The European Union (EU) has delivered ASX-listed Neometals (ASX: NMT) a crucial endorsement for its vanadium recovery project (VRP) in Finland, co-funding part of the company’s bid to become Europe’s first vanadium producer.
The funding deal for the project that refines waste from steelmaking into the valuable vanadium battery metal was executed with Germany’s EU-backed EIT RawMaterials and could be worth up to some AU$42.3 million. That figure includes up-front and future funding for Neometals’ 88 per cent-held Recycling Industries Scandinavia AB (RISAB), which fully owns the VRP’s holding company, Novana Oy.
RawMaterials, which is a legally independent part of an EU entity, will provide an initial €500,000 (AU$829,000) in grant funding to Novana to become a minority 1.1 per cent shareholder in RISAB at a current valuation of €50 million (AU$82.9 million). It is an impressive figure considering Neometals’ market cap currently sits at about AU$67 million.
The German entity can also subscribe for a further €10 million (AU$16.6 million) in equity at the same valuation for up to 18 months, which would take it to a 21.1 per cent shareholding.
Neometals recently tabled an impressive feasibility study for the VRP, confirming the potential for exceedingly-low operating costs (lowest-quartile) alongside a low-to-negative carbon footprint. The 300,000 tonnes per annum plant is aiming to churn out more than 9000tpa of vanadium pentoxide material by the end of 2026.
Following receipt of the funds, Novana will begin a selective financing process, having already identified the project’s site in the steelmaking town of Pori on Finland’s west coast.
The company will seek some €400 million (AU$664 million) – targeting a 40:60 equity-to-debt balance – with leading Nordic banks SEB and Aventum respectively managing the equity and debt packages and a further €15 million (AU$24.9 million) in assistance to be committed by RawMaterials.
With the VRP conditionally confirmed for European Investment Bank debt financing, we look forward to formally securing the remaining equity and debt funding. We hope to capitalise on the significant support from the Finnish State and EU and new incentives to deliver Europe’s first domestic producer of high-purity vanadium.
Neometals Managing Director Chris Reed
The project is a key element in Neometals’ move to commercialise low-carbon, low-cost “green” battery metal recovery technologies – representing a move away from mining the rare metal.
Vanadium demand is forecast to increase by 400 per cent by 2040, primarily driven by an anticipated increased adoption of stationary energy storage systems batteries (vanadium flow type), which possess many long-term, large-capacity storage advantages over the popular lithium-ion batteries.
The VRP will be fed by vanadium-bearing steelmaking waste, or slag, obtained from Swedish steel producer SSAB in Pori. SSAB has agreed to provide the VRP with its slag for 10 years, with the Swiss global commodity powerhouse Glencore agreeing to buy all of Neometals’ high-purity product for a minimum of the first five years of production.
To extend the life of the project, Neometals also signed on with Swedish company H2Green Steel for up to 4 million tonnes of its vanadium-bearing slag, underpinning a potential second long-term operation in the municipality of Boden in Sweden.
With the global battery metal recycling space heating up, today’s milestone European endorsement saw Neometals’ share price shoot up. Closing last week at a price of 8.6c the stock topped out this morning at 10.25c, a positive move of some 19.2 per cent and a price some 46.4 per cent higher than last week’s low of 7c.
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