Vulcan eyes green financing pathway after positive ESG report for zero carbon lithium project

Environmental and Social Impact Assessment complete for Vulcan Energy Resources’ Zero Carbon Lithium project in Germany
The project is to produce lithium from Europe, for Europe, as well as provide renewable geothermal energy
The report notes multiple positive impacts and opens green financing pathway for the project

Special Report: The Environmental and Social Impact Assessment (ESIA) has been completed for phase one development of Vulcan Energy Resources’ Zero Carbon Lithium project in Germany.

The company is on a mission to bring the world’s first zero carbon lithium operation online in 2025 to feed Europe’s electric vehicle battery needs, where demand is more than five times the volume of currently confirmed projects.

Vulcan Energy Resources’ (ASX:VUL) unique geothermal project – home to Europe’s largest lithium resource at 27.7Mt contained lithium carbon equivalent at 175 mg/L – will produce renewable heat and power as well as enough lithium hydroxide for ~500,000 battery electric vehicles each year in Germany’s Upper Rhine Valley.

Phase one development is targeting 24,000tpa of lithium hydroxide production via the more environmentally friendly Direct Lithium Extraction (DLE) method of using the project’s own geothermal brine – that is already naturally heated – to extract the lithium.

The completion of the ESIA is a prerequisite to the raising of sustainable or ‘green’ debt finance and is an important third-party validation of the project’s sustainability credentials.

Numerous positive community impacts

By advancing phase one of its integrated renewable energy and lithium project, VUL aims to meet Europe’s battery electric vehicle critical raw material needs and provide affordable, baseload renewable energy to local communities – as well as generating thousands of direct and indirect jobs linked to the energy transition, decarbonisation, and electrification of transport.

And the key outcomes of the EISA report certainly support those goals.

The report notes multiple positive impacts of the project, including renewable heating provision for local communities, and carbon neutral lithium production to decarbonise the lithium supply chain, in a world leading first for the industry.

Other positive impacts noted in the ESIA included:

The creation of numerous energy transition jobs, as well as ongoing local innovation and research in green technologies;
The project is being developed entirely on industrial and farming land, with no material negative impact to the local environment, and farming activities continuing uninterrupted; and
There are no potential impacts of the project classed as greater than ‘minor’ post-mitigation; with most impacts classed as ‘insignificant’, during the construction, operation and de-commissioning phases.

“The completion of the Environmental and Social Impact Assessment marks a significant milestone in the advancement of our Zero Carbon Lithium project,” VUL ESG lead Storm Taylor said.

“The ESIA has validated the world-leading sustainability and social benefits our integrated renewable energy and lithium project will deliver to stakeholders.

“Uniquely, our project has no potential impact classed as greater than ‘minor’ post mitigation and has instead shown a range of positive impacts to both people and the planet.”

Phase One ‘green’ financing process underway

The ESIA is in line with lenders’ requirements to ensure a level of environmental performance prior to the furnishing of debt finance – namely the International Finance Corporation (IFC) Performance Standards on Environmental and Social Sustainability, and the Equator Principles (EP4).

In addition, an Environmental and Social Management Plan (ESMP) has also been created in advance of construction start, in line with the ESIA recommendations and industry best practice.

The ESMP will now be integrated with the ESIA into VUL’s Phase One project-level debt and equity financing process, which has been initiated and is a key component towards the provision of green financing.

“As a next step, we look forward to implementing the best practice ESMP, and to engaging with lenders on this matter during the Phase One financing process, which has been initiated,” Taylor 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.