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Europe predicts demand for lithium will increase by a multiple of 57 times by 2050.
To secure reliable domestic supplies of key materials including lithium, Europe has this week released its Critical Raw Materials Act.
The move has been welcomed by Vulcan Energy Resources (VUL), which is one of just a few ASX-listed companies well-positioned to benefit from the new European legislation.
Vulcan has 26.6 million tonnes of Lithium Carbonate Equivalent (LCE) in the Upper Rhine Valley in Germany, which Managing Director and CEO Francis Wedin said was the largest known lithium resource in Europe.
Dr Wedin said the Act could help fast-track the company’s already-advanced Zero Carbon Lithium project by providing strategic project status, streamlined permitting procedures and improved access to finance.
“This sets a clear direction by Europe to fund critical raw materials projects,” he said.
“It will create a huge tailwind for us to get permitting and funding quickly.
“Europe has zero local supply of lithium hydroxide that it needs for batteries, and it’s going to see a 57-fold increase in demand — according to the EU’s own numbers, not mine.
“About 80 per cent of lithium hydroxide comes from China. So if you think the energy crisis from the Ukraine war is bad, it’s way worse for lithium, and lithium is the lifeblood of the auto industry. The auto industry is the biggest industry in Europe, so it is red alert for lithium supply in Europe.”
Vulcan’s main offtake customers include Volkswagen, Stellantis, LG, Umicore and Renault. Having recently completed a phase one definitive feasibility study (DFS), the company is now moving into project execution towards a targeted start of production in late 2025.
“We think we’re very aligned with what the EU is trying to achieve — it is the perfect time for us to be building our sustainable, carbon-neutral lithium production project in Europe,” Dr Wedin said.
Vulcan Energy Resources Deputy CEO Cris Moreno said there were about 2.2 million electric vehicles on European roads, but that was likely to reach 30 million by the end of the decade.
While Europe-based, Mr Moreno has been in Australia to meet with Vulcan investors. He spent many years working in the oil and gas industries, building large energy projects while working for companies including Shell, Santos and Woodside before he made a transition to building lithium projects.
“The truth is that lithium and rare earths are likely to be soon more important globally than oil and gas,” Mr Moreno said.
“You don’t have to look far to see what COVID and the Ukraine invasion have done to the security of material supplies — and especially battery-related materials.
“Europe has seen difficult years with its supply chains; it’s been very dependent on South America, China and other Asian countries.”
Another new Act could support Vulcan: EU’s Net-Zero Industry Act
Another Act released this week should also benefit Vulcan. It’s Europe’s Net-Zero Industry Act.
Vulcan, already a commercial renewable energy producer, plans to harvest geothermal energy to drive its lithium production and so therefore should again qualify for special treatment in permitting and funding.
“The Critical Raw Materials Act will work hand-in-hand with the Net Zero Industry Act as they both sit underneath this green industrial plan that the EU is rolling out to meet its commitments to the green transition,” Mr Moreno said.
“Both the Acts will benefit Vulcan: one supporting our geothermal energy project; the other, the lithium on the raw materials. But, ultimately, they both achieve the same goal, and we’re looking forward to working with the EU to start to deploy this.
“Europe does need to take supply of lithium and other critical raw materials very seriously if it’s to meet its decarbonisation timeline and commitments.”
Mr Moreno said Vulcan’s commercial demonstration plants would be operating by mid-year to train its operations team in time for the targeted start of commercial production in late 2025.
Rigs will be soon mobilised for production drilling, long-lead items will be ordered and key contracts will be awarded. The company has been growing its international team.
Europe plans to establish ‘one-stop-shops’ within three months of the new Act coming into force, and permit applications for qualifying projects would be done electronically.
Vulcan Energy Resources shares were up 0.83 per cent and trading at $6:10 at 10:21 am AEDT.
