The Vulcan Energy Resources Ltd (ASX: VUL) share price has spent the last 12 months climbing its way from 15 cents per share, to today's intraday all-time high of $3.41 – easily outpacing the S&P/ASX 200 Index (ASX: XJO)
Although there is no new news out from the company today, we can take a look at the most recent update and recap the recent developments.
A closer look at Vulcan
Since being acquired in 2019, Vulcan has been aiming to be the world's first 'Zero Carbon Lithium' producer. More specifically, the company hopes to produce battery-grade lithium hydroxide with a net-zero carbon footprint.
Vulcan expects to leverage its geothermal and lithium project in the Upper Rhine Valley of Germany. By using the same brine to produce both lithium and geothermal energy simultaneously, the company believes it will address the current issues with lithium in Europe.
If achieved, Vulcan aims to then supply the lithium-ion battery and electric vehicle market in Europe – the fastest growing in the world.
In December 2019, Vulcan completed an Inferred Mineral Resource Estimation of its lithium resource. The results suggest that it is the largest lithium resource in Europe, and significant in size on a global level.
What's been energising the Vulcan share price?
The Vulcan share price has been trending upwards since 21 December last year. On this day, Vulcan updated the market to a recent German legislative change. The legislation is in favour of an Act amendment to geothermal electricity production. This amendment will decrease the reduction rate of feed-in tariffs for geothermal electricity in Germany. Rather than the existing decline of 5% per year, the amended rate will be 0.5% per year.
This would make geothermal energy offsetting more economical for Vulcan. Additionally, once a geothermal project starts operating, the feed-in tariff at the time is locked in for 20 years.
These legislative changes are off the back of the European Commission proposing mandatory requirements on carbon footprints from lithium miners. The requirements would result in all lithium-ion batteries in Europe to include a carbon intensity performance class label from 1 January 2026. If the producer does not meet the carbon footprint threshold they will be barred from operating.
The Vulcan share price closed the day up 10.53%, at $3.36 per share. The company's market capitalisation now sits at $239.96 million.
