Grizzle sat down with the Chairman of Largo Inc, Alberto Arias, to learn how vanadium is quietly becoming one of the most important pillars of our green future.
Vanadium has historically been a specialized metal used to decrease emmissions from the building and steel making industries, however demand trends are rapidly changing.
Of all the battery metals discussed at battery metals con, vanadium has potentially the most to gain if it is adopted en mass by the renewable energy industry.
Why Diversify?
Mr. Arias was asked why Largo is choosing to diversify away from steel additives when it already is the largest high grade vanadium miner in the world, posessing a very strong market position.
His answer: Largo realized the potential of Vanadium to facilitate lower emmissions very early on, but when the rest of the industry failed to innovate and drive new sources of value for consumers he knew Largo had to set an example to ensure its growth and the growth of the entire vanadium industry well into the future.
Largo recently established a leading presence in long duration, industrial batteries while also launching a financial vehicle that has revolutionized how both customers and investors gain access to Vanadium.
Largo Inc is now running on not just 1 but 3 growth pillars.
- Vanadium strengthens steel and decreases emmissions from building construction. The Paris Climate Accord is causing demand for vanadium to grow strongly in major demand centers like China, India and Europe.
- Largo Clean Energy owns patents to the VRFB (Vanadium Redox Flow Battery), a highly recyclable, reliable and energy efficient battery technology that could become a major player in the renewable storage market.
- Largo physical Vanadium (LPV) is a publicly traded vehicle that holds physical vanadium. Investors can now bet on the price direction of Vanadium while Largo’s battery customers no longer have to worry about sourcing enough raw materials for large scale battery installations. LPV keeps ownership of the Vanadium that goes into the batteries and only charges a small rental fee.
Source: Largo Inc
The World Needs Much More Vanadium
As the world accelerates construction of battery backups for intermittent clean energy, think wind and solar, the demand for efficient and green battery solutions will explode.
Even with modest forecast demand for vanadium batteries and vanadium additives in the Aerospace and Steel industries future planned supply growth will simply not be enough to meet demand.
The last time demand exceeded supply by 5%-10% the price of vanadium quintupled.
Based on balance forecasts by vanadium industry group Vanitec, demand will once again exceed supply by 5%+ in only a few years.
These forecasts do not include large scale adoption of Largo’s VRFB technology.
Historical Supply/Demand balance and the Price of Vanadium
Source: Vanitec, Largo Inc
Significant Free Cash Flow Expected at $8+/lb Vanadium
Largo recently had an independent technical report completed that forecasted financial results based on the potential of Largo’s mining asset alone, excluding the clean energy business.
They found a company that can growth cashflow 135% and free cashflow 400% with vanadium prices at a flat $8.5/lb this decade.
This price would be in-line with the last five years when the renewable opportunity was still in its infancy.
Mr. Arias believes Largo has a good chance to exceed these expected results simply by the fact that the Largo Clean Energy and Largo Physical Vanadium divisions are excluded from this analysis entirely.
Both have significant optionality making the future earnings potential of Largo particularly intriguing.
Largo Cashflow Outlook from a Recent Technical Report
Source: Largo Inc
If you’d like to learn more about vanadium and Largo Inc, please visit the company’s website HERE
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