Europe Commences Construction on First Major Lithium Mine with Support from German Government

Construction is now underway on Europe’s first major lithium mine after the German government committed €354 million to Vulcan Energy Resources’ transformative €2.2 billion project in the Upper Rhine Valley. The substantial German backing far exceeds the support given to British lithium ventures and highlights Europe’s urgency to reduce dependence on Chinese rare earths amid soaring demand for green technologies and electric cars.

Currently, at least 80 percent of Europe’s refined lithium is sourced from China, leaving the continent’s supply chain vulnerable. Vulcan is set to become the first large-scale lithium miner and refiner in Europe, providing a local source to meet demand from European industries. Francis Wedin, Vulcan’s executive chairman and founder, emphasised the significance of this development for the continent’s emerging battery and electric vehicle sectors.

The Australian-listed company, founded in 2018, overcame early financial and political hurdles by securing long-term supply contracts, notably with automotive giant Stellantis. The announcement of a €2.2 billion funding package, with grants and equity from several German government tiers and a €250 million loan from the European Investment Bank, follows growing awareness across Europe of the need for reliable supplies of critical raw materials.

Vulcan’s project also benefits from a combined €800 million injection from the export-finance agencies of Australia, Canada, Denmark, France, and Italy. The construction phase is led by Hochtief, which has invested €169 million, while Stellantis holds a stake of just under five percent. Australian mining magnate Gina Rinehart remains a long-term supporter.

The company’s environmentally considerate approach involves drilling geothermal wells two kilometres underground to extract hot brine for both power generation and lithium chloride production, with subsequent processing in Frankfurt into battery-grade lithium hydroxide. The process is less intrusive than conventional mining methods and is expected to generate annual revenues averaging €566 million over a projected 30-year lifespan; around six percent of this revenue will come from energy sales.

Vulcan aims to start lithium production by mid-2028, setting the pace ahead of competing projects in Cornwall, County Durham, the Czech Republic, Austria, Portugal, and Serbia. As Vulcan advances, industry observers will gauge the impact on Europe’s supply chain resilience and the broader transition to sustainable energy and transport.