Vulcan Energy’s Lionheart lithium and renewables project roars to life in Germany with $4b funding deal

Gina Rinehart-backed Vulcan Energy Resources had entered a trading halt to raise almost $1.1 billion as part of a near $4b debt funding package that will advance the first phase of construction at its Lionheart lithium brine project in Germany. Dual-listed Vulcan said construction was due to start in coming days, with Sedgman and Hochtief now signed up for joint engineering, procurement and construction services. Located in the Upper Rhine Valley, Lionheart will have the capacity to produce 24,000 tonnes of lithium hydroxide monohydrate — enough for 500,000 electric vehicles a year — as well as 275 gigawatt hours of power and 560GWh of heat. The $1.08b equity raising priced at €2.24 ($4) a share will comprise a $245m institutional placement, a one-for-1.128 institutional rights offer for $465m and a $366m one-for-1.128 retail rights offer. The raising forms part of a $3.93b financing package that has allowed Vulcan to green-light phase one of an integrated lithium and renewable energy development at Lionheart. Construction will include geothermal-lithium brine production wells, substation and pipelines and a renewable power and heat plant that will supply local consumers over a 30-year project life. A plant to extract lithium from brine will also be built, along with a plant to convert the material to battery-quality lithium hydroxide monohydrate by 2028. Vulcan has already secured offtake deals for the first decade of production — totalling 2220,000t — with LG Energy Solutions, Umicore car giant Stellantis and Glencore. Vulcan chief executive Cris Moreno said Lionheart was set to redefine lithium production, delivering Europe’s first fully domestic and sustainable lithium value chain. “It will also provide a clean and reliable source of renewable energy for local communities and industries in Germany’s Upper Rhine Valley,” Mr Moreno said. The phase one finance deal includes $2.12b in senior debt funding from a syndicate of 13 financial institutions comprising the European Investment Bank, five export credit agencies and seven commercial banks — including ABN AMRO, BNP Paribas and ING — and a $364m grant from the German government. Export Finance Australia is contributing $$214m while EPC joint venture partner Hochtief will also tip in $268m via a strategic 14 per cent stake in a local Vulcan subsidiary in Germany. Vulcan is targeting annual average revenue of €566m and an pre-tax earnings margin of 75 per cent. The company revealed in January that its first batch of the refined lithium had met product purity specifications. According to Vulcan’s latest annual report, Mrs Rinehart owns about 6.5 per cent of the company through her Hancock Prospecting empire.