The Vulcan Energy Resources Ltd (ASX: VUL) share price is under pressure on Monday.
At the time of writing, the short sellers targeted lithium developer's shares are down 6% to $9.63.
Why is the Vulcan share price falling?
Investors have been selling down the Vulcan share price today amid a broad market selloff driven by concerns over the omicron variant of COVID-19.
This has offset the release of an announcement by Vulcan which on a different day might have sent its shares shooting higher.
What did Vulcan announce?
This morning Vulcan announced that it has signed a binding lithium hydroxide offtake agreement with auto giant Stellantis.
Stellantis is the world's fourth largest automaker and the name behind brands including Alfa Romeo, Chrysler, Citroen, Fiat, Jeep, Maserati, and Peugeot.
According to the release, Vulcan will supply Stellantis with a minimum of 81,000 tonnes and a maximum of 99,000 tonnes of battery grade lithium hydroxide over a five-year period from 2026.
The release notes that Stellantis' electrification strategy, which includes ensuring a sustainable supply of lithium, will see it aim to achieve 70% low emission vehicles (LEVs) sales in Europe and 40% in the US by 2030.
To achieve this, the company plans to open a total of five battery cell manufacturing plants in Europe, including Germany, and the United States, with a total capacity of 260 gigawatt hours (GWh). Vulcan's battery grade lithium hydroxide will be used to support this production.
As with previous deals, this remains subject to the successful start of commercial operation and full product qualification. Pricing will be based on market prices on a take-or-pay basis.
Vulcan's Managing Director, Dr Francis Wedin, commented: "The definitive offtake agreement with Stellantis aligns with our mission to decarbonise the lithium ion battery and electric vehicle supply chain. The Vulcan Zero Carbon Lithium Project also intends to reduce the transport distance of lithium chemicals into Europe, and our location in Germany, proximal to Stellantis' European gigafactories, is consistent with this strategy. We look forward to a long and productive relationship between Vulcan and Stellantis, as we work to achieve our shared sustainability and decarbonisation ambitions."
