PERTH (miningweekly.com) – ASX-listed Vulcan Energy has flagged a potential partnership with European essential chemical and energy producer Nobian to partner on Vulcan’s Central Lithium Plant (CLP), which forms part of the Zero Carbon lithium project.
Vulcan ha split Phase 1 of its integrated 24 000 t/y lithium hydroxide monohydrate (LHM) and renewable energy project into two special purpose vehicles (SPVs), the first of which would include the plant and infrastructure associated with the production of renewable energy and lithium chloride.
SPV2 will include the CLP which will convert the lithium chloride into LHM with the by-product of hydrogen chloride. LHM will be sold to the Vulcan parent company, which will then distribute it to Vulcan’s offtakers.
Vulcan has now signed a term sheet with Nobian for the formation of a 50:50 joint venture over, and the equity financing for the CLP, with the companies seeking to leverage Nobian’s experience in industrial crystallization and electrolysis and operating chlor-alkali plants. Nobian has existing production sites in the Netherlands, Denmark and Germany, including at the same site as Vulcan’s planned CLP, at the Hoechst Chemical Park, providing additional synergies.
Under the term sheet, and subject to the execution of definitive agreements, Nobian will contribute some A$265-million in cash to fund the CLP, acquiring a 50% interest in the SPV2 joint venture (JV) on the basis of an agreed pre-money valuation of €322-million for the CLP SVP2.
A previously completed definitive feasibility study estimated that the SPV2 would require a capital investment of €322-million, and it is expected that Nobian's equity contribution, alongside expected project debt finance to be obtained by the company, will fully cover the funding requirement for the CLP. Vulcan is targeting a debt-to-equity ratio of 65:35 for the overall funding of Phase 1.
“This is a positive step forward, as part of our stated strategy to prioritise project level equity investments for funding of Phase 1 of our Zero Carbon Lithium project. After 15 months of collaboration, Nobian and Vulcan have developed a very positive relationship, and we welcome this step towards Nobian’s equity investment into our CLP in Germany, to assist us with providing secure, sustainable and carbon neutral lithium chemicals into the European electric vehicle market, helping to enable the transition to fully electrified transport,” said Vulcan MD and CE Dr Francis Wedin.
“We look forward to keeping our shareholders informed of next steps here as we commence the formal JV negotiation for the CLP, as well as funding updates, including strategic investor discussions, for our upstream lithium chloride production and renewable energy project. It is shaping up to be a very exciting and transformational year for Vulcan.”
The two companies are hoping to execute the definitive agreement within the next ten weeks, subject to the completion of due diligence and the approval of the definitive agreement by the boards of both companies.