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Lithium developer Vulcan Energy has inked a binding lithium hydroxide offtake agreement with battery maker LG Energy Solutions, solidifying a term sheet signed in July of last year.

The agreement will run over an initial five years, and first delivery is set for 2025. Under the terms of the agreement, LG would purchase between 41 000 t and 50 000 t of battery grade lithium chemicals over the duration of the agreement, with pricing to be based on market prices.

“Our initial partnership with LG Energy Solutions, the second largest battery producer in the world, was a significant first step in our strategy to engage with tier-one battery, cathode and automakers in the European market,” said Vulcan MD Dr Francis Wedin.

“The completion of the binding lithium offtake agreement with LG, in addition to our binding lithium offtake agreements with Volkswagen Group, Stellantis, Renault Group and Umicore, represents a globally unique achievement by the Vulcan Zero Carbon Lithium team. It means that we are fully sold out for the first five years of planned lithium production, which is an important foundation toward securing project finance. We look forward to a long and productive relationship with LG.”

Vulcan aims to become the world’s first lithium producer with net zero greenhouse gas emissions, and its zero carbon lithium project intends to produce a battery-quality lithium hydroxide chemical product from its combined geothermal energy and lithium resource, in Germany.

Wedin told shareholders on Monday that there was increasing demand from customers for further supply.

“The December 2021 quarter was a period of acceleration and expansion for Vulcan and the zero carbon lithium project with infrastructure, asset and data acquisitions demonstrating our willingness and ability to swiftly capitalise on strategic opportunities to ensure timely project development.

“The 3D seismic data acquisition, together with the newly granted exploration licences give us significant potential to rapidly advance and further scale up our project as the market continues to grow. To that end, we are targeting completion of our Phase 1 definitive feasibility study in the second half of 2022, to accommodate the inclusion of more project areas into expanded production studies.

“We remain focused on advancing renewable energy development and decarbonisation for the benefit of all stakeholders, and are on track with the development of Vulcan’s zero carbon lithium project, targeting Phase 1 production in 2024,” Wedin said.