Ivanhoe Electric’s VRB Energy enters vanadium battery JV with Chinese firm

Ivanhoe Electric’s (TSX: IE; NYSE-AM: IE) cleantech subsidiary VRB Energy is forming a joint venture with a Chinese investment firm that will bring in a US$55-million investment and help scale up the production of its VRB-ESS vanadium redox flow battery systems targeting customers in Asia, the Middle East and Africa.

Part of the funding, US$20 million, will help VRB set up a new U.S.-based manufacturing site to serve North and South America, as well as Europe.

Under the deal, Shanxi Red Sun will invest US$55 million for a 51% stake in the JV and will establish two manufacturing sites in China. One in Shanxi province will have a 300-megawatt production line, and the second in Hunan province a 200-megawatt capacity.

VRB estimates that these lines combined will expand its current production capacity, based in China, by 10 times.

Under the agreement, Red Sun will purchase shares of the JV from VRB for US$20 million cash, and also complete a capital increase of US$35 million through 2025 by issuing new shares, for a total investment of US$55 million. Upon closing, Red Sun and VRB would each hold 51% and 49% of the JV.

“Red Sun’s support and investment allows us to scale production, drive innovation, and deliver impactful solutions to meet market demand while shaping the future of energy storage,” said Charles Ge, chief executive officer of VRB Energy, which is 90% owned by Ivanhoe Electric.

Other details

The JV also plans to build a dedicated electrolyte plant in Shanxi province with Red Sun’s funding. The facility is expected to be completed in 2025 and have a production capacity of 5,000 cubic metres of electrolyte per year, with the ability to expand.

In addition to the new JV, Ivanhoe Electric and VRB will also establish a separate U.S.-based vanadium redox battery business, to be located in Arizona, after restructuring VRB’s intellectual property and transferring its U.S. patents from the JV back to VRB. According to Ivanhoe, the Arizona facility will be capable of producing 50 megawatts per year of VRB-ESS batteries.

The new U.S. business, which will use the JV as a preferred supplier for certain key equipment and electrolyte, will be owned by VRB and receive the initial US$20 million investment from Red Sun.

The transaction, according to Ivanhoe, is expected to close in the fourth quarter of this year.