Shares in Vulcan Energy Resources Ltd (ASX: VUL) are edging higher on Wednesday after the lithium developer released an update to the market.
At the time of writing, the Vulcan Energy share price is up 3.33% to $3.10 following the announcement.
However, despite today's gain, the stock has had a difficult year and is still down roughly 30% in 2026.
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Vulcan secures key lithium production licence
According to the release, Vulcan has been issued its first lithium production permit for its flagship Lionheart Project in Germany.
The permit relates to Vulcan's LiThermEx lithium extraction facility in the Upper Rhine Valley Brine Field in Germany's Rhineland Palatinate.
This marks the first lithium production licence granted in the region.
Lionheart is designed as an integrated lithium and renewable energy project targeting annual production of 24,000 tonnes of lithium hydroxide monohydrate (LHM).
To put that into perspective, Vulcan says this volume could supply enough material for roughly 500,000 electric vehicle batteries each year.
The project is also expected to generate renewable energy alongside lithium production. This includes about 275 GWh of renewable electricity and 560 GWh of renewable heat each year for local consumers over an estimated 30-year project life.
Construction already underway
The company noted that the permit comes shortly after Vulcan secured a 2.2 billion euro (A$3.9 billion) financing package in December 2025, which fully funded the first phase of development.
Construction of the project is now underway.
The licence applies to Vulcan's Insheim geothermal production area, which already produces renewable heat and electricity. This means the lithium facility will sit within an existing energy-producing site.
Further production licences are expected to follow as Vulcan progresses development across the wider Lionheart licence area.
Management believes the approval represents an important step toward establishing a domestic lithium supply chain in Europe.
Vulcan managing director and CEO Cris Moreno said:
Securing the first lithium production licence within the Lionheart Project marks another important milestone.
Moreno added that the licence was granted alongside the project's financing package, which supports construction activities now underway.
Foolish takeaway
Vulcan is attempting something few companies have done at scale.
Rather than mining hard rock lithium, the company plans to extract lithium from geothermal brines while producing renewable energy at the same time.
The goal is to create what Vulcan calls the world's first carbon neutral lithium project.
If successful, the Lionheart development could become one of Europe's largest domestic sources of battery grade lithium. This could help reduce reliance on imports as electric vehicle demand grows.
