Australia’s Vulcan Energy (VUL) up on Volkswagen supply deal
07:40, 9 December 2021
Australia-based lithium company Vulcan Energy Resources surged nearly 14% on Thursday after announcing a supply deal with German automobile giant Volkswagen Group.
Volkswagen Group, parent company of renowned automobile brands including Lamborghini, Porsche and Audi, will purchase a minimum of 34,000 tonnes and a maximum of 42,000 tonnes of battery grade lithium hydroxide from Vulcan Energy over an initial five-year term.
The supply deal will commence from 2026 and pricing will be based on market prices on a take-or-pay basis, Vulcan Energy said. The deal comes with an option to extend by another five years by mutual agreement.
Similar deals with LG Energy, Renault, Stellantis
“Through this agreement, Vulcan Energy’s Zero Carbon Lithium™ business will become a key enabler of Volkswagen’s world-leading target to produce carbon neutral EVs, including all the raw materials in the battery supply chain,” said Vulcan Energy’s managing director Francis Wedin.
In late October, Vulcan Energy was forced to call a trading halt following a short-seller report which questioned the feasibility of its the company’s “Zero Carbon Lithium” project located in the Upper Rhine Valley of Germany.
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Vulcan under pressure from short-seller report
Vulcan Energy stock slumped over 16% when trading resumed on 29 October.
The company responded by saying that “the report contains many claims that are wrong and misleading”.