Vulcan (ASX:VUL) share price on watch following Renault agreement

Vulcan’s shares will be on watch on Monday…

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The Vulcan Energy Resources Ltd (ASX: VUL) share price will be one to watch on Monday.

This follows the release of an announcement by the Europe based lithium developer this morning.

Why is the Vulcan share price on watch?

The Vulcan share price will be on watch today after it announced a binding lithium hydroxide offtake agreement with European car giant Renault.

According to the release, in line with Renault’s ambition to offer Made in Europe cars and the launch of its new ElectriCity electric vehicle production unit, the auto manufacturer has agreed to purchase between 26,000 to 32,000 metric tonnes of battery grade lithium chemicals over a six-year period.

The agreement will see commercial delivery begin in 2026, with pricing to be based on market price on a take or pay basis.

While this is a positive, it could prove to be far less than the market was expecting. In August, the two parties signed a term sheet for 6,000 and 17,000 metric tonnes per year of battery grade lithium chemicals for five years. This implied a total purchase of 30,000 to 85,000 metric tonnes over the five years.

Nevertheless, Vulcan’s Managing Director, Dr. Francis Wedin, appeared to be pleased with the deal.

He commented: “The completion of this definitive offtake agreement means Vulcan’s Zero Carbon Lithium business will be directly enabling Renault to meet its commitment of producing carbonfree EV batteries and becoming carbon neutral, as part of its “Carbon neutrality – Green as a business” strategy. For Vulcan, the agreement is consistent with our strategy to enter into long term, stable supply agreements with companies that share our ethos on sustainability and decarbonisation ambitions. We look forward to a long and productive relationship between Vulcan and Renault Group going forward.”

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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