The $13.95 million market-cap minnow is hoping to buck the doldrums in the lithium market by positioning itself at the intersection of a trio of seismic political shifts in Europe.
Second is the drive to revitalise the Continent’s struggling automotive sector by jumping onto the electric-vehicle (EV) revolution – and that includes developing battery capability.
Although 2020 is shaping up as a tough year in the EV market, on Tuesday (Wednesday AEST) French President Emmanuel Macron unveiled an €8 billion ($13.3 billion) rescue package for the French car sector, geared towards a faster transition to EVs.
And third, there is the EU’s zealous push to become a carbon-neutral economy by 2050, which includes carbon neutrality in the production of EVs.
Mr Wedin said Europe would ramp up its lithium ion battery cell capacity from 20 gigawatt hours now to 415 gigawatt hours by the end of the decade.
To produce Europe’s anticipated battery output would require the entire annual supply of lithium hydroxide in the world today. So the Europeans have fired the starting gun on a politically sponsored race to develop their own sources of lithium and end dependence on China.
But Europe also has stringent targets to reach carbon neutrality. A tonne of lithium produced from hard rock, the process used in Australia, requires 15 tonnes of carbon emissions to produce.
In Vulcan’s process, a geothermal energy plant both sources lithium-rich brine and also powers the lithium extraction process. It also generates twice the amount of energy required for this, so large quantities of renewable power can be sold into the German grid at attractive feed-in tariffs, displacing coal-fired generation.
Vulcan says its zero-carbon process ultimately reduces European carbon dioxide emissions by 230 million tonnes. And its total resource of lithium carbonate equivalent is 14 million tonnes, which could fully meet European lithium demand.
Vulcan’s ability to insert itself into a European political project will ultimately require the company to distance itself from its Australian roots. The company is dual-listed in Frankfurt, and is dealing with the EU and German authorities through a German subsidiary.
“The ASX is good for that sort of first risk capital. It’s useful for raising your first few million,” said Mr Wedin.
“We really see this as a European project, ultimately – for the right type of investors, with an impact investing and ESG focus – probably eventually majority European investors. The head listing is still the ASX, but with time this will become more and more a European project.”
Vulcan chairman Gavin Rezos, a London-based Australian financier, agreed: “It has to be seen as a German company, all the grants that come in, they want to see the benefits to the Germans,” he said.
“That’s all done through the subsidiary vehicle. This is essentially a European project, a European company and will be seen as such.”
Mr Wedin said there were no imminent plans to raise further capital. Some funds could emerge from negotiations with potential partner companies that might take stakes in the venture.
A pre-feasibility study will be done this year, and Vulcan is partnering with an existing geothermal plant – basically, bolting on a lithium extraction process – to prove the concept.
Larger demonstration plants and a definitive feasibility study will follow next year, producing at a scale that will allow battery manufacturers to test the product in the cells.
Production will begin in 2023, reaching capacity the following year. From 2024, Vulcan hopes to build its own standalone geothermal energy and lithium plant.
Vulcan’s team reckons the Rhine Valley is one of only two places in the world where lithium can be extracted in this way. And it’s fortuitously handy to the customer base – Germany’s manufacturing industry is just upriver.
Europeans are typically pretty resistant to new resources projects, but Mr Rezos said a geothermal lithium plant was a different proposition.
“You have five operators there during the day, there’s no one there at night time, and it’s very community friendly,” he said. “You don’t have trucks, noise, dust like you do in mining, and you don’t have big, unsightly evaporation ponds.”