Bushveld Minerals Limited (LON:BMN) is to provide a convertible loan of US$5mln to Avalon Battery Corporation to help it complete its merger with redT Energy PLC (LON:RED).
The investment will also kick-start the miner's owns vanadium battery technology investment platform.
Avalon is a North American-based vanadium redox flow battery (VRFB) manufacturer and the proposed deal with redT requires at least US$30mln of new funds to be raised.
Half of Bushveld’s funds will be lent to redT by Avalon to help complete the merger.
“The interim funding creates an investment in a prominent VRFB/energy storage entity with the potential to become a leading, global battery energy storage systems supplier,” Bushveld said.
This is the first time the miner has invested directly into a manufacturer of VRFB technology and the South Africa-based miner intends to set up a platform to funnel investments towards other VRFB manufacturers.
Bushveld will take significant minority positions in OEM groups with strategic involvement such as vanadium sourcing, though the day-to-day operations will remain in the hands of the management team.
It also wants to be a catalyst to encourage additional capital from third-party funders to establish a capital pool that will be available to VRFB technology groups.
This will also help hedge its position against future volatility in vanadium market prices, said the miner.
Fortune Mojapelo,Bushveld’s chief executive, added: "The energy storage market presents a sizeable commercial opportunity, potentially exceeding US$660bn by 2040 and significantly greater than the value of the vanadium supply opportunity on its own.
“The VRFB Investment Platform is an exciting new opportunity to directly access the massive upside in energy storage and support select OEMs.
“In addition, pursuing a wide array of partnerships with VRFB OEMs that cover supply, deployment and investment gives Bushveld many more options to unlock value through its integrated strategy.”
