"Oil of the energy transition"

Lithium from Germany: pilot plant in operation

(Bild: Vulcan)

The start-up Vulcan Energy wants to produce lithium for electric car batteries in Germany. On Friday, the company commissioned a demonstration plant in the Frankfurt-Höchst industrial park to produce lithium hydroxide.

The white powder is required by battery cell producers. It is extracted from thermal water from the Upper Rhine Graben in Rhineland-Palatinate. Industrial production in large quantities is set to begin in 2027 - two years later than originally planned.

"The first sustainable lithium produced entirely in Europe from our two optimization plants is an important milestone for the company and of crucial importance for the resilience of the battery value chain in Germany and Europe," explained Vulcan CEO Cris Moreno.

Necessary energy is obtained in a climate-friendly way
The special thing about Vulcan's battery raw material is not only that it comes from Europe, while the leading manufacturers and processors have so far been based in South America and China. It is also more climate-friendly, because the energy required for brine extraction is simultaneously generated CO2-free using geothermal power plants. This technology is still in its infancy. Until now, the light metal has been extracted from rock using a lot of fossil energy in mining.

Until now, lithium had to be imported - for example from South America, where there are large deposits.

(Bild: stock.adobe.com)

"The financing process has taken longer than expected," Christian Freitag, the Vulcan CEO responsible for supply chain management, told Reuters news agency. The financial requirements of the German-Australian company, which was founded in 2018, now amount to 1.9 billion euros, including financing costs. The required funds should be secured in the first quarter. Vulcan will raise more than 600 million euros in equity from a handful of investors, Freitag explained. The remaining 1.3 billion euros will flow through loans from banks - including the European development bank EIB, which has promised half a billion euros.

Car manufacturers hot for lithium from Vulcan
Vulcan is already sold out for the first ten years of production through the purchase agreements with the car manufacturers Volkswagen, Stellantis and Renault, the battery producer LH energy and the cathode manufacturer Umicore. In two years, a quantity of 24,000 tons per year is to be delivered - enough for 500,000 electric car batteries. This would require the construction of an extraction plant in Landau, where a pilot plant is currently extracting the thermal water deep underground, and a larger production plant in Höchst. Every two to three years, the capacity is to be increased twice by 24,000 tons.

According to Freitag, the current sluggish transition to electric cars does not call the plans into question. "The demand for our CO2-neutral lithium at competitive prices is still high," he said. The automotive industry is well aware that the current demand for electric cars in 2024 is not what we will see in 2027, 2028 or 2029." Price fluctuations also have hardly any effect. Since peaking at more than 70 dollars (currently 65 euros) per kilogram, the price has fallen by 80 percent. Vulcan has agreed a range of minimum and maximum prices with customers for more than half of the agreed quantity. "This means that even at extremely low lithium prices, which could be even lower than at present, our project is still profitable."

The European Union is pursuing the goal of only putting zero-emission cars on the road from 2035. The continent also wants to become less dependent on Asia across the entire supply chain. This is why there are now many projects in Europe - most of them in the form of mining, such as Rio Tinto's EU-funded project in Serbia. They meet with resistance from the local population due to the potential damage to the environment.

Deep geothermal energy, such as that operated by Vulcan Energy, carries the risk of triggering earthquakes. A similar project in France caused cracks in houses in Alsace and Baden-Württemberg a few years ago. There are thorough risk assessments for this, Freitag assured us. Vulcan sees itself as a pioneer that would be happy to have imitators in Europe: "It always takes someone to open the door and then there are a few others who also benefit from it." In Australia, Vulcan Energy shares rose by almost 5 percent to 4.93 Australian dollars (3 euros).