European Banking Giants Set to Support Vulcan Lithium Project
European Banking Giants Set to Support Vulcan Lithium Project

European Banking Giants Set to Support Vulcan Lithium Project

  • 19-Apr-2023 2:55 PM
  • Journalist: Jai Sen

Germany: The German-based company, Vulcan Energy, has garnered "in-principle" backing from major investment houses in Europe. The French and Italian banks have pledged support for the first phase of Vulcan Energy's zero Carbon Lithium and geothermal project. According to the company, they are the first in the world to provide an integrated renewable energy Lithium extraction and Lithium Hydroxide project with no net greenhouse gas emissions.

Vulcan Energy has enlisted the assistance of BNP Paribas – a banking giant in Europe – to aid in securing further support from Export Credit Agencies (ECAs), which are backed by governments. Major players in the automobile manufacturing industry, including Volkswagen, Renault, and Stellantis, have signed up for offtake agreements. Given the project's critical significance to France's automotive industry, Bpifrance Assurance Export – the French ECA – is eager to provide funding.

Italy's government ECA-SACE has given the green light to Vulcan's project for its tied Export Credit Program. The approval was based on the expected inclusion of an Italian outfit among the project's construction contractors. Vulcan's plan to hire a Canadian contractor also serves as an opportunity to strengthen its relationship with Export Development Canada, the Canadian ECA, which is also interested in participating. Vulcan is optimistic that it will secure financing for the first phase of its ground-breaking project by the first quarter of 2024, with a production target set for 2025.

In an astounding move, the company announced the results of its definitive feasibility study (DFS) earlier this year, which revealed an incredible pre-tax net profit value of €3.9 billion (AU$6.3 billion) for phase one of its operation. This impressive figure is coupled with an internal rate of return of 34% for its €1.5 billion (AU$2.4 billion) CAPEX investment. The project's payback period is expected to be only three and a half years, and it has the potential to generate an annual revenue of over €700 million (AU$1.1 billion). This awe-inspiring achievement is truly remarkable.

Vulcan's objective to extract Lithium from Lithium-infused brines may seem like a common approach, given that brines account for over 60% of the world's Lithium production. However, the company's innovative project possesses a fascinating and profitable twist. Vulcan's brines are incredibly hot, and they can produce surface power using standard geothermal technology. Vulcan, headquartered in Western Australia, has an extensive and exceptional project that comprises 26.6 million tonnes of Lithium Carbonate equivalent. This makes it the largest Lithium resource in the European Union.

Strategically nestled in the heart of the European battery industry, the project is uniquely situated atop a 300km "graben" system hosting a reliable sedimentary geothermal Lithium reservoir. The company aims to generate renewable energy for a million people before 2030, manufacture ample Lithium Hydroxide for a million electric vehicles every year, and eschew emitting one million tonnes of Carbon dioxide annually. These goals are now within closer reach thanks to the preliminary financial endorsement from government-supported European investment banks.

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