The founder of a Gina Rinehart-backed mining aspirant that has defied the odds to dodge this year’s lithium share market bloodbath says Rio Tinto’s acquisition of Arcadium Lithium validates his company’s strategy.
Francis Wedin is juggling two time zones to plant Vulcan Energy Resources at the heart of Europe’s green energy transition.
Vulcan has an ambitious plan costing $2.3 billion to produce both lithium and renewable energy in Germany via a process generating net zero emissions.
Vulcan aims to extract lithium chloride from reservoirs of hot brine in the Upper Rhine Valley, while using the natural heat in the brine to make geothermal energy to power its own Zero Carbon Lithium project and sell back into the grid.
This novel approach has piqued the interest of Europe’s environmentally-conscious car makers looking for lithium to build electric vehicles.
Vulcan has already inked lithium offtake agreements with the two behemoths that control brands like Volkswagen, Audi, Lamborghini, Porsche, Maserati, Bentley, Jeep, Chrysler, Alfa Romeo, and Peugeot.
Mr Wedin says Vulcan’s green production credentials and proximity to the main hub of European car manufacturing make the company “uniquely positioned” to capture a big slice of the continent’s emerging market.
“There is a unique place in the market, because we are supplying from Europe, for Europe,” the Vulcan executive chairman tells The West Australian at his company’s St Georges Terrace headquarters.
“You’ve got this mega trend, which is localization of global markets . . . so called on shoring, or friend shoring, of production right through the supply chain.
He says this trend is “particularly acute” for Europe, because the automotive industry is “massive” in the continent’s biggest economy – Germany.
“They are very concerned with making sure their auto industry transitions to electric in the right way and also doesn’t get destroyed by Chinese competition, basically, and in doing so they have to build supply chain resilience.”
Carving out a niche has shielded Vulcan from the lithium price collapse that has savaged its peers.
While most lithium miners, developers and explorers have lost a big chunk of their value over the past year, Vulcan has gained more than 60 per cent.
Gina Rinehart and Melbourne’s Smorgon family are among Vulcan’s wealthy backers to benefit from the buoyant share price.
Mr Wedin is eyeing further growth as the company ticks off milestones. On Wednesday it locked in an initial lending pool for the funds required to reach commercial scale lithium production by the end of 2026.
Another wind in Vulcan’s sails has been Rio Tinto’s $9.9 billion acquisition of Arcadium Lithium.
Arcadium’s portfolio is heavily weighted towards lithium brine, instead of the hard rock lithium that exists at all current Western Australian mining operations.
Mr Wedin believes in the long run projects like Vulcan’s and Rio Tinto’s will win out over their WA hard rock competitors.
“I think brine is going to be the dominant force . . . there’s been lots of clues as to where the (lithium) market is going and I think with the Rio-Arcadium news this is another clue,” he said.
“It was the speed to market where hard rock really had the edge and in a rising lithium market with high prices costs didn’t matter so much.
“But fast forward to now, and I guess we’re in what you can call the third wave of lithium — it’s all defined by cost of production and it’s defined by scale, and I think brine has the edge.”
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