Vulcan Energy Resources (ASX: VUL) has inked a binding offtake agreement with LG Energy Solution to sell lithium hydroxide from its project in Germany.
According to the terms of the agreement, LGES will purchase up to 50,000 metric tonnes of battery-grade lithium chemicals over five years, beginning from 2025. There is also an option to extend the term by a further five years.
Commenting on the partnership, Vulcan Energy Resources Managing Director Dr. Francis Wedin said: “Our initial partnership with LG Energy Solution, the second largest battery producer in the world, was a significant first step in our strategy to engage with tier one battery, cathode and automakers in the European market.
“we are fully sold out for the first five years of planned lithium production, which is an important foundation toward securing project finance”
The completion of the binding lithium offtake agreement with LG, in addition to our binding lithium offtake agreements with Volkswagen Group, Stellantis, Renault Group and Umicore, represents a globally unique achievement by the Vulcan Zero Carbon LithiumTM team. It means that we are fully sold out for the first five years of planned lithium production, which is an important foundation toward securing project finance. We look forward to a long and productive relationship with LGES.”
LGES Senior Vice President of Procurement Department Dong Soo Kim said: “By joining forces with Vulcan Energy Resources Ltd., a renewable energy producer and sustainable lithium chemicals developer, LG Energy Solution aims to diversify supply chain and strengthen its competitiveness in the ESG sector. LGES promises to solidify and broaden its steady supply of raw materials in case of potential supply disruptions.”
Vulcan’s new offtake agreement follows a binding term sheet signed on 18 July 2021, which was conditional on the execution of a Definitive Agreement.
The deal will see LGES purchase between 41,000 to 50,000 metric tonnes of battery-grade lithium chemicals over the duration of the agreement, with pricing based on market rates for lithium hydroxide. Conditions precedent include successful start of commercial operation and full product qualification.
Vulcan is aiming to become the world’s first integrated lithium and renewable energy producer with a net zero carbon footprint. The company’s unique Zero Carbon Lithium Project aims to produce both renewable geothermal energy and lithium hydroxide for electric vehicles, from the same deep brine source in the Upper Rhine Valley in Germany.
LGES is the second-largest battery maker in the world with over 20% market share, and supplies its products to leading global Original Equipment Manufacturers. LGES is currently manufacturing lithium-ion batteries in Poland, the United States, China, and South Korea, and is investigating expansion production capacity.
