The Vulcan Energy Resources Ltd (ASX: VUL) share price has returned from its trading halt and is shooting higher.
At the time of writing, the lithium developer's shares are up 11% to $12.87.
Why is the Vulcan share price charging higher?
Investors have been bidding the Vulcan share price higher today after it released an announcement relating to a new binding offtake agreement.
According to the release, Vulcan has signed a binding lithium hydroxide offtake agreement with Umicore. It is a leader in cathode materials production used in lithium-ion batteries for electrified transportation.
The agreement is for an initial five-year term, with the start of commercial delivery set for 2025. Umicore will purchase a minimum of 28,000 tonnes and a maximum of 42,000 tonnes of battery grade lithium hydroxide over the duration of the agreement. Pricing will be based on market prices on a take-or-pay basis.
The release notes that in Nysa, Poland, Umicore has built the first cathode materials plant in Europe. The plant is expected to start production around year end of 2021 and the materials that will be produced in Nysa will be sold to battery cell makers who produce the batteries for electric vehicles.
Management commentary
Vulcan's Managing Director, Francis Wedin, commented: "Umicore, a leading cathode manufacturer and the first in Europe, will be a valuable offtake partner for Vulcan, as a direct consumer of Vulcan's lithium hydroxide products."
"With our recent announcements of agreements with LG Energy Solution and Renault Group, we now have a diversified mix of offtakers from the cathode, battery and automotive sectors, with further agreements expected in the near term."
"Importantly, Umicore also shares our ambition to decarbonise the battery supply chain in Europe, by building a carbon neutral cathode plant in Poland. We look forward to a long and fruitful cooperation with Umicore as we progress our Zero Carbon Litihum Project," he added.
