Vulcan Energy’s lithium ambitions receive major boost with European Investment Bank financial endorsement

Vulcan Energy Resources (ASX: VUL) has received a major vote of confidence in its lithium development plans with the European Investment Bank (EIB) in line to provide financing for the German-based project.

The EIB has upgraded the status of Vulcan’s Phase One Zero Carbon Lithium Project after completing preliminary due diligence.

The project has been advanced to the “under appraisal” stage as the EIB examination suggests it is potentially suitable for up to $825 million of proposed financing.

Vulcan’s managing director and chief executive officer Cris Moreno said the EIB support for its lithium project is expected to complement its ongoing debt funding discussions with leading export credit agencies and international banks.

“We welcome the support of the EIB,” Mr Moreno said.

“This is a strong and tangible signal of confidence at the European level for the Zero Carbon Lithium project and of its capability to enable a secure, domestic lithium supply chain for electric vehicle batteries for Europe.”

“This progression in EIB’s financial appraisal is a positive step forward in the sequence of our debt and project level equity financing for phase one of the project, which is anticipated to create millions of tonnes of carbon avoidance in the electric vehicle (EV) supply chain in the years to come.”

The EIB is the lending arm of the European Union and, as one of the largest climate finance providers, is looking to finance Europe’s aims to reduce net greenhouse gas emissions by 55% by 2030 and have no net emissions of greenhouse gases by 2050.

Debt financing

Mr Moreno said Vulcan has commenced its debt and project level equity financing process, supported by BNP Paribas, following positive market indications in 2023 from commercial banks, development banks and government-backed export credit agencies.

This included a $200m non-binding letter of support from Export Finance Australia and indications of strong Export Credit Agency support from Canada, Italy and France during 2023.

Vulcan is developing the world’s first integrated renewable energy and zero carbon lithium project in the Upper Rhine Valley, aiming to decarbonise the lithium supply chain for EVs and to supply local communities with renewable heat and power.

Its phase one development is targeting the production of 24,000 tonnes per annum of lithium hydroxide, equivalent to 500,000 EVs.

Vulcan is targeting key auto and battery makers in the European supply chain, including its second-largest shareholder Stellantis.