Vulcan Energy Resources is pioneering a sustainable approach to lithium production, aiming to meet growing European demand while minimizing the environmental footprint. Zero Carbon Lithium™ Project is Vulcan’s groundbreaking project which adapts existing, commercially proven technology to produce battery-quality lithium.
Vulcan uses a process based on Direct Lithium Extraction. They achieve this by extracting lithium from naturally heated subsurface brine in the Upper Rhine Valley. The project aims to deliver a local source of sustainable lithium for the European battery industry while also generating renewable energy as a co-product.
Vulcan’s unique process draws on naturally occurring renewable energy to power its lithium production. This means that their production and processing operations are carbon neutral, using zero fossil fuels.
As a renewable energy producer, Vulcan extracts natural geothermal heat from deep brine sources. This ensures a clean, reliable, and renewable energy source for their operations, partners, and local communities.
Europe is a rapidly growing electric vehicle manufacturing market. Demand for lithium in Europe is expected to increase significantly by 2050. Currently, there is zero local supply of battery-quality lithium hydroxide within Europe. Vulcan aims to change that by producing enough lithium hydroxide for 500,000 electric vehicles in Phase One of their project, and 1 million electric vehicles per annum when Phase Two is operational.
The Upper Rhine Valley region offers favorable geological conditions for co-producing lithium and renewable heat. At a depth of around 3,600 meters, there’s a large geothermal brine resource with high lithium concentration.
The NPV of Vulcan’s project is €2.25 billion (post-tax). This substantial value reflects the long-term profitability and viability of their Zero Carbon Lithium® production.
Vulcan boasts the lowest OPEX of any lithium hydroxide (LHM) project globally, standing at €2,640 per ton of LHM. Their efficient cost structure contributes to the project’s economic strength.
The combined renewable energy-lithium project demonstrates a post-tax IRR of 21%.
Vulcan Energy Resources is expected to move into first production during 2026 and is in the process of constructing and commissioning different parts of the value chain. With offtake agreements already confirmed, Vulcan is in the crucial phase of arranging financing for the project to move ahead for production in 2026.
The share price has reduced significantly over the last years (in line with the lithium spot price) and the current market capitalization is only around 10% of the post-tax NPV estimate. As the company confirms financing arrangements and goes through the final stages of development, there is a significant theoretical upside in Vulcan Energy Resources’ valuation.
