Technology Metals Australia Ltd (ASX: TMT) is higher after signing an MoU with a leading vanadium redox flow battery (VRFB) company aimed at setting up a vanadium offtake agreement and investigating VRFB manufacturing in Australia.
The MoU is with Big Pawer Electrical Technology Xiangyang Inc Co Ltd, which has VRFB research, development, and manufacturing capabilities and has deployed VRFB systems to more than 20 locations globally.
Two components of MoU
It establishes the framework for a binding offtake agreement covering up to 5,000 tonnes annually of TMT’s proposed average 12,800 tonnes annual vanadium pentoxide V2O5 production from the Gabanintha project in WA’s Mid-West region.
The MoU also covers a joint venture to investigate the opportunity to produce vanadium electrolyte and establish a VRFB manufacturing base in Australia.
Diversified customer base
As such, the agreement marks an important diversification of TMT’s customer base and scope to participate in downstream processing.
It is also a significant first step in TMT’s vision of becoming a key participant in the stationary storage battery market.
Managing director Ian Prentice said; “Our vision is for the very high purity Gabanintha vanadium product to play a significant role in the development of the domestic VRFB industry and this MoU marks a key first step in achieving that vision.
“The diversification of the customer base is also a key support for the development of the globally significant GVP.”
A significant portion of TMT’s proposed production is now covered under binding offtake and MoU, including the recently announced 2,000 tonnes per annum binding offtake with CNMNC.
Shares up more than 37% to 16.5 cents intra-day.
TMT and Big Pawer have agreed to use their best endeavors to negotiate a definitive and binding offtake agreement for the supply and purchase of V2O5 products that TMT intends to produce from the Gabanintha project.
The other component of the MoU will see the parties negotiate the establishment of a JV to potentially produce vanadium electrolyte and establish a VRFB manufacturing base in Australia.
This downstream value-add opportunity would utilize Big Pawer’s proprietary VRFB technology and TMT’s premium high-purity vanadium product.
Big Pawer’s executive director & general manager of VRFB Yu Longhai said, “We are very pleased to have established this relationship with Technology Metals Australia and aim to progress our offtake and joint venture discussions based on the principles of mutual benefit and respect.
“This is an exciting opportunity for both parties, and we are very focused on developing this relationship.”
Enhanced economic benefits
The opportunity presented by the MoU further enhances the economic and social benefits for the Mid-West region of WA, the state, and the nation that the development of Gabanintha is expected to generate over a long period of time.
WA Minister for Mines & Petroleum and Energy Bill Johnson said: “I congratulate Technology Metals Australia on their MoU with Big Pawer which demonstrates the strength of Western Australia’s burgeoning chemical processing and battery technology sector.
“Vanadium is proving to be a key component in battery technology and renewable energy storage and has been influential in forming the Western Australian Future Battery Industry Strategy, which was officially launched in January 2019.”
Progressing Gabanintha development
TMT is looking forward to continuing to work closely with the WA Government’s Lead Agency team, the Northern Australia Infrastructure Facility and other government agencies as it progresses the development of Gabanintha to be a producer of vanadium, a critical mineral with a vital role to play in the efficient and effective deployment of renewable energy.
Vanadium’s strategic importance to the Australian economy has been recognized with its inclusion on the Australian Government’s list of critical minerals, further underlined with the establishment of the Critical Minerals Facilitation Office at the beginning of 2020.