ASX-listed Vulcan Energy Resources will look to pursue the production zero emissions lithium in Europe after publishing the results of a “positive” pre-feasibility that found a proposed geothermal powered facility would be highly profitable.
Vulcan Energy Resources has been investigating the possibility of producing emissions free lithium at a project in the Upper Rhine Valley of Germany. The company plans to pair the lithium production facility with a geothermal energy project, powering the facility with zero emissions electricity.
The company, which has its Australian headquarters in Perth, said that it would be possible to produce battery-quality lithium hydroxide chemical product at the proposed facility, and would be looking to tap into the emerging European lithium-ion battery and electric vehicle market.
“We are very pleased to reach this major milestone for investors in Vulcan and the Zero Carbon Lithium Project. The PFS has demonstrated robust economics for both the lithium and energy parts of the project, both independently and combined,” Vulcan Managing Director, Dr. Francis Wedin, said.
“This means that there doesn’t need to be a compromise on the ethical and environmental sourcing of battery raw materials, for Europe’s current rapid transition to electric vehicles and renewable energy storage.”
The pre-feasibility study found that the planned €1.74 billion (A$2.7 billion) facility could produce up to 40,000 tonnes of Lithium hydroxide each year, the usable ingredient for battery production and would be looking to tap into a deposit of 1.12 million tonnes of lithium carbonate equivalent in Germany, Europe’s largest.
The production facility would be paired with a 74MW geothermal electricity generator, drawing heat from the lithium deposit itself. The power plant would allow the project to tap into a reliable supply of zero emissions electricity that will also benefit from attractive feed-in-tariffs.
The pre-feasibility study showed the company could achieve an expected pre-tax internal rate of return of as high as 26 per cent, a positive result that sent the value of the company’s shares surging higher.
The company said that next steps will include the completion of a ‘definitive’ feasibility study, securing relevant permits, undertaking extraction testing and progressing negotiations with potential off-takers.
“We’ve shown the potential for zero carbon production of lithium hydroxide, with co-production of renewable geothermal energy, to be highly profitable as well as environmentally friendly. We see commerciality and strong environmental credentials as being critically interlinked, not mutually exclusive,” Wedin added.
“2021 should be a transformative year for Vulcan, as we commence our DFS, scale up our lithium extraction piloting and advance discussions with European off-takers for our Zero Carbon Lithium product.”
Vulcan’s shares surged around 40 per cent higher on the results of the study, and have more than doubled in price since the start of the year.
Lithium producers, including many of those based in Australia, have benefited from the surging market for battery storage and electric vehicles. Europe is currently the fastest growing market for electric vehicles, and the market is set to accelerate further with Tesla’s Berlin gigafactory plans, as well as the push of major German auto manufacturers into the EV market, including Daimler and Volkswagen.
Vulcan’s European lithium production ambitions are likely to be warmly welcomed by the regions battery manufacturers, with around 80 per cent of the world’s market currently controlled by Chinese based producers. Local production would help to address both supply chain and environmental concerns.
