EU bank to run rule over Neometals vanadium play

Neometals is in the crosshairs of the European Investment Bank for cornerstone debt funding of its curious vanadium recycling project in Finland.

The EIB is the lending arm of the European Union (EU) and one of the biggest providers of climate-related finance. While it does not tend to lend 100 per cent of required funding for projects, its nod of approval could see other commercial banks also come to the table.

The move comes after the EU last week ushered in its answer to the United States’ Inflation Reduction Act - the Critical Raw Materials Act and the complementary Net-Zero Industry Act. The new laws will see the EU embrace companies engaged in green-themed developments that involve critical minerals by providing one-stop approval processes and potential lines of funding.

Neometals says “material progress” has been made in the finance process being run for its joint venture company, Recycling Industries Scandinavia AB (RISAB), which it owns in equal partnership with Critical Metals. The process is now in a formal approval stage with the EIB.

Neometals is looking to recycle vanadium from steel slag heaps produced by Stockholm-based global steel-making company SSAB. Notably, the grades in the slag heaps would make a vanadium miner blush and Neometals says they are up to several times the grade of some of the larger in-ground vanadium deposits.  

The crucial EIB funding, if approved, will assist the JV company ‘s technology to recover high-purity vanadium pentoxide from the slag, a by-product generated in the steel-making process.

Vanadium has already been declared a critical raw material by the EU, with the EIB emphasising that the Neometals’ project supports, “a circular economy solution that will reduce the usage of primary resources for vanadium manufacturing”.

Neometals managing director, Chris Reed, said: “We first submitted our proposal to the EIB in October 2022, its acceptance validates our circular economy ambition to produce critical raw materials in Europe. Typically, cornerstone funding from the EIB for environmentally sustainable opportunities in the battery supply chain is on very attractive terms. There is keen interest from a number of debt providers for the funding of the Vanadium Recovery Project.”

Mr Reed said the company is now watching “with interest” how the passing of the EU’s new legislation will affect financial support for strategic projects that produce critical raw materials such as vanadium, where the EU is almost entirely dependent on imports.

Critical raw materials that include vanadium are used in a wide variety of applications, including the digital economy, aerospace, defence and green-energy generation. Given 86 per cent of the EU’s vanadium supply comes from Russia alone, Neometals’ recycling project may have a role to play in reshaping the supply chain. 

With a total of 27 member states within the EU and a thriving manufacturing sector across many of them, it is likely more mineral companies will benefit from EIB debt funding. And at face value at least, it would appear that Neometals’ project can handle some debt.

The company says it will bring in a top line of about US$200m (AU$300m) a year after a ramp-up period and will churn out a pound of vanadium for just US$4.19 (AU$6.25), which management says is in the lowest quartile of vanadium producers.

Notably, Neometals says the project will pump out about 9000 tonnes of vanadium oxide each year for at least 10 years and possibly beyond – now that just might make a difference.

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