Vulcan Energy Resources Ltd (ASX: VUL) shares are sinking on Friday morning.
At the time of writing, the ASX lithium stock is down 7% to $6.31.
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Why is this ASX lithium stock sinking?
Investors have been selling the company's shares today after a selloff on Wall Street overshadowed the release of an update on its Phase One Lionheart Project in Germany.
According to the release, the lithium developer has named global technology company, ABB, as the Main Electrical Contractor (MEC) partner for the project.
The company notes that ABB will be responsible for the design, engineering, manufacture, testing, and delivery of the electrical infrastructure systems for the project. It will cover the Lithium Extraction Plant (LEP), Central Lithium Plant (CLP), and well sites. The contract has a combined value of ~46 million euros.
The upstream LEP is located in Landau, Rhineland-Palatinate, and the downstream CLP is located in Industrial Park Höchst, Frankfurt.
As Vulcan Energy's MEC, ABB will provide the high, medium, and low-voltage power distribution systems, variable frequency drives, transformers, UPS, and protection equipment required to energise all process and utility systems. It will also provide design consistency, single-point responsibility, and technical integration needed to ensure safe and reliable power distribution from the 110 kV grid interface down to the process and building-level consumers.
Its MEC is certainly up to the task. Management highlights that ABB is a global company specialising in electrification and automation technologies. It offers a suite of integrated power, automation and digital solutions that enable safer, more efficient and more sustainable operations. In addition, it delivers technical documentation, design software, training materials, and configuration and product selection tools.
The good news is that this brings the project closer to fruition. The ASX lithium stock points out that the signing of the contract is a condition precedent to financing, which Vulcan is targeting to finalise, together with additional project and financing agreements, during the final quarter of 2025.
Commenting on the news, Vulcan Energy's managing director and CEO, Cris Moreno, said:
ABB has a proven track record of delivering large-scale, mission-critical infrastructure across the energy, mining, and chemicals sectors, including several recent major European projects.
We were impressed with the work completed by ABB under the MoU, so it is pleasing that our collaboration will now be a long-term partnership. ABB's systems will be the electrical backbone powering our Lionheart Project, and we look forward to working together in delivering on the objectives of the Project.
ABB's global business unit battery materials manager, Staffan Sodergard, said:
The continuation of our relationship with Vulcan Energy is significant given the nature of the Project and its standing in Germany and broader Europe's energy and mobility transition. "Both companies share a commitment to innovation and technology, and we are excited to be playing a key role in advancing the local battery manufacturing industry.
