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Bushveld Minerals [LON:BNMB] is being added to our lists for stocks to watch this week as it seems to have successfully refinanced what should be a very exciting vanadium mining and battery materials production project in South Africa.

New funding facility

The miner has begun drawing down on a funding facility that it secured through Orion Mine Finance at the end of September. At the same time, Bushveld shares have continued trending upwards amid the increasingly bullish outlook for vanadium and the wider demand for vanadium flow batteries.

Bushveld Minerals has access to $30m in production financing and is going to issue $35m in convertible notes to Orion. The deal helps Bushveld to repay some debt and also upscale its Vametco mining project.

Bushveld Minerals sits right at the centre of what we consider to be a coming revolution in the production of large scale vanadium batteries for institutional use. It has both a mine and a processing plant in South Africa and acquired industrial group Vanchem in order to help it to diversify into the batteries sector.

Bushveld shares have been torpid in 2020

Shares in Bushveld Minerals have been looking relatively range bound since April, having dropped from a high of 48.40 in November 2018. Lower vanadium prices and lost production due to the pandemic have kept the stock price suppressed for most of 2020. Lost revenue has been estimated at $9.2m and Bushveld has registered a loss before tax of $10.7m.

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We think the company is looking well-positioned within the vanadium battery sector as Vanchem will help it to considerably increase its production by a factor of about 10. This should not be underestimated, as there is likely to be substantial and growing demand for vanadium flow batteries from around the world going forward.

Global vanadium battery market poised for expansion

The global market for vanadium redox batteries in 2020 is estimated at around $234m, with 30% of that market being buyers in the US. Demands for large scale energy storage alone – including storing energy from clean power sources like wind power and solar – is estimated to grow at 52% CAGR over a period to 2027.

China is expected to constitute a major market for vanadium batteries – estimates put its growth at GAGR 51.4% through 2027. There is also likely to be a considerable increase in demand for the batteries for emergency power supply purposes. The need for the batteries was demonstrated in California this year, when wild fires took out large segments of California’s power grid. Again, markets like the US, and Japan, where natural disasters regularly disrupt power supplies, will be considerable.

Re-financing was necessary

We are adding Bushveld Minerals to our watch list this week as we expect the company to see considerable growth in demand for its output in 2021 and beyond. It seems to have been held back by necessary refinancing and reinvestment activities, as it moves from pure mining to a more diversified industrial processing and production entity.

We are in agreement with the bullish outlook for the stock issued by Peel Hunt: Bushveld Minerals should be entering Q1 next year with a much more solid balance sheet. At the same time it is putting the trials of the pandemic behind it, and will be the beneficiary of the growth in the vanadium battery market.


Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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