Key Points
- Vulcan Energy shares lift on back of new lithium supply deal
- Up to 50,000 metric tonnes of lithium chemical to be provided to LG Energy Solution
- Vulcan Energy has sold out its entire planned lithium production for the first five years of operation
The Vulcan Energy Resources Ltd (ASX: VUL) share price is edging into positive territory today. This follows the company announcement that it has teamed up with a future eco-friendly energy powerhouse.
At the time of writing, the clean lithium developer's shares are fetching for $9.01 apiece, up 2.04%. Despite today's slight gain, its shares have fallen 11% in the past month.
Vulcan Energy secures another partner for its Zero Carbon Lithium Project
In today's statement, Vulcan Energy advised it has signed a binding lithium hydroxide offtake agreement with LG Energy Solution (LGES).
Founded in 2020, LGES is the second largest battery maker in the world, holding over 20% market share. The storage battery manufacturing company supplies its products to leading Original Equipment Manufacturers (OEM) worldwide.
Currently, LGES manufactures lithium-ion batteries in Poland, the US, China, and South Korea, and is seeking to expand production capacity.
Under the deal, LGES will purchase between 41,000 to 50,000 metric tonnes of battery grade lithium chemicals from Vulcan Energy.
The agreement will last for an initial period of five years and can be extended by a further five years. Commercial delivery of the battery-making ingredient is expected to begin in 2025.
In terms of pricing, this will be based on the ongoing market price for lithium hydroxide.
Vulcan is aiming to become the world's first lithium producer with net zero greenhouse gas emissions. Its Zero Carbon Lithium Project is seeking to produce a lithium-hydroxide chemical product for the European electric vehicle battery market.
Vulcan managing director, Dr Francis Wedin commented:
Our initial partnership with LG Energy Solution, the second largest battery producer in the world, was a significant first step in our strategy to engage with tier one battery, cathode and automakers in the European market.
The completion of the binding lithium offtake agreement with LG, in addition to our binding lithium offtake agreements with Volkswagen Group, Stellantis, Renault Group and Umicore, represents a globally unique achievement by the Vulcan Zero Carbon Lithium team. It means that we are fully sold out for the first five years of planned lithium production, which is an important foundation toward securing project finance.
Vulcan Energy hare price snapshot
Over the last 12 months, the Vulcan Energy share price has risen by more than 10% for shareholders. The company's shares reached an all-time high of $16.65 in September, before moving on a downward channel.
Based on today's price, Vulcan commands a market capitalisation of around $1.16 billion with approximately 131.61 million shares on issue.
