumes an average selling price of US$9.82/lb V₂O₅ plus a purity ‘premium’. OPEX was put at US$4.19/lb with CAPEX an estimated US$314.4M.

Although the economics of the deal remain unclear, the move should be seen as positive for Neometals, which will receive guaranteed offtake as well as technical expertise from Glencore. Vanadium market observers will likely draw comparisons with Largo, which also signed a deal for Glencore offtake when ramping up its Maracás’ Menchen operation in Brazil.   

The outlook for the vanadium market balance suggests potential tightness over the years ahead. Given its dynamic nature, various demand- and supply-side factors could help push the vanadium market into surplus or deficit over the forecast period with the outlook for the vanadium redox flow battery (VRFB) market remaining binary.

Project Blue’s expectation is that the market could almost be supported by existing assets over the next few years, but that ultimately new sources of supply will be required after the middle of the decade. This new supply will come from primary, secondary or co-producers, with both existing players and new operators looking to bring new projects into production. VRP1 is one of a number of projects looking to supply the market over the coming decade. Based on announced projects, total new capacity could exceed 70kt by 2033. However, Project Blue believes that less than a third of this capacity will be operational by 2033. On a ten-year horizon, incremental supply could fluctuate depending on several factors, operational and financial. But overall, based on the announced projects, supply should be able to meet future demand.