Vulcan Energy Secures €2.2bn to Launch Europe’s First Sustainable Lithium Project

A Landmark Financing Achievement

Vulcan Energy Resources (ASX – VUL) has announced a comprehensive €2.2 billion (A$3.93 billion) financing package to fully fund the construction and development of Phase One of its Lionheart lithium and renewable energy project in Germany’s Upper Rhine Valley. This milestone has enabled the Vulcan Board to take a Final Investment Decision (FID), with construction set to commence imminently, aligning with the company’s Q4 2025 target.

The financing package is a blend of senior debt from a syndicate of 13 financial institutions, including the European Investment Bank and multiple export credit agencies, alongside €204 million in German government grants and strategic equity investments from notable partners such as KfW Raw Materials Fund, HOCHTIEF, Siemens Financial Services, and Demeter. This diverse funding mix underscores strong institutional confidence in the project’s viability and strategic importance.

Project Scope and Strategic Importance

Phase One Lionheart is designed as an integrated lithium and renewable energy facility targeting an annual production capacity of 24,000 tonnes of lithium hydroxide monohydrate (LHM). This volume is sufficient to supply approximately 500,000 electric vehicle batteries per year, positioning Vulcan as a critical enabler of Europe’s battery and electric vehicle supply chain. Beyond lithium, the project will generate 275 GWh of renewable electricity and 560 GWh of heat annually, benefiting local communities and industries.

Vulcan’s proprietary VULSORB® Direct Lithium Extraction technology will be employed to extract lithium from geothermal brines, a process that aligns with the company’s commitment to sustainability. The project has earned a Dark Green rating from S&P Global, the highest ever awarded to a mining and metals company, highlighting its leadership in environmentally responsible resource development.

Robust Financial and Contractual Foundations

Major project contracts have been signed with experienced partners, including a joint venture between Sedgman and HOCHTIEF for engineering, procurement, construction, and commissioning management. The financing package includes €1.185 billion in senior debt with flexible terms, €364 million in non-dilutive government grants, and strategic equity investments totaling €533 million from KfW and a consortium of industrial investors.

Vulcan is also undertaking an equity raising of up to €603 million (A$1.08 billion), fully underwritten by Canaccord Genuity and Morgan Stanley, with HOCHTIEF committing to a cornerstone investment of up to €130 million. The equity raising price reflects a discount to recent trading prices, a common feature in large capital raises but one that investors will watch closely for dilution impacts.

Economic Outlook and Next Steps

Economic projections for Phase One Lionheart are promising, with an estimated 30-year project life, average annual revenue of €566 million, and an EBITDA margin of 75%. The project’s post-tax internal rate of return (IRR) is forecast at 13.7% unlevered and 16.6% levered, reflecting solid financial fundamentals despite the capital-intensive nature of the development.

With all major construction permits secured and positive drilling results confirming lithium grades, Vulcan is poised to transition from development to execution. The company’s CEO, Cris Moreno, emphasized the project’s role as a “lighthouse” for Europe’s sustainable lithium supply, underscoring its potential to reshape the continent’s battery materials landscape.