Vulcan Energy: innovation generates transformation

Vulcan produces geothermal electricity and heat for local communities from underground, hot, lithium-rich brine in the Upper Rhine Valley Brine Field bordering Germany and France. The high-grade lithium is extracted and produced using a proprietary adsorbent and electrolysis process and is sold to European car manufacturers for use in electric car batteries. The residual brine is pumped back into the underground resource, creating a closed-loop system.

The innovation resides in the extraction of lithium from the heated brine, utilising the renewable heat within the same brine to drive the process, and removing the need for fossil fuels to produce lithium for batteries. However, the strategic importance of the project (and uppermost in the minds of board members) is its contribution to Europe's energy security and transition – and in its alignment with European policies related to energy transition and critical raw materials.

While this project is location specific, Vulcan Energy has acquired several licences to operate, not just in Germany. The project is the first of its kind; but that is not to say it cannot be replicated.

Community engagement and policy affiliation are key

Engagement – under the stewardship of the board in two significant directions – has been the watchword throughout the development of the project.

Firstly, there has been significant community engagement to address concerns about drilling and resource extraction and allay fears about the physical impacts of the project itself.

Secondly, engagement with governing institutions has driven the project. Phase One Lionheart sits at the heart of European policy. The EU Corporate Sustainability Due Diligence Directive and the European Critical Raw Materials Act put it there. The project occupies a space envisaged by policymakers when designing the legislation that governs the future of energy production and recognises that sustainability and technology will drive the new economy.

These policy considerations – and the nature of the project itself – have driven the multi-stakeholder approach by the board and the executive to both managing and financing the project.

Financing across an array of stakeholders

Vulcan Energy’s access to grant funding, capital markets, institutional investors, the supply chain, retail investment as well as the debt markets have been integral to financing Phase One Lionheart.

And European institution support has been critical to the project's long-term success. While Vulcan Energy is listed on the Frankfurt and Australian stock exchanges, it is not yet seeing real returns. The Vulcan Energy story is a capital growth story, and investors have been invited to invest at a pre-revenue stage of the business.

Confidence in the stability of the policy landscape for the development, construction and operation of the project over the long term is vital to investors. And belief in the project’s future contribution to the European energy transition and the future demand for lithium are table stakes for investors.

“Phase One Lionheart is a true lighthouse project for Europe. Combining strategic, technological and environmental innovation; it mirrors the EU’s long term goals for energy security, industrial sovereignty and climate neutrality,” said Ms Bush.

The perception of risk also lies in the real prize of Phase One Lionheart – the production of lithium. Such risk – if not managed well by the board – impacts investor appetite and the cost of capital.

The constellation of stakeholders in Vulcan Energy’s project is huge: local communities, Vulcan Energy’s personnel, investors, policymakers, governing bodies (at the supra-national, national and local levels), long-term buyers of raw materials (who, in this case, are also equity investors) and so on. They can all influence the viability, success and future funding of this operation. A complex but mutually dependent ecosystem of stakeholders is a clear characteristic of the project; and a clear challenge for the board is in providing oversight.

Board composition and risk management

Vulcan Energy’s company board composition reflects the project’s risks and opportunities. Skills include finance, project management, major capital project execution and chemical engineering – an array of disciplines that don’t come together without careful curation.

“Like all high-functioning boards, we operate with a blend of strategic discipline, sector-specific expertise, and strong interpersonal dynamics. We maintain a laser focus on long-term value creation for our shareholders, so we challenge constructively and engage actively,” she said.

Such projects also take vision. Thinking beyond typical quarterly cycles is naturally part of governance; but, in this case, we are talking years, and this comes with its own challenges. Investors are always anxious to know when a return will materialise. Building a multi-stakeholder ecosystem takes time. This is a project that requires investor buy-in, trust and patience.

The composition of the Vulcan Energy board not only reflects the risks and opportunities of the business; it does so at each stage of growth. The board has been refreshed to reflect these shifts.

There is complete trust in the expertise of each board member and real co-dependency. The success of the project depends on that expertise.