Ivanhoe Electric Inc. has announced that its subsidiary, VRB Energy Inc., has secured a $55 million investment, with $20 million of the proceeds to be used to establish a U.S.-based grid-scale vanadium redox flow battery manufacturing facility in Arizona. Additionally, an existing VRB Energy manufacturing operation in China will become a 51/49 joint venture following a $35 million investment from Red Sun, an Asian new energy group.
The joint venture will focus on manufacturing and selling vanadium redox flow battery systems in Asia, the Middle East, and Africa. This restructuring will allow VRB Energy to concentrate on developing its U.S.-based vanadium redox flow battery systems business, which will be 100% owned by VRB Energy.
The agreement outlines that Red Sun will purchase shares from VRB Energy for $20 million in cash payable in two equal tranches, and complete a capital increase of $35 million through 2025 into the joint venture through the issuance of new shares. Following the closing of the transaction, Red Sun will own 51% and VRB Energy will own 49% of the joint venture.
The joint venture aims to accelerate the manufacture and sale of vanadium redox flow battery systems by combining VRB Energy's technology with facilities and infrastructure to be leased or acquired from entities affiliated with the founders of Red Sun.
The transaction provides Ivanhoe Electric the opportunity to benefit from a newly capitalized joint venture operated by a strong and experienced local Chinese partner, Red Sun. Red Sun plans to establish manufacturing sites for the joint venture in Changzhi City, Shanxi Province, and Huaihua City, Hunan Province. The joint venture will also construct a dedicated electrolyte plant with Red Sun's funding.
As a non-participating, non-controlling shareholder in the joint venture, Ivanhoe Electric, through VRB Energy, will retain exposure to the growing grid-scale battery markets in Asia, the Middle East, and Africa. Meanwhile, Ivanhoe Electric will focus on establishing and growing vanadium redox flow battery production in Arizona to serve North American, South American, and European markets.
VRB Energy will establish VRB USA to pursue domestic manufacturing of vanadium redox flow battery systems, receiving $20 million from Red Sun for the purchase of some of its shares in the joint venture. VRB USA will establish a domestic battery assembly facility in Arizona, capable of producing 50 megawatts per year of vanadium flow batteries.
The transaction is expected to close in the fourth quarter of 2024, subject to certain conditions being satisfied, including execution of the definitive agreements and Chinese regulatory approvals.
The press release also provides background information about Red Sun, a prominent Asian investment firm specializing in new energy and advanced technologies, and VRB Energy, a clean technology innovator that has commercialized the largest vanadium flow battery on the market, the VRB-ESS®.
Ivanhoe Electric is a U.S. company that combines advanced mineral exploration technologies with electric metals exploration projects predominantly located in the United States.
The transactions remain subject to certain conditions being satisfied, including execution of the definitive agreements, Chinese regulatory approvals, and other customary regulatory approvals. As a result of these announcements, the company's shares have moved -5.0% on the market, and are now trading at a price of $7.22. Check out the company's full 8-K submission here.
