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Neometals’ Finnish vanadium recovery project gains EU backing and strategic financing

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By Colin Hay - 
Neometals ASX NMT Finnish vanadium recovery project funding
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Neometals (ASX: NMT) has received European Union (EU) funding support for its plans to develop a unique vanadium recovery process in Finland.

Novana, in which Neometals has an indirect interest through its 88%-owned entity Recycling Industries Scandinavia AB (RISAB), has executed a project agreement with EIT RawMaterials that will support the development of the Finnish vanadium recovery project (VRP1).

An independent part of the European Institute of Innovation and Technology, EIT has been mandated to lead and manage the European Raw Materials Alliance (ERMA).

Grant funding

The Berlin-headquartered organisation has agreed to provide Novana with approximately $826,000 in grant funding in return for approximately 1.1% of the issued capital of RISAB.

Neometals managing director Chris Reed said the funding and services provided by EIT would support the project financing process for the development of a plant to produce high-purity vanadium pentoxide from steel slag in Pori, Finland.

Novana holds the exclusive licence to Neometals’ wholly-owned VRP technology in the region and is required to pay a 2.5% gross revenue royalty on all products generated from its use.

Domestic producer

“We are delighted Novana and VRP1 have attracted a group of EIT RawMaterials’ calibre as a shareholder and supporter of the project financing process,” Mr Reed said.

“With the VRP1 conditionally confirmed for European Investment Bank (EIB) debt financing, we look forward to formally securing the remaining equity and debt funding.”

“We hope to capitalise on the significant support from the Finnish state and EU and new incentives to deliver Europe’s first domestic producer of high-purity vanadium, a critical material for the production of high-strength steel, aerospace titanium alloys and stationary energy storage batteries.”

Exclusive licence

Novana holds a long-term lease over the proposed VRP1 plant site, has secured the project’s environmental permit and also entered into a binding offtake agreement for 100% of VRP1’s vanadium pentoxide products with Glencore.

A VRP1 feasibility study has confirmed the potential for lowest-quartile operating costs, with a low-to-negative carbon footprint.

Novana now intends to formally commence a project financing selection process, seeking approximately $660 million upon receipt of the EIT funds.

Wide-ranging support

Targeting a financing package of around 40% equity and 60% debt, Novana has reached an agreement with leading Nordic banks SEB and Aventum to manage the equity and debt packages respectively, with assistance from EIT RawMaterials.

The EIB conditionally approved Novana for debt financing in November 2023.

Business Finland has also offered a conditional grant through the EU-backed NextGeneration sustainable growth fund, while the Finnish Ministry of Finance announced in late 2024 that the country is proposing to introduce a new 20% investment tax credit system for large industrial, energy transition and recycling projects in Finland.