Special Report: How to Win With Vanadium: The Metal That Will Replace Lithium

No doubt, smart, forward-thinking investors cashed in on the lithium boom.

Others made a similar move, getting in on cobalt before its massive price surge.

But now, there’s a new up-and-coming metal that’s poised to unseat both...

It’s a metal that’s ideal for batteries that run longer and are more efficient than lithium-ion ones.

I’m talking about vanadium: The best-performing battery material of the past year.

Currently selling for $14 per pound, vanadium has soared more than 130% over 12 months and more than 500% since January 2016:

Here’s why vanadium batteries are ideal for large utility grid-scale energy storage and also why they’ll be the next energy metal story...

Coming in Hot

Even though lithium-ion batteries, with surging popularity and adoption, have the best energy density in today’s battery space, their inherent flaws remain. They have a short life span of just two to three years, up to about 1,000 charge cycles, and potential safety hazards.

So, just as nicad batteries displaced lithium-ion batteries, lithium-ion batteries could be displaced by new technologies. Such new technologies include hydrogen fuel cells that have up to four times greater energy density by volume and up to 20 times by weight.

The fact is that lithium-ion batteries are not the end of the line. And that’s crucial because the pending transition to electric vehicles (EVs) is very real.

Global electric car stock has increased an average of roughly 170% every year.

At such a compounded growth rate, global electric car stock should reach over 200 million by 2025. Indeed, the broad industry consensus seems to be that EVs will account for 35% of all new car sales by 2040.

But I have to ask: Why 2040?

With approximately 80 million vehicles manufactured globally per year, I wonder if 35% of those production capacities actually have the ability to be retrofitted to produce EVs within the next five to 10 years.

A basic EV like the Chevy Volt, which looks identical to a regular, gas-powered car, costs roughly $35,000. And prices are coming down every year. Will it take as long as until 2022 for EVs and gasoline vehicles to arrive at comparable price points?

So long as there's a positive sales margin (i.e., revenue minus cost), there are no practical constraints to EV sales growth as giant battery factories are erected across the U.S. and Asia. And we could very well see one in three vehicles powered by batteries within 10 years — way before 2040.

And I suspect that lithium-ion technology will be replaced sooner than we think, as well...

Vanadium Versus Lithium

While investors are busy focusing on lithium-ion batteries and their explosive demand and application in the mobile battery space, vanadium batteries are making a stealth entry into the rapidly growing utility grid-scale energy-storage sector.

And the reason is simple...

Lithium-ion batteries are not ideal for grid-level energy storage, because they have a short duration and discharge run time cycle and also because they begin to degrade after a few hundred discharge cycles (i.e., 1,000 cycles at most).

But vanadium redox batteries (VRBs) can operate for 10,000 cycles over 20 years. And vanadium batteries can scale up while decreasing unit storage costs. In contrast, the unit cost of lithium batteries increases when sizing up.

The adoption of VRBs is still in its infancy with less than 500 megawatts (0.5 gigawatts) of installed capacity at the global level. But GTM Research and the Energy Storage Association (ESA) estimate that the utility-scale energy-storage market will grow to 2.6 GW by 2022, with the potential to grow much larger.

Indeed, there's a lot of pent-up demand for VRBs. And that's without counting any future growth in wind and solar capacity. Remember, the combined capacity of solar and wind energy is now nearing 600 GW, up from 100 GW in 2007.

Vanadium is the key ingredient in VRBs. And vanadium prices have gone up 500% from their 2016 low of $2.50 per lb. And as I pointed out earlier, the price more than doubled in 2017, jumping 130%.

Unfortunately, there's currently no commodity exchange or ETF for vanadium. Investors can only gain vanadium exposure by owning shares in vanadium-mining companies.

The three largest vanadium-producing countries are China, Russia, and South Africa. These three countries account for over 80% of the global vanadium production.

There are currently no operating primary vanadium mines in North America. But Prophecy Development Corp. (TSX: PCY)(OTC: PRPCF) is looking to fast-track the development of its Gibellini Vanadium Project, located 250 miles east of Tesla’s Gigafactory 1 in Nevada.

The Gibellini could become the first primary vanadium mine in the U.S.

Gibellini is the only North American primary vanadium project with a feasibility study, that I am aware of. The project is open pit-able. And since Gibellini material is low in deleterious metals and nonmetals, it's conducive to low-cost heap leach processing.

Vanadium deserves attention as an investment due to its potential future demand from vanadium battery manufacturers. It's already embarking on a stealth bull that few people talk about. And as long as there's a possibility of it displacing the lithium-ion battery, vanadium batteries will be here to stay.

Fundamentals aside, the total lack of vanadium coverage by mainstream media (e.g., Bloomberg, BNN, CNBC, and even mainstream metals websites such as Kitco) suggests that what we've seen so far is nothing compared to what's to come.

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