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Vulcan Energy has secured a $2.56bn financing package to build Europe’s largest lithium production project that is expected to generate enough material for about half a million electric vehicle batteries a year.
The lithium explorer said the funding for the first phase of its Lionheart lithium project in Germany — for which the production start date has been twice delayed — clears the way for construction to begin this week.
Lithium projects around the world have faced delays in response to a crash in the price of the battery metal that has weighed on investor confidence and the willingness of buyers such as carmakers to sign up to long-term agreements.
During its first decade of production, Australia-listed Vulcan — backed by Australian mining magnate Gina Rinehart — is aiming to produce around 24,000 tonnes of lithium hydroxide a year, enough for about 500,000 EV batteries.
The company will supply lithium from the project to companies such as carmaker Stellantis, materials technology group Umicore and commodities group Glencore, as western countries race to diversify critical mineral supply away from China.
Vulcan told the Financial Times this year that the sales agreements had a “mixture of pricing mechanisms” and timelines of between five and 10 years.
The company said the package — backed by European and German government agencies, the European Investment Bank, five export credit agencies and seven commercial banks — combined debt, government grants, equity investments and equity raising. As part of the financing package, Vulcan plans to raise up to €603mn in equity at a fixed price of €2.24 per share.
“The board has taken the final investment decision, it’s fully funded and we will be putting shovels in the ground on Friday,” executive chair Francis Wedin told Reuters.
Vulcan originally said its much-delayed project in Germany would start producing lithium in 2023, a date that it later pushed back to 2025. It is now expecting to start production in 2028.
This year, Vulcan ended its long-standing sales agreement with carmaker Renault to “free up” some of the material for other buyers. Stellantis is a big buyer as well as one of Vulcan’s largest shareholders.
Around 90 per cent of the lithium produced by Vulcan in the first 10 years has already been contracted, with the majority of those sales either at a fixed price or with a price “floor” or “ceiling”, according to Vulcan filings.
The price of lithium carbonate was trading at just under $10,000 a tonne at the end of October, down from more than $70,000 a tonne in 2023, according to Benchmark Mineral Intelligence.