The Vulcan Energy Resources Ltd (ASX: VUL) share price has struggled in recent times. It’s fallen nearly 45% since this time last year to trade at $5.78 at the time of writing.
Could the worst be over for the zero-carbon European lithium hopeful? Letâs take a look at what the future might hold for the S&P/ASX 300 Index (ASX: XJO) stock.
Own Vulcan Energy shares? Here’s what the future might hold
The Vulcan Energy share price has tumbled since this time last year as the companyâs short interest continues to grow. Indeed, the stock is one of the ASXâs most shorted, with close to 7% of its shares being shorted at last count.
Weighing on the market’s sentiment might be concerns about the price of lithium, allegations brought about in a short seller attack last year, or general disdain for unprofitable outfits.
It might even have something to do with the well-publicised pushback that faced Rio Tinto Ltd (ASX: RIO)âs European Jadar lithium mine in late 2021.
However, Vulcan Energy managing director and CEO Francis Wedin is optimistic the company could be a major beneficiary of the European Unionâs (EUâs) moves to decarbonise.
The recently revealed Critical Raw Materials Act aims to see 10% of the EUâs consumption of critical materials extracted from within its borders by 2030. Meanwhile, strategic projects would see shorter regulatory permit timeframes and better access to finance.
Vulcan Energy is behind the Vulcan Zero Carbon Lithium Project, located in Germany. Wedin recently said, courtesy of The Australian:
Obviously we are expecting to be front and centre of this as itâs the largest lithium resource and project in Europe by far.
A definitive feasibility study for the projectâs first phase tipped it to produce 24,000 tonnes of lithium hydroxide each year. The projectâs capital expenditure is expected to be around $2.4 billion, with payback targeted within three and a half years. The study’s release last month saw the Vulcan Energy share price tumble 7%.
Interestingly, the company might not be developing the project alone. There may soon be news of a partner capable of helping on both technical and financial fronts.
Wedin told the publication that while the company’s resources are abundant, its growth is âcapital and people constrainedâ. Thus, it might hunt “a big partner in with a big balance sheet which is looking to decarbonise”.
The post The Vulcan Energy share price has crashed 45% in a year. Whatâs next? appeared first on The Motley Fool Australia.
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Motley Fool contributor Brooke Cooper has positions in Vulcan Energy Resources. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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