Financing under way: Vulcan gets A$200m letter of support to help build giant lithium project

VUL receives letter of support of A$200m of finance from Australian Government’s export credit agency
Phase one financing process of the company’s Zero Carbon Lithium™ Project in Germany due to start next month
The project could help meet EU lithium demands for electric vehicle production

Vulcan Energy has received a conditional, non-binding letter of support from Export Finance Australia (EFA) for up to $200 million (~€120 million) to assist the financing of Phase One of its Zero Carbon Lithium™ Project in Germany.

The project, which has been in development since 2018, is now heading into the execution phase with its Phase One commercial operation targeting 24,000tpa of lithium hydroxide production to supply offtakers such as automakers Stellantis, Volkswagen and Renault.

The company is confident that, with a combined deep geothermal and lithium brine resource, they will help satisfy Europe’s lithium needs for the transition to electric vehicles.

This support from EFA is another signal of confidence in Vulcan Energy’s (ASX:VUL) project, with the company already securing substantial in-principle government-backed ECA support from Bpifrance Assurance Export, the French ECA, SACE, the Italian ECA, and EDC, the Canadian ECA.

Massive resource upgrade

Vulcan’s quest to bring the world’s first carbon neutral lithium operation online received a new set of wings in September after the project’s resource grew to 27.7mt contained lithium carbon equivalent @ 175 mg/L.

Tune in below to hear Vulcan executive chair Dr Francis Wedin on the resource upgrade, how Germany will feed Europe’s hunger for lithium and what comes next at the Zero Carbon Lithium Project.

Government-backed support in EU and Australia

EFA administers the Australian Government’s National Interest Account, which currently includes the Critical Minerals Facility, the Defence Export Facility and lending for the Australian Infrastructure Financing Facility for the Pacific.

It provides commercial finance for export trade and overseas infrastructure development. From small and medium sized enterprises (SMEs) to large corporates, foreign Governments, and infrastructure projects, EFA helps Australian businesses take on the world.

Vulcan says their support is a tangible and a powerful symbol of the sort of Australia-EU links sought as part of the Minerals Security Partnership, which includes Australia, Germany, France, the European Commission, and the US.

“Noting the deepening relationship between Australia and the EU as part of the international push to develop and secure global supply chains for clean energy critical minerals, it is encouraging that we have secured substantial in principle financing support from government-backed export credit agencies (ECAs) both in Europe and in Australia,” Vulcan managing director and CEO Cris Moreno said.

“EFA’s letter of support is encouraging and follows our successful market sounding conducted in the last few months, which has seen strong commercial and development bank support, as well as substantial in-principle ECA support for Phase One.

“This is a tangible and powerful symbol of the sort of Australia-EU links sought as part of the Minerals Security Partnership, which includes Australia, Germany, France, the European Commission and the USA.”

Phase One financing process starts next month

EFA’s letter of support could be converted into a binding agreement following customary conditions and financing terms being met, including – but not limited to – a confirmed level of Australian content; legal, technical, market and environmental due diligence reports; and acceptable lender and other contracts in place.

Going forward, Vulcan is also engaging closely with the German Government, which signed a joint Declaration of Intent to work together to develop critical minerals value chains.

Notably, the French and Australian governments also did the same at the end of September this year.

The company now plans to formally commence its phase one project level debt and strategic equity financing, after the completion of the bridging study, which is also timed to coincide with public funding applications in Germany.

“This signal of confidence is timely and strengthens our position as we enter our project-level debt and equity financing for Phase One of the Zero Carbon Lithium™ Project in November,” Moreno said.

This article was developed in collaboration with Vulcan Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.