Why the Bushveld Minerals (LON:BMN) share price could soon take off

With a deal recently reached to develop a segment in the niche vanadium battery market, could the Bushveld Minerals (LON:BMN) share price soon take off?

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A South African-based producer of vanadium, Bushveld Minerals (LSE:BMN) also engages in exploration and mining activities. As one of only three companies engaged in the sole production of vanadium globally, this is a firm in a very niche market. It is a constituent of the FTSE AIM and is a business I’m considering adding to my long-term portfolio.

Where might the Bushveld share price go in future? It currently trades at 10.4p. Let’s take closer look.

What is vanadium and why do we need it?

Vanadium is a metal found primarily in South Africa, Russia, and China. 

It has a number of applications including use in alloys. In this sense, it can be a strengthening component in steel. This may then be incorporated into products like jet engines.

Furthermore, there have been efforts to develop vanadium redox flow batteries (VRFBs). As the name suggests, these rely on vanadium and have an estimated time durability of between 20 and 30 years.

Due to their bulky frame, these batteries generally support operations like power plants and electricity grids. Development of these batteries constitutes one segment of Bushveld’s business.

Vanadium batteries and the BMN share price

In March, the company reached a deal with specialist battery investor, Mustang Energy. Specifically, Mustang issued a $1.5m convertible loan note, payable in six tranches over the next 18 months. While this is still a relatively small investment, it still suggests that Bushveld is attempting to tap into a market that could hold much promise.

Given that the firm is one of only three businesses focused only on vanadium, a strong move into this battery market could prove advantageous for the company. With many countries now seeking alternatives to oil and gas, VRFBs may soon play a much greater role in energy.

In the future, therefore, the Bushveld share price could take off if the firm successfully taps this niche market.

Recent production and sales reports

Aside from VRFBs, the company is also focused on the daily task of the exploration and mining of vanadium. 

In the 2021 full-year operational update, results were mixed. For the period, the company produced 3,592 metric tonnes. This was slightly lower than in 2020, when the firm posted a figure of 3,631 metric tonnes.

Despite this, production in the second half climbed to 2,018 metric tonnes. This was a year-on-year increase of 28.2%. The company expects production to improve to between 4,200 and 4,400 metric tonnes in 2022.

Sales of vanadium fell over the whole year, however. This is partially explained by the impact of the pandemic and political unrest in South Africa. There is, of course, the further risk that these disruptions could once again impact operations in the future.

Overall, this is a company operating in a niche market. It is actively developing its batteries segment and this could be very lucrative in the future. I therefore think the BMN share price could soar higher. I will be buying shares soon.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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