How was 2021 for Vulcan Energy?

The year 2021 was an exciting year for Vulcan Energy Resources Limited (ASX:VUL) as it noted significant growth in its share price. From 04 January 2021 till 31 December 2021, the Company’s shares improved by ~275%. VUL shares traded at AU$2.77 on 04 January 2021 improved and reached AU$10.40 on 31 December 2021.

About Vulcan Energy:

Mineral exploration company Vulcan Energy aims to decarbonise the changeover to electric mobility, via its world-first Zero Carbon Lithium™ Project for electric vehicle (EV) batteries, along with its renewable energy business.

At present, the Company is focusing on the Europe region, the fastest EV and Lithium-ion battery production centre globally. The region has no local supply, and automakers and governments are pushing for battery raw materials with a zero carbon footprint. As the region has a supply deficit, the Company feels that its Zero Carbon Lithium™ business can fulfil this requirement and support the switch to EVs.

What supported Vulcan shares in 2021?

One of the most important factors that supported Vulcan shares was the positive outlook for battery making constituents. Other than this, the rising concern related to the environment helped drive the demand for EV and lithium batteries.

Besides these, the Company made significant progress during the period. Below are some of the major updates in the past couple of months.

• On 10 December 2021, Vulcan Energy Resources Ltd announced that it agreed to acquire an operational geothermal renewable energy power plant in the Upper Rhine Valley at Insheim via acquiring 100% of the shares in the entity. The plant is in Germany, and the Company believes that it will be its source of revenue. In FY2020 (period ended 31 December 2020), the plant reported sales of €5.8 million and an EBITDA of €2.9 million.
• On 08 December 2021, Vulcan entered into a binding lithium hydroxide offtake deal with the Volkswagen Group. As per the terms of this deal, Volkswagen Group would purchase at least 34,000 tonnes and a maximum of 42,000 tonnes of battery-grade lithium hydroxide (LiOH) over the tenure of the contract. The contract is initially for five years, and commercial delivery starts from 2026.
• On 29 November 2021, Vulcan Energy and Stellantis N.V. signed a binding lithium hydroxide offtake deed to supply a minimum of 81,000 tonnes and a maximum of 99,000 tonnes of battery-grade LiOH over the tenure of the first five-year contract.

• On 22 November 2021, the Company entered into an offtake agreement with Renault. The deal is in line with Renault’s aim to offer ‘made in Europe’ cars. At the same time, the deal is in line with Vulcan’s plan to decarbonise the battery materials sector. The deal is for six years, and commercial delivery would start from 2026.

Vulcan in 2022:

On 04 January 2021, the Company announced that it secured five new exploration permits for geothermal energy and lithium in the Upper Rhine Valley, Germany. The Company is now looking forward to growing its Zero Carbon Lithium™ Project to service the European market, witnessing the strong demand from offtake customers for lithium chemicals and renewable heating. Through these licenses, the Company would potentially offer a bigger pipeline of projects, as it works to incorporate more production capacity and added project areas into its Phase 1 and 2 plans.

Stock Information:

At AEDT 12:53 PM on 6 January 2022, VUL shares were trading at AU$9.930, down 2.838% from the previous close. It has a market cap of AU$1.34 billion. 

What Next?

The rising demand for EVs and EV related components have brought players from this space into the spotlight. At the same time, governments worldwide aim to reduce carbon emissions. Thus, it seems that there are chances that the demand for lithium and EV components may improve in the coming days.

Based on recent deals signed by VUL amid the existing environment, it seems that Vulcan has a strong outlook.

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