A global shift in capital allocations is underway. Trillions of dollars are flowing into sustainable or green investments, as the, ‘environmental, social and governance’ (ESG) sector shakes off its image as simply a feel-good investment class.
New evidence demonstrates that profitability and environmental footprint are not mutually exclusive — but that ESG performance does in fact correlate with good financial results.
Corporate boards are cleaning up their operations and supply chains to be carbon neutral and environmentally friendly, while global fund managers are allocating to climate and eco-friendly companies, and increasingly refusing to back coal and fossil fuels.
In fact, the world’s largest fund manager, BlackRock — which manages nearly US$7 trillion in assets — is reengineering its investment strategy. According to BlackRock CEO and chairman Larry Fink, this shift is on the basis that climate change “has become a defining factor in companies’ long-term prospects”.
Last year 180 of America’s most powerful CEOs – as members of the Business Roundtable lobbying group – declared that corporations have a responsibility to the environment. Not only are these business leaders combating climate change, but it is a savvy, financially motivated move.
Bill Gates’ new fund, Breakthrough Energy Ventures, along with big name investors Jeff Bezos, Jack Ma, and Michael Bloomberg is investing in start-ups that are each capable of cutting emissions by 500-million tonnes annually and has attracted.
It was just announced overnight that Breakthrough has invested in a similarly themed low carbon lithium technology. The original co-founder of this rich-list backed, low-carbon lithium tech has recently joined Vulcan Energy Resources (ASX:VUL | FWB: 6KO) as CTO of lithium extraction.
Dual ASX and Frankfurt listed Vulcan Energy is capitalising on one of the biggest trends in this space: the widespread roll out of electric vehicles.
A major component of electric vehicle batteries is lithium hydroxide, however traditional lithium recovery methods are incredibly environmentally damaging — extracting brines via evaporation ponds or open-pit mining of hard-rock lithium sources have a large carbon footprint.
Driven by changing consumer attitudes along with government legislations, electric vehicles are set to massively displace CO2 intensive internal combustion engine vehicles.
The European Union wants all greenhouse gas emission cut to net zero by 2050, and stresses that “Europe needs to accelerate the transition towards low- and zero-emission vehicles”.
This shift has been spectacularly demonstrated in the recent ascent of Tesla’s share price that has added US$70 billion to its market value in less than two months.
One issue facing Tesla going forward, and all major auto makers for that matter, is securing enough EV batteries, while battery makers themselves— the likes of LG Chem and CATL — struggle to secure adequate supply of battery quality lithium hydroxide.
But fulfilling supply, alone, is not enough. The next step in this evolution is the greening of the EV supply chain. Currently, while EVs are much greener to run, their manufacture generates significantly more CO2 emissions than that of traditional vehicles.
Located at the heart of Europe’s electric vehicle and battery industry in Germany, Vulcan Energy has a solution.
The company has a globally significant lithium resource — the largest in Europe — that, with its unique Zero Carbon Lithium™ direct lithium extraction process from geothermal brines, is perfectly positioned to deliver carbon neutral (or even carbon-negative) lithium to the supply chains of Europe’s rapidly growing battery electric vehicle industry.
The dual lithium hydroxide and renewables project will derive primary revenue from selling battery-quality lithium hydroxide (LiOH∙H2O) chemicals into the European market and secondary revenue from renewable geothermal power generation.
The Vulcan Zero Carbon Lithium™ Project comprises a very large, lithium-rich geothermal brine field located in Germany’s Upper Rhine Valley, just 60 kilometres from Stuttgart — the home of the German auto-industry and the centre of the burgeoning European lithium-ion supply chain.
The project is trucking distance to cathode manufacturers and EV battery “gigafactories” and is large enough to be Europe’s primary source of battery-quality lithium hydroxide.
Vulcan today released its scoping study indicating the potential for its Vulcan’s Zero Carbon Lithium™ Project to be the first negative carbon lithium project in the world, helping to decarbonise what is known to be a highly CO2-intensive product.
The study demonstrates the potential for a combined operation producing lithium hydroxide and renewable energy, all with a net zero carbon footprint.
Vulcan is planning for a staged ramp-up, with Stage 1 comprising the construction and operation of a Direct Lithium Extraction (DLE) and lithium hydroxide plant at the existing Insheim geothermal plant.
Stage 2 would later add considerably larger capacity, with the drilling of ten new production geothermal wells across two plants, construction of a new combined geothermal, DLE and lithium hydroxide plant at Vulcan’s 100%-owned Ortenau license.
The Next Small Cap estimate that the project could “be bringing in US$350 million yearly at Stage 2, which would start to stack up quickly over its 30+ year project life.”
After emerging from a trading and announcing the findings of the scoping study announcement, the stock hit 30 cents on the ASX, after previously closing at $0.255.