Gina Rinehart’s electric dreams are coming true with Vulcan Resources

Gina Rinehart. Picture: Getty Images

Lithium company Vulcan Resources hit the headlines when iron ore tycoon Gina Rinehart became a key shareholder.

Now it looks like Vulcan will soon have two key deals on the table: one with South Korea’s LG Energy Solution, the world’s biggest battery maker for electric vehicles, the other with Stellantis Ltd, the owner of Fiat, Peugeot and Chrysler.

As a string of locally listed lithium companies fight for investor attention, German-based but ASX-listed Vulcan is selling a distinct proposition – it’s what Vulcan MD Francis Wedin tags as a green premium.

Vulcan is specialising in what’s known as geothermal lithium in contrast to the hard rock lithium more common in our market. What’s more, Vulcan’s operations are in the middle of Europe. Most of the world’s leading car makers are moving into EV production and they favour “localised lithium supply” to enhance their environmental credentials.

Besides putting some serious industry funds into Vulcan – the LG deal alone is estimated to be worth at least $US150m annually – the latest developments reframe Rinehart as a resources entrepreneur willing to cross over into the new era of sustainable energy. She joins a growing list of big names in resources that have been betting both ways in recent times.

In our local market Trevor St Baker, best known for making a fortune from the Vales Point coal station in NSW, is now preparing to list Tritium, the US-based EV charging network.

While overseas, the latest example comes from Saudi Public Investment Fund enriched by the recent partial float of state-owned oil assets: The fund is expected to make $US20bn from its 60 per cent holding in the soon-to-be-listed EV maker Lucid Motors.

What these varied commodity kingpins have in common is a focus less on industry silos and more on perpetual money making – lithium prices have doubled this year.

Vulcan – where analysts estimate Gina Rinehart may hold more than 6 per cent through Hancock Prospecting – has confirmed the LG Solution offtake deal in an ASX announcement while the reported deal with Stellantis is said to be a “memorandum of understanding” according to Reuters. Vulcan has not confirmed any arrangement with Stellantis, and the company did not comment this week.

General Motors – which has recently signed its own geothermal lithium supply agreements – calls the technology “a more environmentally friendly process than traditional lithium production”.

Moving to capitalise on its green credentials, Vulcan became a member of the powerful Global Battery Alliance a month ago with its stated mission of becoming the world’s first lithium producer with net zero greenhouse gas emissions.

With a market capitalisation now closing in on $1bn, Vulcan got broking analysts interested with a recent announcement that it been granted new licences to explore in Germany. WiseOwl, the share research service suggested: “Our question now is

– if the demand for sustainable geothermal lithium explodes globally will Vulcan stop at its planned 40,000 tonnes a year?” The answer will most likely revolve on the company’s ability to fall into line with the EU’s exceptionally tight environmental guidelines when it hits full production.

Either way the latest moves puts Vulcan into the front row with other well established lithium players such as Minerals Resources or Pilbara Minerals – and Rinehart into a powerful group of investors willing to swing money from traditional resource interests into the EV sector.