Vulcan Energy Begins Lithium Production in Germany Amid Financing Delays
Vulcan Energy, an Australian start-up, has taken a major step towards lithium production for electric vehicle batteries in Germany. The company commissioned a demonstration plant on November 8 at the Frankfurt-Höchst industrial park, marking a significant milestone in its efforts to produce lithium hydroxide locally for European industry.
The lithium hydroxide, a key component required by battery cell producers, is extracted from thermal water sourced from the Upper Rhine Graben in Rhineland-Palatinate. Vulcan plans to begin large-scale industrial production by 2027, two years later than initially anticipated. "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," said Vulcan CEO Cris Moreno.
Vulcan’s approach is distinctive not only because the lithium is sourced within Europe, but also because the extraction process is more environmentally friendly. The brine from which the lithium is extracted also generates CO₂-free geothermal energy, making the production process significantly more climate-friendly compared to conventional lithium extraction methods that rely heavily on fossil energy.
However, financing for the project has taken longer than expected. Vulcan’s financial needs have now reached 1.9 billion euros, including financing costs. CEO Christian Freitag, who oversees supply chain management, stated that Vulcan aims to secure the necessary funds by the first quarter of 2025. The company plans to raise over 600 million euros in equity from investors, while an additional 1.3 billion euros will be financed through loans, including 500 million euros from the European Investment Bank (EIB).
Despite delays, Vulcan has secured purchase agreements for the first decade of production. Customers include major automakers Volkswagen, Stellantis, and Renault, as well as battery producer LH Energy and cathode manufacturer Umicore. Production is expected to reach 24,000 tons of lithium per year, sufficient for 500,000 electric car batteries. Vulcan also plans to increase production capacity in stages every two to three years by an additional 24,000 tons.
While the transition to electric vehicles has been slower than initially expected, Vulcan’s CEO Freitag remains confident. He emphasized that the demand for CO₂-neutral lithium remains high, and automakers recognize that future demand will far exceed current levels. He also noted that Vulcan has set minimum and maximum price ranges for lithium sales, ensuring profitability even during price fluctuations.
The European Union has targeted a shift towards zero-emission vehicles by 2035, prompting numerous projects across Europe to secure a sustainable battery supply chain and reduce dependence on Asian suppliers. Vulcan's project is part of this effort, leveraging local geothermal energy to extract lithium in a more sustainable manner, despite challenges that have included financing and production delays.
