VUL Shares Down: Five-Year Renault Partnership Announced (ASX:VUL)

By ,

The Vulcan Energy Resources Ltd [ASX:VULand top European automaker Renault today announced a five-year partnership concerning the supply of battery-grade lithium chemicals.

Vulcan Energy Resources Ltd [ASX:VULshares were up as much as 4.7% in early trade before pulling back at noon. The lithium stock was up 2% at time of writing.

ASX VUL - Vulcan Share Price ChartSource:

The Renault partnership comes two weeks after Vulcan entered its first binding lithium offtake term sheet with LG Energy Solutions, the world’s largest producer of lithium-ion batteries.

Three Ways to Invest in the Renewable Energy Boom

‘Made in Europe’ — Vulcan partners with Renault

In its ambition to offer sustainable, ‘made in Europe’ electric vehicles, top automaker Renault has tapped Vulcan as a supply partner.

The parties signed a five-year lithium offtake term sheet that can be extended if mutually agreed.

The offtake’s commercial delivery is set for 2026.

Under the deal, Vulcan will supply Renault between 6,000 and 17,000 metric tonnes of battery-grade lithium chemicals per year.

Vulcan said the deal would help Renault avoid 300 to 700 kilograms of CO2 for a 50-kWh battery.

Why is this important?

As Managing Director of Alliance Purchasing at Renault explained:

Our environmental and social responsibility is at the heart of the Renaulution and this must apply to the providers we partner with if we want to … offer the most sustainable vehicles in the market.

The Renaulution plan — which includes the commitment to a zero CO2 footprint in Europe by 2040 — gels with Vulcan’s Zero Carbon Lithium Project in the Upper Rhine Valley.

The announced offtake term sheet is conditional on the parties executing a Definitive Agreement on ‘materially similar’ terms by 20 November 2021.

VUL share price: What next?

VUL’s partnership with Renault makes sense.

Renault seeks to achieve carbon neutrality worldwide in 2050. And Vulcan wishes to become the world’s first lithium producer with net-zero greenhouse gas emissions.

By 2030, Renault hopes to have 90% of its sales mix comprise battery electric vehicles, four years after the first anticipated commercial delivery of the offtake with Vulcan.

In its Pre-Feasibility Study (PFS) released early this year, Vulcan cited estimates from Canaccord and Fastmarkets suggesting the average annual price for lithium hydroxide will ‘remain above $15,000/t long term.

The PFS also noted Vulcan’s lithium project has an estimated production capacity of 39,400 tonnes a year.

This means the proposed agreement with Renault represents — at minimum — about 15% of VUL’s annual production capacity and — at maximum — about 43% of VUL’s production capacity.

If we also take the price estimates cited by Vulcan, we get a rough approximation of this agreement’s potential revenue ramifications.

The Renault offtake agreement could bring in between $90 million and $255 million a year for Vulcan.

If you’re researching lithium stock investments and want more information or ideas, then I’d recommend reading Money Morning’s free 2021 lithium report.

If you’re keen for more reading, this report on energy disruption is also a great resource. It goes through finding promising energy stocks and discusses why the energy market is ripe for massive disruption.


Lachlann Tierney,

For Money Morning

PS: In this new report, Money Morning’s Ryan Dinse reveals why he is convinced that lithium is going to rebound in 2021. Get the FREE Report

About Lachlann Tierney

Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest…

Vulcan Energy Shares Surge on Stellantis Equity Stake

Lithium developer Vulcan Energy [ASX:VUL] rose as much as 30% on Friday after conglomerate automaker Stellantis made a $76 million equity investment in the stock.

Vulcan Energy Signs Offtake with German Energy Supplier [ASX:VUL]

Vulcan Energy Resources Ltd [ASX:VUL] on Wednesday announced an offtake with Germany’s ‘largest municipal energy supplier.’

ASX Lithium Stocks Tumble as ASX Continues Slump

The S&P/ASX 200 [ASX:XJO] slumped for the fourth time in five trading days, with ASX lithium stocks falling steeply on Monday. 

Rio Tinto Makes $825 Million Lithium Play with Rincon Mining Acquisition (ASX:RIO)

Rio Tinto [ASX:RIO] is set to acquire the Rincon Resources Ltd [ASX:RCR] lithium project in Argentina for $825 million.

ASX 200 News: Vulcan, PointsBet, and CSL Updates

We examine ASX updates from PointsBet Holdings Ltd [ASX:PBH], Vulcan Energy Resources Ltd [ASX:VUL], and CSL Ltd [ASX:CSL].

Vulcan Share Price — Lithium Sector’s Bellwether Stock (ASX:VUL)

Vulcan Energy Resources [ASX:VUL] share price is up this week as the lithium developer signed an offtake agreement with automaker Volkswagen.