Stellantis will construct a €50mn stake in Australian start-up Vulcan Vitality Assets because it seeks to extract lithium from deposits in Germany and grow to be the primary European carmaker to make a considerable direct funding within the extraction of uncooked supplies for batteries.
The transfer comes as carmakers are having to cope with hovering costs for key supplies comparable to cobalt, nickel and lithium, including strain on the profitability of electrical automobiles.
“Making this extremely strategic funding in a number one lithium firm will assist us create a resilient and sustainable worth chain for our European electrical car battery manufacturing,” stated Stellantis boss Carlos Tavares.
The group, which incorporates Fiat and Peugeot manufacturers, plans to promote a complete of 5mn battery electrical vehicles worldwide by 2030.
Stellantis’s funding will make it the second-largest shareholder in Vulcan after founder and managing director Francis Wedin. The corporate has additionally been backed by a bunch belonging to Australian billionaire Gina Rinehart.
Vulcan has been awarded eight exploration licenses in Germany’s Higher Rhine Valley, the place it hopes to extract lithium from geothermal brines and acquired a facility in Insheim with an present manufacturing licence final 12 months. It additionally has an exploration licence for a website within the Monti Sabatini volcanic area close to Rome.
The corporate plans to start out business deliveries of lithium by the center of the last decade, contingent on additional approvals from native authorities in Germany and amid opposition from some residents close to its websites.
Vulcan’s shares — listed each in Australia and Frankfurt — have fallen by greater than 50 per cent this 12 months, as a part of a broader market sell-off, after hovering in 2021.
A number of different carmakers, together with Volkswagen and Renault, have signed procurement offers with Vulcan, however these haven’t included upfront investments. The corporate is utilizing a way generally known as direct lithium extraction that separates the steel from geothermal brines.
BMW invested final 12 months in a rival firm, Lilac Options, which claims to have the ability to effectively extract lithium from saltwater brines. The corporate didn’t disclose how a lot it had spent on the start-up, however filings point out the deal is value a fraction of the one Stellantis has made.
Carmakers, which have been pummelled by persistent shortages of semiconductors and key parts, are more and more contemplating investments in know-how and commodity firms to keep away from provide bottlenecks after many years of counting on contractors for supplies and elements.
Tesla boss Elon Musk in Could informed a Monetary Occasions convention that it was “not out of the query” for his firm to purchase a mining group.
“It’s not that we want to purchase mining firms, but when that’s the one strategy to speed up the transition” to electrical automobiles, the likelihood was on the desk, he stated.
Such an acquisition would solely make sense, although, if Tesla had been able to altering that mining firm’s trajectory, he added.
The value of battery-grade lithium hydroxide has risen sharply. It’s at present buying and selling at $75 a kilogramme, in line with a value evaluation from Fastmarkets, up 400 per cent from time a 12 months in the past.
Direct lithium extraction (DLE) differs from typical evaporation primarily based processes. Its supporters declare it has greater restoration charges and stronger environmental traits.
Rio Tinto agreed final 12 months to pay $825mn for Salar del Rincon, an DLE venture in Argentina, saying it had the potential to considerably enhance lithium recoveries in comparison with photo voltaic evaporation ponds.
Nonetheless not everyone seems to be satisfied small mining firms will have the ability to make the know-how work. Solely Livent, a giant US lithium producer, can boast of utilizing DLE know-how on a business scale.