The Vulcan Energy Resources Ltd (ASX: VUL) share price is having a good day on Tuesday.
In morning trade, the lithium developer's shares are up almost 5% to $8.33.
Why is the Vulcan Energy share price rising?
Investors have been bidding the Vulcan Energy share price higher this morning in response to the release of an update on the company's Zero Carbon Lithium Project.
According to the release, Vulcan has started onsite construction of its Sorption-Demo Plant in Landau, Germany. This follows off site fabrication which has been ongoing since March.
Vulcan Energy advised that the plant is being built on the premises of Energie Südwest AG (ESW), the local energy utility for Landau, following the completion of FEED studies, mobilisation, and delivery of key components.
Management highlights that this is a key element of its strategy to de-risk its Zero Carbon Lithium Project. That's because technical and operations personnel will train in the demo-plant to develop a comprehensive understanding of the process and its operation prior to the construction of the first commercial plant.
The plant is scheduled to start cold commissioning in late 2022 and start operation in early 2023.
The release explains that Vulcan Energy has chosen a sorption-type Direct Lithium Extraction (DLE) approach for its lithium extraction business due to its current successful commercial deployment globally. Furthermore, it highlights that sorption approaches have been shown to optimally produce lithium chemicals from hot brines with low operating cost and sustainable footprint.
Management commentary
Vulcan Energy's managing director and CEO, Dr. Francis Wedin, commented:
We are excited to begin onsite construction of our Sorption-Demo Plant, which is the logical next step for us to continue upscaling towards commercial production of lithium hydroxide with a net zero carbon footprint. We are also encouraged with continuing receipt of environmental approvals from the authorities, and mobilisation of teams for commencement of "on the ground" seismic survey activities, toward our goal of developing a much larger geothermal renewable energy and Zero Carbon Lithium business.
One slight but not unexpected disappointment, is that the company is being impacted by supply chain disruption and rising costs. Wedin explained:
Vulcan, as with almost every developing project the world over, is being impacted by disruptions to supply chains due to COVID-19 and the war in Ukraine, together with the rising cost of raw materials due to global inflation. I would like to thank the entire Vulcan team who, faced with these universal challenges, are working hard to deliver the Zero Carbon Lithium Project at pace and scale. We believe the Zero Carbon Lithium project is crucial for Europe, both from an energy security perspective and due to the need to have a local, reliable supply of critical raw materials like lithium. With these macro-policy tailwinds in our favour, Vulcan looks forward to delivering Zero Carbon Lithium Project as soon as possible.
