Vulcan strikes Volkswagen offtake

Perth lithium aspirant Vulcan Energy has scored a binding offtake agreement with Volkswagen, marking its second deal with an automotive manufacturer.

Shares in the Rinehart-backed company were up 13.89 per cent on the news, which will see the Vulcan sell between 34,000 tonnes and 42,000 tonnes of battery grade lithium hydroxide to Volkswagen.

The arrangement will span an initial five-year term, with the start of commercial delivery set for 2026.

Volkswagen, which is one of the world's largest automakers by revenue, is one of many car companies seeking ways to reduce gas emissions from its vehicles.

It adds to the company’s binding offtake arrangement with Renault Group, who has agreed to acquire between 26,000 to 32,000 metric tonnes of battery grade lithium chemicals from Vulcan.

The Volkswagen and Renault deals are both subject successful start of commercial operations.

Vulcan is working to produce what it says could be a world-first zero carbon lithium hydroxide product from its in-development geothermal lithium brine project in the Upper Rhine Valley.

Its aspirations were recently called into question however by a critical short-selling report titled ‘Vulcan: God of Empty Promises'.

Vulcan ended up challenging J Capital and its co-founder in court in November over the report in a bid to keep it out of publication.

Commenting on today’s announcement, Vulcan managing director Francis Wedin said the agreement would make his company a key enabler of Volkswagen’s carbon neutral targets.

“We look forward to working closely together with Volkswagen, the world's largest automaker by revenue and the largest company in Germany, to build sustainable, local lithium supply for the German and European automotive sector,” he said in a statement.

Vulcan shares closed the day up 13.89 per cent to trade at $11.07.